WASHINGTON (Aug. 12, 2014) — President Barack Obama signed on Aug. 8 a $10.8 billion stopgap highway funding package designed to keep the Highway Trust Fund operational until May of next year.
The final version of the bill, which passed the House of Representatives July 15 and the Senate July 29, obtains most of the $10.8 billion through a method known as “pension smoothing,” which allows companies to contribute less money to their defined benefit pension plans over the less several years.
Pension smoothing causes companies to report more taxable income, thus enhancing revenue for the federal government.
When the House passed the bill, President Obama said the short-term measure will preserve 112,000 current transportation projects and 700,000 transportation-related jobs in the U.S. However, the administration continues to support its own multi-year, $302 billion transportation funding package.
In its Weekly Legislative Update of Aug. 11, the Tire Industry Association (TIA) said it supported passage of the short-term transportation bill, but would continue to fight for passage of a long-term bill.
“We will work to keep the issue in front of the media,” TIA said. “Stepped-up involvement from our members outside of the Beltway, including our grassroots network, will be needed to save the Highway Trust Fund from collapse in the future.”
Though pension smoothing will give the government a short-term bump in highway revenue, TIA said, companies will have to increase their pension contributions eventually, making pension smoothing an unlikely vehicle for long-term funding.
What do you think of the tax reform proposal before Congress?
|I’m in favor of it—it’s good for business||
29% (27 votes)
|It doesn’t go far enough in helping small business.||
12% (11 votes)
|I’ll wait to see the final bill.||
19% (18 votes)
|It’s going to hurt the middle class.||
40% (37 votes)
|Total votes: 93|