It isn’t very often than any individual, company or government gets everything wrong simultaneously. But the members of Congress, clinging fiercely to ideology, expediency and cynicism, are doing so regularly. There can be no better illustration than the pathetically ignorant and immoral “solution” fashioned this week to forestall the pending insolvency of the Highway Trust Fund.
No thinking person – Democrat, Republican or Unicorn – can possibly believe that encouraging companies to further shortchange already inadequately financed pension plans is a sensible approach to funding highway construction. Nevertheless, that’s what Congress just did, before rushing off to an ill deserved “vacation”.
Anyone who pays attention to public affairs knows that the US has been seriously underfunding maintenance of the country’s physical infrastructure for many years. We spend roughly half as much, as a percentage of GDP, on infrastructure maintenance as most developed countries. The Highway Trust Fund, which provides a large percentage of the money needed to sustain and expand our roads, is supported by a federal gasoline tax of 18.4 cents per gallon, which has not been increased since 1993. Since building and maintaining our roads is more expensive now than when the tax was last increased, the Trust Fund is expected to run out of money at the end of August. Should that happen, about 600,000 jobs will be lost as highway construction and maintenance projects across the country shut down.
Shutting down projects that are providing good jobs is bad for the re-election prospects of incumbents, so Congress went looking for a way to keep those projects going – without raising taxes (perceived as bad by politicians) or increasing the deficit (also perceived as bad by politicians) . To accomplish its goal, Congress decided to make another problem even worse than it already is—counting on the fact that most of us won’t notice and even if we do, won’t do anything about our outrage.
To prevent the Trust Fund from running dry, Congress authorized the transfer of $10 Billion from the General Fund to the Highway Trust Fund. Normally, increasing the government’s expenses by paying for road building would count as an increase in the deficit. However, since most members lack the courage to acknowledge that truth, Congress decided to “finance” the fund transfer by allowing corporations to make smaller pension contributions under certain circumstances. Doing so allows Congress to forecast larger corporate profits and increased tax receipts, thus – theoretically – covering the cost of the payment to the Highway Trust fund.
Since smaller pension contributions now will mean higher contributions later, arguing that such an arrangement generates additional revenue for the government is nonsensical. Moreover, since many pension plans are already underfunded, and since the government agency responsible for replacing benefits owed by failed pension plans -- the Pension Benefit Guaranty Corporation ( PBGC)—is itself in financial difficulty, allowing more plans to be more underfunded is clearly contrary to common sense. Nonetheless, because underfunded pension plans make news only when they actually go broke, Congress feels confident that its chicanery will go unnoticed and has proceeded to “solve” the problem of a depleted Highway Trust Fund by making the pension funding problem worse.
This nonsensical legerdemain is extraordinarily troubling and goes on only because most citizens pay little attention to what Congress does. Even fewer write, call, or otherwise complain about irresponsible behavior.
Every member of Congress knows that this “solution” to the Highway Trust Fund’s illiquidity is both illusory and fraudulent. Each member, whatever their ideology, knows that without world class infrastructure, our country cannot create or sustain the constantly growing economy needed to sustain the US way of life. Each member, by participating in such charades, makes a mockery of the leadership he or she pledged to provide when seeking office.
Until a larger percentage of our citizens realize that our government isn’t working well, the US is not going to find solutions to the many great issues that challenge us --infrastructure, education, energy, research and development, immigration, inequality, taxation, debt, you name it. While these are all hard problems – requiring careful thought and serious deliberation – they are no more difficult than other problems we have faced and overcome in times past. Solutions are not beyond us, but will surely continue to elude us until we choose our leaders more wisely and pay more careful attention to what those leaders are doing. Those who choose to lead must be held accountable for getting things right, but so far, seem to be doing just the opposite.