Federal Highway Trust Fund propped up, but at what cost?

Wow. Congress went a little crazy with the accounting gimmicks this week. They did so enthusiastically.

I’m not sure how widely known this is, but the Highway Trust Fund which funds federal infrastructure projects is almost out of money. That’s creating a lot of problems.

While many of us believe (in a lot of different areas) that states would be in far better shape if the federal government left more revenue available to the states so that they could be more self-sufficient, it’s hard to make that change overnight. So, in the meantime, the reality remains that states lean heavily on federal resources for infrastructure maintenance, etc. Consequently, when the trust fund that provides those resources goes bust, there are some real problems.

Propping up the highway fund

This week, Congress overwhelmingly passed legislation to prop up the Highway fund.

I voted against it for two main reasons.

First off, they “paid for” the increase with a whole series of shell game accounting gimmicks. I hate that. The first is a longstanding accounting trick called “pension smoothing”. Basically, they relax the pre-funding contribution requirements that employers have to kick in to employee pension plans.

That, in turn, means that these companies have fewer pension contribution dollars to deduct from their taxable income. Fewer deductions means more revenue now for the federal government without actually raising any taxes. Companies are generally thrilled. The federal coffers get an influx of cash.

Everything is great … until it isn’t.

Borrowing from the future to pay for today

The problem is that, in reality, all we’re doing is borrowing revenue from the future to pay for our spending today. Somewhere down the road, these companies will eventually make those pension contributions and at that point, the federal coffers will lose revenue – revenue we spent back in 2014.

If preventing the trust fund from going bust is important, and clearly it is to a majority in Congress, then it ought to be important enough to do some serious budgeting. Find something else in the federal budget that isn’t as important. I understand that this isn’t easy, but that’s no excuse.

Not to belabor the point, but this is one of those times where I get even more frustrated than usual about our enormous foreign aid budget. When we can’t figure out how to repair crumbing bridges at home, why on earth … You get where I’m going with this.

The accounting game is shamefully easy to play in Washington. If we applied the same rigorous accounting standards to our own books that we do to private companies, we would likely be in gross violation of our fiduciary responsibility. But just because you are technically “allowed” to game the system doesn’t mean that it’s any less irresponsible.

And so on this bill, I couldn’t see going along with my colleagues.

The second reason I opposed the bill is another absolutely classic Washington move.

Can-kicking observed along federal highway

Instead of buckling down and finding a long-term solution to the problem, they are just kicking this can down the road for a few measly months.

As you can imagine, building a new highway interchange is a colossal undertaking. It requires road builders to invest in a considerable amount of very expensive equipment, engineering planning, schematics, labor, etc. And the projects themselves usually take years to complete.

So, providing funding for a few months at a time with no guarantee of available funds next spring creates havoc for these companies and for the state agencies who are trying to responsibly plan and execute these projects.

When the best you can come up with is a temporary patch paid for with a temporary accounting gimmick, I think it’s time to go back to the drawing board. I get that the problem is imminent, but it didn’t come out of nowhere. This situation was not a surprise. They just left it until the last minute. Never any excuse for that in my mind.

In any case, that was the policy highlight for the week.

The House also knocked out one more appropriations bill. The count now stands: House – seven of 12 complete. Number eight likely coming next week.

Senate – crickets … zero of 12 with no apparent intention of getting them done. So if you have a second, please call over there and tell them you’d appreciate it if they would do the most basic part of managing your precious tax dollars.

I promise they have time on their hands. They aren’t doing much of anything else either.

Let me know if there is anything I can do to be of service.

Rich Nugent (R), Brooksville
Member of Congress,11th Congressional District