. . . Tomorrow (July 10), his (Chairman Dave Camp, House Ways & Means Committee) committee will consider a proposal to partially pay for topping up the highway trust fund with a cynical budget gimmick called “pension smoothing.”
In a nutshell, here’s what it does: Companies can postpone contributions to their pension funds. This means that their tax deductions for pension contributions are lower now, but the actual pension obligations don’t change, so contributions later will have to be higher—by the same amount plus interest. In present value terms (that is, accounting for interest costs), this raises exactly zero revenue over the long run.
Let me say that again using all capital letters to express my frustration.
THIS $6.4 BILLION REVENUE PROVISION RAISES NO REVENUE OVER THE LONG RUN!!!
In fact, it could cost the government money if underfunded pension plans can’t meet their future obligations and the Pension Benefits Guarantee Corporation must step in. . . .
Pretending to raise revenue, while adding to our long-run fiscal woes and undermining the retirement security of American workers seems like the worst possible option.Here is the link to the full post.
According to Bloomberg News, the proposal also calls for other measures to generate the funding required. "The House and Senate proposals both generate nearly $11 billion, according to the JCT summaries. They include customs fees, changes to pensions that lower companies’ short-term contributions, and revenue from a leaking underground storage tank fund."
Yes, folks, as usual, Congress can't see past the next election cycle in planning anything for our country. And why not sock it to workers' pensions a decade or so from now when one's vote on this proposal is long forgotten--yet there is still another election in front of each Congressman.
Congress just can't solve a problem without making things worse these days.