Federal discretionary transportation grants have exploded from a rounding error to roughly one-fifth of all transportation spending by 2022, according to a new policy brief published June 18, 2026, by Reason Foundation. The Infrastructure Investment and Jobs Act of 2021 allocated $200 billion to discretionary grants spread across 101 separate programs, marking a dramatic shift from the traditional formula-based funding that built America's highways. The report, authored by Baruch Feigenbaum, senior managing director of transportation policy, argues that this growth has created a bipartisan consensus that discretionary grants should be reduced in size, as the White House has gained control over transportation funding decisions that once belonged to Congress.
The numbers tell a striking story of expansion. In the 2005 SAFETEA-LU surface transportation bill, discretionary funding made up 8%–10% of total transportation funding. By 2015's FAST Act, that share had grown to 10%–13%. The 2021 Infrastructure Investment and Jobs Act pushed discretionary grants to approximately 20% of all federal transportation spending. The federal government began awarding small amounts of discretionary transportation funding intermittently starting in 1970, but these awards became a sizable annual share only after 2009's American Recovery and Reinvestment Act, when they were supported by the general fund rather than dedicated transportation revenues.
The report finds that discretionary grants have become just as political as the formula funding they were meant to improve, with executive branch decision-makers showing preference to projects whose representatives hold congressional leadership positions or serve on revenue and transportation committees. According to the brief, past project guidelines have "tweaked the criteria to reward rural districts (to increase support), active transportation projects (because congressional leadership preferred these projects), and economic development projects (to build infrastructure not funded by another federal program)." The Department of Transportation has also processed the grant programs very slowly, compounding the problems created by shifting spending decisions away from taxpayers' congressional representatives.
The issue matters because discretionary grants were originally designed to fund projects based on quantitative metrics—like how much a new roadway reduces congestion or how much shorter transit wait times increase ridership—rather than politically determined formulas. Instead, the report argues, they've allowed the White House to circumvent congressional selection processes and at times even divert funds from transportation entirely. The grants' qualifying criteria supersede congressional criteria, giving the executive branch unprecedented control over which projects get built. This shift represents a fundamental change in how America funds its infrastructure, moving power from the legislative branch that's supposed to represent local interests to executive branch officials pursuing broader political objectives.
Improving the discretionary grant funding process, the report concludes, requires "determining how it went awry over the years and returning it to a small, focused, useful program." The brief includes a comprehensive appendix examining all 101 IIJA discretionary grants against recommended criteria for identifying the best projects. With discretionary grants having grown from insignificant to dominant in just 15 years, both parties now agree the pendulum has swung too far from the formula-based system that once guided federal transportation investment.