Potholes vs. Pensions: Make Your Choice
From 2012.
It’s crunch time. Congress has to decide which Peters to borrow from in order to pay which Pauls.
A case in point. The highway fund needs money. It needs a lot of money. Anyway, that’s what it claims.
There is a gasoline tax of 18 cents per gallon. It has not been raised for 19 years. Also, cars get better mileage. So the fund is $18 billion in the hole — a pothole, if you like.
Congress does not want to raise the gasoline tax. That would be too obvious. Taxpayers would scream. But Congress will not cut spending.
Money, money, who’s got the money?
Ah, ha! Pensions! Why not siphon off money that the government pays to the Pension Benefit Guaranty Corporation?
But what if pensions go bust? This fund is already $36 billion under-funded. I guess the Congress will just borrow money from some other fund.
What’s that? You say that the PBGC is supposed to be funded exclusively by premiums paid by employers. Well, technically, yes — just like highways are supposed to be funded by gasoline taxes. But it turns out that Congress has funded a lot of the PBGC for years. So, this year, Congress will just send the fund an IOU. It will use the money saved to fund the highways.
There are some other projects to reach into. Did you know that there is a federal fund for paying to clean up radioactive leaks? It’s called the Leaking Underground Storage Trust Fund or LUST Fund. Let’s hope there are no leaks next year. Or the year after.
And so it goes, year after year. The IOUs multiply. So do the potholes.
Congress thinks this can go on forever. “There will be no day of reckoning.” Debt is a perpetual motion machine. The bills will not come due.
But they will. Then the name of the game will be finding a place to hide.
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Published on June 29, 2012. The original is here.
It's much worse today. This is from the PBGC's website (May 31, 2018).
Over the next decade, the financial condition of PBGC’s Multiemployer Insurance Program is expected to worsen. Projections made for FY 2027 show a wide range of potential outcomes, with an average projected deficit of about $89.5 billion in future dollars – an increase of over $11.7 billion from last year’s projection for FY 2026. The insolvency risk and projected future deficits are very similar whether or not PBGC assumes multiemployer plans will continue to adopt benefit reductions or partitions under the Multiemployer Pension Reform Act of 2014.About 130 multiemployer plans covering 1.3 million people are expected to run out of money over the next 20 years. Absent legislative changes, more and larger claims on the Multiemployer Program will lead to the program’s insolvency. As insolvency nears, the specific year of insolvency becomes more predictable. The most recent projections show that the risk of the Multiemployer Program becoming insolvent prior to FY 2024 or remaining solvent after FY 2026 is now very small. It is increasingly likely that the Multiemployer Program will become insolvent during FY 2025.