This afternoon, both the House and Senate approved the conference report of the largely Senate-crafted MAP-21 surface transportation reauthorization. The bill, which is expected to be signed by the president within a week, will extend federal surface transportation programs for 27 months through Fiscal Year 2014. While the bill makes a number of policy improvements, the fiscal side is so terrible that the whole package should have been rejected.
The bill relies on an $18.8 billion general revenue bailout, which even by the rosiest estimates, will not be offset for 10 years. Yes, this is another two-year funding bill being paid for by 10 years of offsets. This is the new normal in Washington.
Stephen Moore of The Wall Street Journal is rightly outraged by this fiscal train wreck. In an article today, he cites me in his criticism of "The Road to Fiscal Hell":
Without the drilling money the bill elevates fiscal accounting hocus pocus to new heights. For example, it pays for 27 months of road funding with 10 years of budget savings and revenue measures. Isn't that exactly the trick ObamaCare used for financing and that Republicans denounced? As Marc Scribner, transportation expert at the Competitive Enterprise Institute notes, "this just makes the funding problem even worse two years from now when a new highway bill has to be passed. It's just a bunch of phony pay fors."
Highway bills are supposed to be financed with gas tax money, but because Congress wanted to spend so much more than is collected and didn't want to cut spending or raise the gas tax, Mr. Scribner calculates that the bill is a $20 billion raid on the general fund (which is $1.2 trillion in deficit) to pay for the spending programs. This makes the deficit worse. The bill "saves" some $3 billion by raiding various non-transportation trust funds with unspent dollars. It spends about $8 billion on obsolete transit projects (less than three percent of trips are taken on mass transit), thanks to an unholy alliance between big city Democrats and suburban Republicans.
Worst of all is the $9 billion pension gimmick. The bill "saves" $9 billion by reducing the required corporate contributions to pension funds. This will raise income-tax revenues for the government because pension contributions are tax deductible. So businesses will have fewer tax deductions under this scam and pay more tax. But the Pension Benefit Guarantee Corporation estimates these corporate pensions are $26 billion underfunded already. They should be contributing more, not less to the fund. And guess who is on the hook for underfunded pensions? Taxpayers.
He's exactly right. Taxpayers are in a far worse position now than they were just days ago. I don't agree with him on the use of fossil fuel lease royalty revenue as a transportation pay-for (see my article here, for instance, explaining why this GOP proposal is deeply flawed), but otherwise Moore is right on the money. Read the whole thing here.