OPINION

JOSEPH GIGLIO: Potholes sink while pensions soar

Staff Writer
The Patriot Ledger

In another dazzling display of politics trumping common sense, just before taking off on their five-week summer vacation, Congress passed and the president signed a $10.8 billion patch to keep the Highway Trust Fund solvent until next May.

This is the fourth time in the past five years Congress has had to prevent the HTF from going broke. Each time they have avoided raising the 18.4 cent per gallon federal fuel tax, which is the main source of the fund’s revenue. Short-term fixes are a tough habit to shake.

Since 2008, lawmakers have shifted over $54 billion from the general fund to make up the HTF shortfall. Congress has been kicking the can down the road for decades, but now it is doing so in high definition.

This time Congress and the president have funded the HTF by changing how companies fund pension programs, extending customs user fees on certain imports, and transferring money from a fund to repair leaking underground fuel storage tanks. Put a stethoscope to the funding plan and you may not like what you hear.

In particular, more than half of the funding for the latest stop-gap will come from a change in the way corporations are allowed to account for the future cost of paying pension benefits to retirees.

In theory, more money falls to the bottom line and higher corporate profits generate bigger corporate tax bills, which will help fund transportation projects. Moody’s, the credit rating agency, estimates that corporations will save about $51 billion in pension fund contributions. Of course, they will have to make up these payments in the future. Sound good?

This idea of funding 10 months of transportation spending with six years of deferred pension contributions comes from the same folks who criticize business leaders for their obsession with quarterly earnings. You have to love the irony of duplicitous politicians lecturing greedy business executives on short-termism. To say anyone is surprised by this behavior would be selling the truth below wholesale.

While corporate pension funds have recovered from the 2008 financial meltdown, large corporate pension plans remain underfunded to the tune of $122.3 billion according to a survey conducted by the newspaper Pension & Investments.

The federal fuel tax was last raised in 1993 and is no longer sufficient to fund the nation’s transportation needs. Revenue from the tax falls short because Americans are driving less and drive more fuel-efficient cars. Since the fuel tax is not indexed to inflation, the tax’s purchasing power has declined dramatically as the consumer price index has risen more than 60 percent over two decades.

But as Vice President Biden cracked, “Hell, Congress can’t even decide on a gas tax to keep the highway system going.”

Of course, he conveniently neglected to mention that the president earlier this year proposed funding a $302 billion transportation bill with about $150 billion from closing corporate tax loopholes rather than raising the gas tax.

A Gallup Poll taken in April found that two-thirds of Americans oppose raising the fuel tax. Is it any wonder that Americans get exactly the transportation network they deserve?

What’s next for the HTF is anybody’s guess. We will have to wait until after the November elections to deal with a direct, sustainable funding source for transportation infrastructure such as preserving the user fee concept by increasing and indexing the federal fuel tax while we transition to a more precise, technology-driven user fee.

Given Congress’ feckless behavior on this issue, perhaps they need their long vacation.