Senate Rejects ‘Pension Gimmicks’ in Highway Funding Bill

The Senate voted 79-18 Tuesday night to send the Highway and Transportation Funding Act of 2014 back to the House, but without the “pension gimmicks” that accounted for roughly $3 billion of its funding.

The amendment removing pension-smoothing provisions, sponsored by Delaware Democratic Sen. Tom Carper, California Democratic Sen. Barbara Boxer and Tennessee Republican Sen. Bob Corker, passed by a 66-31 vote.

Without pension-smoothing, the short-term fix will only keep the Highway Trust Fund solvent through December 19, while the original House bill would have ensured funding through May 31, 2015. (RELATED: Conservatives Slam Short-Term Fix to Highway Funding)

Boxer decried pension smoothing as “really, really dangerous,” because “what we are saying to companies is, you can set aside less money for your pension requirements to your employees.” In the event that some companies go broke without setting aside enough money to cover employee pensions, Boxer explained, responsibility falls to the Pension Benefit Guaranty Corporation, “but if that does not have enough…the taxpayers will have to bail it out.”

Other senators supported the amendment because it forces Congress to re-consider the issue during the lame-duck session, when political considerations are less important.  Maryland Democratic Sen. Barbara Mikulski argued that, “the underlying bill only prolongs uncertainty,” whereas the Carper-Boxer-Corker amendment “will allow Congress to complete its work on a multi-year bill this year.”

A different amendment, offered by Utah Republican Sen. Mike Lee, would have kept the Highway Trust Fundsolvent through FY 2019 while devolving most control of transportation projects to the states, but was defeated by a vote of 28-69. (RELATED: Mike Lee Would Send Highway Funds to the States)

Lee portrayed his amendment as a way to break free from the “permanent structural problems” created by “the dysfunction of Washington.” The proposal called for a gradual reduction of the federal gas tax over five years, from 18.4 cents a gallon to 3.7 cents a gallon, which Lee said would leave Congress with “enough revenue to continue to maintain the Interstate Highway System,” while giving states the freedom “to launch a new era of local investment and local innovation.”

Opponents responded that Lee’s amendment would actually hurt the states, since transportation projects are funded primarily through the gas tax. (RELATED: Highway Trust Fund Almost Broke, Senators Propose Gas Tax)

Boxer said the proposal was “not devolution but complete and utter destruction of a system that has been in place that the States have grown to count on,” and would represent “the end of the federal highway system.” She warned that if it were passed, “the states would see a cut in their transportation funding of 80 percent.”

Lee countered that Boxer’s assertions were “simply not true,” and ignored important aspects of his plan. “The idea here is to transfer both the revenue collection authority and the spending authority back to where most of it belongs, which is at the state and the local level,” Lee said.

Although Washington “perpetuates the myth that transportation money is free,” the reality, according to Lee, is that “the status quo policy ensures that states actually get less value back than they should.”

“Our states and localities…want to get to work,” he argued, “but they want to put this money into steel and concrete in the ground rather than spending so much of it on lobbying.”

The amended bill will now go back to the House, which must decide to either accept the Senate’s changes or send back its own version.

House Speaker John Boehner told reporters on Tuesday that if the Senate removed any provisions from the bill, he would simply “put the House-passed provisions back in and send it back to the Senate.” Despite the impasse, Senate Majority Leader Harry Reid has said he remains confident that Congress will agree on a bill before the summer recess.

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