The Carper-Corker-Boxer Amendment: A Gimmick-Free Highway Funding Patch
This week, the Senate agreed by unanimous consent to consider the House-passed highway bill, H.R. 5021. The agreement allows for the consideration of several amendments, including an amendment by Senators Tom Carper (D-DE), Bob Corker (R-TN), and Barbara Boxer (D-CA), that would remove the pension smoothing offset, a gimmick that we have written about previously.
As outlined in the table below, the Carper-Corker-Boxer amendment would replace the offsets in the House bill with the measures approved by the Senate Finance Committee, excluding pension smoothing. This funding would be sufficient to keep the HTF solvent through December 20.
|Short-Term Proposals to Fund Highways|
|Policy||H.R. 5021 (passed by House)||Senate Finance||Carper-Corker-Boxer Amendment|
|Enact pension smoothing||$6.4 billion||$2.7 billion||-|
|Extend customs fees by 1 year to 2024||$3.5 billion||$2.9 billion||$0.9 billion*|
|Increase mortgage reporting||-||$2.1 billion||$2.1 billion|
|Clarify of statute of limitations on overstatement of basis||-||$1.3 billion||$1.3 billion|
|Withhold payments from Medicare providers with delinquent taxes||-||$0.8 billion||$0.8 billion|
|Transfer funds from the Leaking Underground Storage Tank Fund||$1 billion||$1 billion||$1 billion|
|Rescind old transportation earmarks||-||<$0.1 billion||-|
|Add due diligence requirement for tax preparers regarding the Child Tax Credit||-||<$0.1 billion||<$0.1 billion|
|Other provisions||-||<$0.1 billion||<$0.1 billion|
|Total Revenue Raised||$10.9 billion||$11 billion||$5.7 billion*|
|Percent Raised From Pension Smoothing Gimmick||~60%||~25%||0%|
|Date of Highway Trust Fund Exhaustion||May 2015||May 2015||December 2014*|
*The Carper-Corker amendment was intended to transfer $8.1 billion to the Highway Trust Fund, enough to sustain the Highway Trust Fund through mid-December. However, the CBO score released after the Senate vote showed a lower score, mostly because of drafting error where the customs fees extension raised $0.9 billion instead of $2.9 billion. If the error remains uncorrected, the bill will still transfer $8.1 billion into the Highway Trust Fund, but $2.4 billion of the transfer will be deficit-financed.
Source: CBO, JCT
The amendment would also extend the MAP-21 (the current highway bill) authorization, currently scheduled to expire at the end of September, through December 20, 2014, setting up a debate about reauthorization and continued funding in the lame duck session after the election.
As shown above, and outlined in our blog, both the House and the Senate Finance bill partially rely on the pension smoothing gimmick as an offset for a general revenue transfer to the HTF. The Carper-Corker-Boxer amendment does not rely on this gimmick, so it is the most fiscally responsible option of the three, even though it is only a short-term solution.
As we explained in our recent paper, we would prefer to see Congress take action to stabilize the HTF over the long term and enact a long term reauthorization. However, that outcome does not appear realistic as Congress will leave for the August recess in just a few days while the HTF will reach levels low enough to potentially disrupt some projects.
Whatever option Congress chooses to fill the HTF in the coming days, it should be fully offset and avoid gimmicks. The Carper-Corker-Boxer amendment meets these criteria, so it is preferable to the House and Senate Finance bills.
- Pension Smoothing Does Not Reduce the Deficit
- Bipartisan Agreement on Gimmicks to Fund the Highway Trust Fund
- Don't Use a Gimmick to Fund Our Highways
Update: July 30, 2014 - The table was updated to include three provisions shared between the Senate Finance proposal and Carper-Corker-Boxer amendments that each have a very small (less than $50 million) revenue impact. Estimates of the Carper-Corker bill were also changed to reflect today's CBO score.