Today, the House passed legislation (HR 5021) to fund the Highway Trust Fund for one year. Authority for the fund, which provides federal money for transportation projects--defined as including not just highways but mass transit projects, bike and walking trails, and "scenic overlooks"--expires at the end of September. The Highway Trust Fund is supposed to be funded from the Federal Gas tax, however, in part because of improved gas millage, gas tax revenues have fallen below the level necessary to meet the fund's obligations. Therefore, HR 5021 "transfers" $9.8 billion from the "General Fund" to the Highway Trust Fund.
But fear not taxpayer, our fiscally responsible Congress is offsetting this increase in Highway Spending with "offsets." However, the Highway Fund is projected to spend the entire $9.8 billion in one year whereas the offsets will take ten years...thus HR 5021 is yet another example of the “Wimpy theory of budgeting,” named after the Popeye character who infamously promised to pay you Tuesday if you bought him a hamburger today.
The bill extends the Customs Bureau's authority to collect "user fees" for one additional year. Last year's bipartisan budget agreement extended the Custom Bureau’s authority till 2023, this bill extends it to 2024 and uses the additional revenue--that will be collected 10 years from now-- to partially pay for this year's transportation spending.
The bill also adopts "pension smoothing" as an offset. Pension smoothing lowers the amounts that employers have to contribute in their employee's pension plans during times of low interest rates, such as we are experience today. Since pension plan contributions are tax-deductible, lowering the contributions brings in more revenue to the government.
However, under current law, if employers do not have enough in their pension fund to pay promised benefits, they receive a bailout from the Pension Benefit Guaranty Corporation (PBGC), which is already $36 billion in the red. So this bill increases the likelihood that the PBGC would come to Congress, hat in hand, for a taxpayer-funded bailout of the nation's underfunded pension plans. But worry not say the authors of this bill, because in true Wimpy fashion, the bill schedules increases in pension contributions starting in 2017, and there is no danger Congress won't "delay" those increased contributions right?
Instead of debating which gimmicks can be used to prop up the failed system of federal transportation funding, Congress should be reducing the federal role in transportation. Congress should also stop putting taxpayers on the hook for the failure of private employers to ensure their pension plans have enough resources to meet their contractual obligations.
Campaign for Liberty will continue to work to end all budget gimmicks and instead work for "Real Cuts, Right Now."
Tags: spending, Real Cuts, Right Now