

Eric Cantor speaks to reporters on Tuesday. Associated Press

The New House Leaders


The reaction offered a preview of the challenges incoming Republican House Speaker John Boehner and his leadership team will face as they start work Wednesday to make good on promises to cut as much as $100 billion from annual federal spending.

The House will formally change hands Wednesday amid pomp and ceremony, as outgoing Speaker Nancy Pelosi (D., Calif.) hands the gavel to Mr. Boehner, a reverse of the transfer four years ago. House members and new Senate members will be sworn in.

On Thursday, Republicans will read the entire Constitution in the House chamber, a nod to tea-party activists who say government has overstepped its constitutional authority.

Incoming House Majority Leader Eric Cantor (R., Va.) outlined Tuesday the House Republicans' plans for the opening weeks of Congress, saying they would include spending cuts and scrutiny of Obama administration regulations. He said the House would enact a 5% cut in its own budget, which Republicans say will save $35 million.


"Everything is going to be on the table," Mr. Cantor said, indicating Republicans may also consider cuts in defense spending, which they so far have not targeted. Further details may wait, Mr. Cantor suggested, until after President Barack Obama outlines his plans for overhauling federal finances in his State of the Union address, likely in late January.

Groups that back more highway spending aren't waiting to see specific cuts to register their opposition. Congress is expected to take up a new multi-year highway and transportation funding bill this year, and a diverse array of groups ranging from the Chamber to big labor unions are calling for more funds to rebuild the nation's infrastructure.

The Chamber, which contributed heavily to GOP congressional candidates in the midterm elections, said in a letter last week that subjecting highway spending to the uncertainty of annual budget cuts would lead to more job losses in the battered industry. The letter was also signed by groups tied to the construction industry.

Jack Basso of the American Association of State Highway and Transportation Officials said states would be more reluctant to sign long-term construction contracts without the guarantee of future federal aid.

"If you're a state DOT, you've got to know that the funding stream you're making these commitments against is going to be there," he said.

At stake is about $41 billion a year the federal government provides to states for repairs to roads and subway systems. For most states, the money constitutes almost half of their budgets for highway capital projects.

House Republican leaders plan to bring to a vote as early as Wednesday that would end a congressional policy that since the late 1990s has effectively guaranteed federal highway spending would rise each year.

Outgoing speaker Nancy Pelosi. United Press International

The policy has protected spending authorized by highway bills from being cut by congressional appropriators during budget time. Other types of domestic spending are often funded at less than the authorized level.

To comply with the old policy, Congress has used $35 billion in general tax revenue money since 2008 to plug the gap left because federal gas-tax revenue have fallen below forecasts, mainly because Americans drove fewer miles during the recession, and cars became more fuel efficient.

"This proposal simply ensures we won't be required to spend more on transportation projects than we take in," said Brendan Buck, spokesman for the Republican transition team. Ron Utt of the Heritage Foundation, a conservative think tank, said the policy change would treat transportation spending like other domestic programs.

"There's no reason why federal transportation programs ... should be held sacrosanct in comparison to other discretionary spending," Mr. Utt said.

Some Republicans said they were concerned about the impact the change might have on their states.

Rep. Steven LaTourette (R., Ohio) said the change would allow Congress to reduce the official budget deficit figure while not cutting spending of individual and corporate tax money.

He proposed an amendment that would continue to shield highway spending from year to year cuts. The amendment failed in a vote of the Republican caucus.

—Naftali Bendavid contributed to this article.

Write to Josh Mitchell at joshua.mitchell@dowjones.com