DC Confidential. David Schoenbrod
Yet, no legislator responded to these concerns. The lengthy congressional report on the statute also failed to do so.15
Because Congress had in 1974 established the Pension Benefit Guaranty Corporation “to insure the defined-benefit pensions of working Americans,”16 it might seem that legislators need not have addressed whether they put pensions at risk with the transportation-spending gimmick. The PBGC collects insurance premiums from employers with defined-benefit pension plan, puts the money collected into a fund, and uses the fund to pay pensions to retirees if their former employer’s pension plan goes broke. Yet, the PBGC’s maximum guarantee for an employee is less than $13,000 per year, meaning that the transportation-funding gimmick does in fact endanger employees.
Worse still, according to Joshua Gotbaum, the PBGC’s director appointed by President Obama, speaking two months before Congress passed the transportation-spending gimmick, “Congress has continued to set PBGC premiums and has done so in ways that . . . [underfund] PBGC.” As a result, according to a footnote buried deep in its November 2014 annual report, the corporation lacks “the resources to fully satisfy PBGC’s long-term obligations.”17 The PBGC as a whole had a net worth of minus $62 billion. In underfunding the corporation, members of Congress also ducked blame for (5) charging employers premiums adequate amounts to insure the pensions they promised. This is a relatively small instance of the Debt Guarantee Trick.
The PBGC’s lack of cash raises the question of what would happen if in a crisis it can’t pay even its meager guaranteed pension. Its 2014 annual report states, “The U.S. Government is not liable for any obligation or liability incurred by the PBGC.” That is what Congress has said, but if you believe that, “I have a bridge to sell you,” as the saying goes. Congress similarly disclaimed liability for the debts of government-sponsored mortgage firms Fannie Mae and Freddie Mac, but paid their debts anyway. We the taxpayers will foot the bill if the PBGC goes broke. However, by taking the position that the taxpayers will not have to pay, members of Congress also ducked the blame for (6) the potential costs of bailing out the PBGC.18
Meanwhile, Congress uses the PBGC to fudge its budget accounting by including the corporation in the federal government’s books on the basis of its current cash inflows and outflows. This means that, according to Professor Howell E. Jackson, the PBGC seemed to have made “a positive contribution to the federal budget (reducing deficits) over the past five years,” even though it would likely produce an immense long-term loss to the public.19
In sum, members of Congress maneuvered to duck many kinds of blame:
1. blame for increasing the gas tax
2. blame for losses and layoffs in transportation construction
3. blame for borrowing more money, and thus blame for adding to the deficit and the national debt
4. blame for raising the tax rate on corporate profits
5. blame for charging employers premiums an adequate amount to insure the pensions they promised
6. blame for the potential costs of bailing out the PBGC
Essentially, members of Congress twisted and turned to avoid blame without regard to the ultimate impact on the people.
Moreover, having escaped responsibility for the burdens required to raise the money for transportation, legislators also didn’t feel pressure to focus the money on the projects that would do the most good for voters—projects such as replacing the South Park Bridge before it had to be closed. This they have pervasively failed to do.20
At every step in the South Park Bridge story, members of Congress structured policy to maximize their credit and minimize their blame. For them, it was “every man for himself, and the devil take the hindmost.” We the People are the victims.
The Highway and Transportation Funding Act of 2014 is no worse than most statutes that Congress enacts today.21 Congress-as-usual routinely uses tricks that let its members promise something for nothing or very little. One trick is to leave to members of future Congresses the job of imposing the burdens needed to pay for the things Congress promises now. This is the Money Trick.
Most people know that Congress plays this trick but do not know the scale on which it does so. Congress has used this trick so repeatedly that current policy, if continued into the future, will leave a roughly $100 trillion gap between future spending and future revenue. This is about ten thousand times greater than the $10.8 billion bill left by the 2014 transportation statute. In chapter 6, I will explain why the gap is so large and what the consequences are for us and our children, but here is the bottom line: Future Congresses will inevitably have to increase taxes and cut spending from the levels reflected in current policy to a painful extent. Detailed studies from the left and the right conclude that an increase in economic growth won’t close the gap.22 Yet, by “kicking the can down the road,” as members of Congress have described their conduct, they make the gap bigger and thus will inflict upon us even-more pain in the future.
The trick that Congress uses for taxing and spending is only one of those for ducking blame that members of Congress have been using since the late 1960s (see chapters 3, 4, and 7). The tricks have changed the role of legislators, which under the Constitution is to make themselves accountable at the polls for the consequences of the acts of Congress. When they do so, they align their interests with those of their constituents. By avoiding doing so, however, they create a conflict between their interests and those of their constituents. They accept responsibility for the self-professed “hopes of Congress,” but not the unpopular consequences of the “acts of Congress.”
As agents of the people, legislators have a plain moral duty to make clear to us, their constituents, the unpopular as well as the popular consequences of their decisions whether we want to hear of them or not.23 Yet legislators are dishonest, even though they expect to be addressed as “the Honorable.” If they are to act honorably, as they should, they will need to stop the tricks that relieve them of personal responsibility for the choices that so profoundly affect our lives.
Their dishonorable conduct wounds us, their constituents. Having evaded blame, modern legislators have little reason to grasp, let alone discuss, what effect their statutes will have on us. In particular, they don’t need to analyze whether the government can actually deliver the benefits they promise and the scope of the burdens they impose upon us, or whether the benefits are worth the burdens. They also don’t need to design statutes to give us the most benefits for the least burden. They only need to know their talking points on bills, not what’s actually in them or how it will actually affect us.
Oscar Wilde defined a cynic as “a man who knows the price of everything and the value of nothing.”24 It is not much of an exaggeration to say that our legislators know the popularity of everything and the effect of nothing.
Legislators’ seeming cynicism makes us cynical about them. Approval ratings of Congress have dipped as low as the single digits. According to one recent poll, “Just 14% of voters nationwide think most members of Congress care what their constituents think.”25 Even though overwhelming majorities of Americans believe that most members of Congress don’t deserve reelection, most people like their own members of Congress in no small part because they provide services to constituents.
We cannot escape the tricks of Congress by looking to presidents for salvation. As I will show, presidents have often instigated the tricks that Congress uses. With the power to veto bills, the president usually has more power over legislation than anyone and therefore more responsibility. As the legislator-in-chief, the president is the trickster-in-chief.
The tricks poison the entire government