This Road Work Made Possible by Underfunding Pensions

[n2doc]

The Federal Highway Trust Fund is expected to run out of money in August. So, naturally, Congress is debating a temporary fix that involves letting corporations underfund their pension systems.

Of course, we could replenish the fund by raising the federal gasoline tax, which is its primary source of financing. That’s what Senator Bob Corker, Republican of Tennessee, and Senator Christopher S. Murphy, Democrat of Connecticut, want to do. But increasing gas taxes is unpopular, so Congress hasn’t done so since 1993, which means that the tax on gas has actually fallen 39 percent over the last 21 years after you adjust for inflation. Instead, Congress has used a series of gimmicks and shifts to keep the fund solvent as highway construction costs have risen.

The latest proposal, which passed the Republican-controlled House Ways and Means Committee on Thursday, works like this: If you change corporate pension funding rules to let companies set aside less money today to pay for future benefits, they will report higher taxable profits. And if they have higher taxable profits, they will pay more in taxes over the 10-year budget window that Congress uses to write laws. Those added taxes can be diverted to the Federal Highway Trust Fund.

Unfortunately, this gimmick will also result in corporations paying less in taxes in later years, when they have to make up for the pension payments they’re missing now. But if it happens more than 10 years in the future, it doesn’t count in Congress’s method for calculating budget balance. “Fiscal responsibility,” as popularly defined in Washington, ignores anything that happens after 2024.

more

http://www.nytimes.com/2014/07/13/upshot/this-road-work-made-possible-by-underfunding-pensions.html?ref=business

[Travis_0004]

1. If underfunding pensions is bad why does everybody complain about the post office pension.

The post office was underfunding their pension for years and Congress passed a bipartisan bill to adequately fund their pension and everybody raises hell about it and lies about it claiming they are funding pensions for people not born yet, which is not true.

[awoke_in_2003]

2. They forced USPS to fund

employees they haven't even hired yet.

[Travis_0004]

3. That would be bad

But its not true.

[TheKentuckian]

4. 75 years means they are pre funding those not even born yet.

[Travis_0004]

5. No it doesnt

From the Government accountability office:

“Contrary to some claims, there is no liability held, nor contributions made for any future employees who have yet to be hired or yet to be born.”

Full report:
http://www.gao.gov/assets/660/650511.pdf

So please let me know how the government accountability office got it wrong, and why you know more than they do.