Bloomberg View: Enough with these highway-spending gimmicks from Congress
It's not quite fair to call this a do-nothing Congress. It's really a do-the-bare-minimum-at-the-last-possible-moment-to-keep-the-country-from-actually-collapsing Congress. The handling of the Highway Trust Fund provides the latest master class in this debauched style of government.
For six years, Congress has been plugging holes in the fund caused by declining gas-tax revenue. Over the past two decades, the gas tax has been frozen at 18.4 cents a gallon and eroded by inflation; cars have become more fuel-efficient, and their use has leveled off. As a result, the tax can no longer cover the government's share about 27 percent of maintaining the country's roads and bridges.
One in three major American roads is in poor or mediocre condition, according to the American Society of Civil Engineers, and even more are severely congested. The cost to the average motorist is more than $1,000 a year.
There are many ways to solve this problem. Raising the gas tax would be the simplest; other options include imposing new user fees on roads and bridges, creating more public-private partnerships, and adopting congestion pricing. All of these have merit. Earlier this year, President Barack Obama proposed raising revenue through changes to the corporate tax code. The case for that is weaker, but the main thing was to find the money.
Congress has had years to do it. Instead of providing the needed funds in a stable way, it has adopted temporary patches. Now, with the trust fund about to run out of money, it is kicking the can down the pothole-filled road again by relying on another gimmick "pension smoothing" to keep the fund solvent through next spring.
Pension smoothing is a euphemism for letting companies put less money into employees' retirement funds. This raises taxable income in the short run, generating more revenue for the federal government. Eventually, however, companies will have to make up for the shortfalls, which will lower future taxable income. In effect, Congress is using future revenue to pay for current spending but without calling it borrowing, to which it's opposed. It's a scam.
The House, by a vote of 367-55, passed the pension-smoothing bill Tuesday, even though members who call themselves fiscal conservatives were advised to oppose it by the Club for Growth and Heritage Action.
It's a shame that Obama and members of Congress, including those who wanted to raise the gas tax, didn't find another solution to the funding problem. The president reluctantly endorsed the House bill, explaining that he does not want to see the fund run dry in August.
If the bill could be stopped, the economic impact would be limited. Work wouldn't cease on projects already under way. Some states might be forced to delay future projects, but this would help push unions and governors to increase the pressure on Congress to find a better answer. Without strong political pressure, Congress will keep the gimmicks coming and that needs to stop.
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