Bond Buyer 7/22/14 3:33pm ET by Jim Watts

DALLAS — Sens. Barbara Boxer, Bob Corker, and Tom Carper will attempt to derail Senate passage of a House-approved 10-month, $11 billion bailout by offering an amendment on the Senate floor that rejects budget gimmicks like pension smoothing and requires passage of a long-term transportation funding measure in 2014.
“Instead of funding this highway bill through next year, get our work done this year,” said Boxer, D-Calif., in a speech on the Senate floor Monday night. “I will do everything I can to ensure we don’t just do smoke and mirrors here.”
Boxer, a Democrat from California, chairs the Senate Environment and Public Works Committee, which passed a six-year transportation measure in May that capped spending at 2014 levels plus inflation through 2024.
“I hope my colleagues will support the amendment that would reject the budget gimmicks in this bill and force Congress to stop shirking its responsibility so we can work toward passing a long-term transportation bill,” said Corker, a Republican from Tennessee.
The House approved a short-term fix on July 15 that extends the solvency of the highway fund through May 31, 2015. A similar measure adopted by the Senate Finance Committee calls for the same amount of spending but does not specify a deadline.
The Senate is expected to vote on a short-term bailout this week.
Without an extension, the ailing HTF would be so depleted by Aug. 1 that states will receive a 28% cut in their federal reimbursements for transportation projects. The reimbursements will be made twice a month, rather than daily, if the cash balance drops to $4 billion.
The December deadline will make Congress focus on several long-term funding solutions, said Carper, a Democrat from Delaware
“The idea is to create a situation where we’re going to be compelled and will actually figure of all those options and maybe some other ones,” he said.
Both short-term fund extension measures rely on more than $6 billion that would be generated over 10 years through pension smoothing. It allows companies to reduce their contributions to employee pension plans, which increases their taxable income.
Corker said pension smoothing generates additional tax collections in the short term but winds up reducing revenue in later years.
“It’s shameful, it’s irresponsible, and it’s generational theft,” said Corker. “I hope we reject this irresponsible pay-for once and for all and do something far more responsible.”
Alan Cole, an economist at the Tax Foundation’s Center for Federal Tax Policy, said pension smoothing is “one of the more confusing things Congress does” that does not actually produce additional revenues.
Collections resulting from it will initially be high but will begin dropping in fiscal 2020, he said, so that most of the losses will occur beyond the 10-year budget window used to score congressional spending bills.
“Using pensions to ‘pay for’ a brief Highway Trust Fund reprieve is a particularly poor policy idea,” he said. “There is no meaningful way that pension policy should be tied to highway policy.”
Sen. Ron Wyden, chairman of the Senate Finance Committee who proposed the committee’s extension plan, said the pension smoothing in his legislation differs from the House version.
“The Finance Committee’s legislation leaves room for revenue from the pension smoothing provision to help secure multi-employer pension plans that face insolvency,” Wyden said in a floor speech on Monday.
“The other body …weakened the solvency of pension plans and leaves no funds in reserve to address that problem down the road,” he said.
“If we now take the House approach, we will have two challenges on our hands: transportation and pensions,” Wyden said.

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