President Obama this month signed a measure that provides $11 billion to fund the Highway Trust Fund through May, relying heavily on a budget gimmick euphemistically known as “pension smoothing.” Congress approved the legislation in late July.
The Senate had stripped the gimmick from House-approved legislation in favor of more legitimate offsets. However, the House rejected the changes, sending its original bill back to the Senate.
With the trust fund reportedly within days of insolvency and reductions in its support for state transportation projects, senators say they had little choice but to approve the bill.
But lawmakers received plenty of advance warnings about the trust fund’s problems, notably the failure of fuel tax revenue to keep up with its expenses. Once again, however, Congress waited to the last minute to address a growing crisis — and then only approved an irresponsible short-term fix.
The pension gimmick could actually worsen the long-term fiscal problems and weaken pension funds. But it has become an unfortunate go-to for both parties to “pay for” various policies. It’s time to retire it.
Instead, lawmakers should work together to develop realistic solutions to the nation’s pressing fiscal challenges, including the financing of transportation programs.