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SEARCHCongress is inching ever closer to the edge of insolvency for the Highway Trust Fund. On Thursday afternoon the House rejected the Senate’s bill to patch the Fund into December and sent its original bill back to the upper chamber.
Congress is inching ever closer to the edge of insolvency for the Highway Trust Fund.
On Thursday afternoon the House rejected the Senate’s bill to patch the Fund into December and sent its original bill back to the upper chamber. The vote was 271-149.
Members of the House then prepared to depart for their five-week summer break.
The Senate has until Friday to either accept the House bill that it rejected earlier this week, or let the fund tip into insolvency, risking thousands of highway projects and as many as 700,000 highway construction jobs.
If the Senate does not act, on Friday, August 1, the Department of Transportation will have to start cutting back reimbursements to states for highway projects they have completed.
At issue was a House bill that patches the fund through next May, versus a Senate bill that extends the patch only though December 19.
Senators who pushed the December 19 patch said they wanted to force Congress to act on a long-term highway bill before the end of the year. They rejected the May patch because it increases the likelihood that Congress will default to another short-term extension.
The other major difference between the bills is how they pay for the patch.
The House bill relies on an accounting mechanism called “pension smoothing” to replenish the general treasury. This refers to a temporary lowering of pension funding requirements to increase business profits. Those presumed profits are taxed, producing a presumed increase in government revenue.
A majority of Senators objected to this mechanism and opted for the shorter patch, which does not need “smoothing.”
But the Senate made a $2 billion counting error when it added up the costs of its bill, which gave opponents in the House ammunition in their fight against the Senate version.
Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, said the Senate’s bill actually would get the Highway Trust Fund only to October.
Rep. Earl Blumenauer, D-Ore., who supported the Senate approach, said the mistake could be corrected in a matter of minutes, but Camp said he was certain that, due to the mistake, the Senate would accept the House bill.
Camp also said that he plans to hold a hearing on highway finance before the Ways and Means Committee in September.
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