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.
