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The Congressional Spectator
Worst Congress Ever?
That’s what the evidence points to.
It’s no surprise that 60 percent of Americans, according to a new poll from Public Policy Polling for the leftist Daily Kos website, think that the current Congress is the worst ever. Of course, we don’t expect the Daily Kos to note that most of the problem comes from an obstructionist Senate leadership that refuses to put anything passed by the House to a vote. However, when Congress does act in a bipartisan fashion it tends just to make things worse (with rare exceptions like the recent JOBS Act).
A prime example is the Moving Ahead for Progress in the 21st Century Act (MAP-21), also known as the highway bill, a two-year reauthorization of surface transportation spending that passed in late June. Once it was enacted, special interests put on their best jilted-lover act, wailing about not receiving every handout they had requested.
So what did Congress do? It resorted to tricks and obfuscations to provide “pay-fors” for new spending programs. Such budgetary legerdemain allows members of Congress to claim with a straight face that their new spending somehow reduces the burden on the taxpayer, even as it actually increases it.
One provision that received little attention contains a significant pay-for used to fund the highway bill’s spending programs and keep the legislation “budget neutral.”
For this two year measure, Congress relied on 10 years of budget offsets — including a dangerous accounting gimmick known as “pension smoothing.” This provision reduces pension funding requirements under the Pension Protection Act of 2006 by allowing plan managers to assume higher investment returns — perversely at a time of very low interest rates on — low-risk investments such as bonds.
The effect of this move is to make pensions seem better funded than they are, which allows fund managers to reduce tax-free pension contributions. By reducing contributions, more employer income will be taxable, which is why Congress expects this trick to generate $9.467 billion in additional tax revenues over 10 years.
In May, the Pension Practice Council of the American Academy of Actuaries wrote to members of Congress expressing concerns that the resulting contribution amounts will be “insufficient to settle obligations or fund obligations with a low risk portfolio and do not provide meaningful information about the current funded status of [a] plan.” In other words, actuaries are worried that the change would give pension managers a license to make up numbers, further underfund already underfunded defined benefit pension plans, and increase the risk of a taxpayer-backed pension fund bailout via the federal Pension Benefit Guaranty Corporation (PBGC).
The PBGC is the federal agency charged with insuring private sector pensions. It is funded by premiums paid by insured firms. However, those premiums are set by Congress, which for years has set them too low, largely due to persistent lobbying by insured firms — the vast majority of which are unionized. As a result, the PBGC now has a $26 billion deficit. That means that it cannot pay for any more pension plans for which it might become responsible — as its reluctance to take on American Airlines’ pension obligations shows. As the pressure on the PBGC’s resources grows, so will calls for a taxpayer-funded PBGC bailout.
The Academy recommended a number of policy tweaks that could have improved pension funding and disclosure of funding status, while reducing the bailout risk to taxpayers. Congress, in a desperate attempt to fund MAP-21, ignored all of these suggestions. Removing the pension smoothing provision would have meant losing 9 percent of the total revenue and offsets needed to pay for the surface transportation spending levels set by Congress. House and Senate leadership were out of options — they certainly were not contemplating cutting spending and living within the programs’ means.
So in order to keep things going with a minimum of fuss, Congress has degraded actuarial standards for the nation’s private pensions — at a time when one of Americans’ chief concerns is whether they’ll have enough to live on when they retire. There are many words to describe this behavior; irresponsible is probably the most polite.
For the nation to emerge from the protracted crisis that has dragged on since 2007, it will need a complete cultural change in Congress where tricks like this as utterly unacceptable. Until then, there is little hope.
About the Author
Iain Murray heads the Center for Economic Freedom at the Competitive Enterprise Institute and is the author of Stealing You Blind: How Government Fatcats Are Getting Rich Off of You.
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oldeham| 8.16.12 @ 7:07AM
If there was ever a case for term limits this congress (lower case c) is it.
Aristocat| 8.16.12 @ 7:23AM
"When Republicans and Democrats work together, somebody is going to get screwed."
Due to Boehner's cowardice, we have been operating under the Nancy Pelosi 2009 Budget for three years now....Boehner has refused to stand up for the Paul Ryan budget and has instead ordered House Republicans to vote for CR (Continuing Resolutions) every year, which include funding for Obamacare and Planned Parenthood....Pray that House Republicans will get rid of this coward and loser, the sooner the better....
TLP| 8.16.12 @ 8:20AM
That's not true.
As much as I hate the Linguini Spined Republican Leadership, they have Passed Budgets and sent them to the Senate. They have Passed Jobs Bills, and sent them to the Senate. They did Pass Cut, Cap and Balance, and sent it to the Senate.
Just ask Robotax Boy - Tim Geithner - "It's not that we have a Plan of our own. It's just that we don't like yours."
No Budget for this entire Presidency.
Another First for the First Marxist Muslim African President, with his Whole Life Story locked away in a Vault, on a Volcanic Island in the middle of the Pacific Ocean.
The First President to give us a Credit Downgrade, to go along with all of the other Record Bad Economic Numbers like Foreclosures/Bankruptcies/Months of Unemployment Numbers over 8%/Americans on Food Stamps/Americans living AT or BELOW the Poverty Line/as well as Homelessness, Suicides, Divorces, and everything else associated with Chronic Unemployment, and Hopelessness.
The Problem is The Democrat Party via the White House and the People from the Party of No Budget, in the Senate.
If we had a MEDIA in this Country, instead of the Democrat Glee Club, that we have, now?
We wouldn't be talking about all of this Sh*t.
This Election would already be a forgone conclusion, with the Republicans having their shot with The White House, and Super Majorities in both Houses of Congress.
IF we had a real Media.
Von Mises Jr| 8.16.12 @ 8:54AM
TAS and AT are the real media. Here is the research on Mr. Murray's and Mr. Scribner's column. Thank you gentlemen for finding and reporting the truth.
Nothing is what it seems and we are being set up for another crisis:
http://marketday.nbcnews.com/_.....he-us?lite
http://money.cnn.com/2012/07/2...../index.htm
lsudolemite| 8.16.12 @ 9:02AM
Boehner lives each day in utter, mortal fear of a government shutdown, and Harry Reid is well aware of this. Which means he has no leverage with the Senate whatsoever, due to sheer political cowardice.
DTOM| 8.16.12 @ 10:25AM
You betcha! And the minute Boehner said that he has a responsibility to keep the government in operation he gave Reid and his henchpersons (I am sick of men taking all the blame!) the perfect lever to do anything they want.
In any negotiation you must never, ever, never, ever take ANYthing off of the table. Boehner did at the outset - we will be paying the price for this error for decades.
Although he could surprise Reid and suddenly take Harry to the brink - they may well have to raise the debt ceiling before the election.
Wouldn't that be a big who-bash a month before the election. I don't think Boehner has the intestinal fortitude to hold them up as he should...
DTOM
lsudolemite| 8.16.12 @ 10:40AM
I've yet to understand the practical point of even having a debt ceiling at all when it supposedly "must" always be raised.
JP| 8.16.12 @ 12:56PM
Mmm...The Senate is run by Reid; the Executive by Obama; The Beltway by the Dems and rentseekers; the MSM by Soros, Wa Po, NYT, CBS..; and just think about the reaction from the voters if Boehnner forced a government shutdown. At a time when 100 million Americans receive some kind of Gubmint Check it is obvious that the House GOP would get skewered.
If you don't believe me, just ask Newt. It would out real good for him.
I understand your point. But, at a time when the federal government consumes almost $4 trillion of our national GDP (of $14 trillion), the political fall-out would be catastrophic -Obama, Reid, Pelosi win.
lsudolemite| 8.16.12 @ 5:23PM
Then why have an opposition party at all if it's heads Obama wins and tails we lose? Why not give the Dems everything they want if we've already lost? I'm frankly getting very tired of this defeatism in our own ranks.
Aristocat| 8.17.12 @ 3:17AM
Exactly....Call their bluff...If the Senate won't even vote on a budget, any govt. shutdown is on them.
But Bonehead Boehner is too chicken to call them on it...
Jacob McCandles| 8.17.12 @ 8:40AM
House has been doing some good things- bottom line- we must remove Senate democratic leadership.
Stkman| 8.16.12 @ 10:54AM
While Reid and the Senate are certainly obstructionist, the fault lies with a gutless leader in the House. He can't comminucate with the public and doesn't have the fortitude to confront the Senate privately or in public.
The House controls the purse strings, and Boehnor has been content to spend every penny the Democrats want to spend.
If the House is still controlled by the Republicans after the election, Boehnor should not be elected speaker again. He is a failure.
JP| 8.16.12 @ 1:00PM
I agree. But the GOP has no Daniel Webster. And even if it did, people no longer read about the political battles; they view them in 20 second gotcha sound bites.
Boehnner is a weak leader. But, he is in an impossible situation. The problem with the GOP is that it has to play by the Beltway/Dem rules. Mitt and Ryan don't dare utter the Truth, for the political class will not hear the Truth.
Unfortunately, the Truth will be forced upon us all at some point in time. Niether the political class nor most of the voters are ready for it.
Joe D.| 8.16.12 @ 11:07AM
The worst congress in history was 2006-2007.
Marie| 8.16.12 @ 1:28PM
How long has Jesse Jackson Jr. been MIA? Yes, it's the worst congress ever.
merlin| 8.16.12 @ 2:08PM
Defined benefits pensions, government or private, should be illegal. Inevitably it is a promise that someone else will pay, not the one that is promising the pension. A pension should be what is in the account, nothing more, nothing less.
topcat52| 8.16.12 @ 4:18PM
"...actuaries are worried that the change would give pension managers a license to make up numbers, further underfund already underfunded defined benefit pension plans, and increase the risk of a taxpayer-backed pension fund bailout via the federal Pension Benefit Guaranty Corporation (PBGC)." No. Some of us think that the interest rates would be too high and understate the liability, not that anyone would make up numbers. (Some of us think that the current rates are too low.) Also, the PBGC has 2 funds, 1 for single employer plans (generally corporate plans) which is currently under water, but those plans are predominantly non-union; those are the plans getting "relief". The other is the multi-employer fund, which historically has been sufficiently funded (the act increases those premiums too). That is the fund that is made up solely of union plans. But most importantly, you missed the main absurdity in this "funding" of the highway bill. The number of dollars of reduced pension costs, $9.5 billion (which, by the way, can still be contributed, even if the contributions exceed the minimum requirement) in reduced deductible contributions, and therefore increased government revenue, is a sham. It is essentially identical to the increased PBGC premium cost, which is also deductible. The deductible contributions which do not go to fund the pension plans, will, deductibly, go instead to the PBGC. It is revenue neutral, and can't be used to fund the other parts of the highway bill.