Rep. Dave Camp , R-Mich., listens at a hearing on Capitol Hill in Washington in this June 20, 2014, file photo.EDITORS NOTE: An occasional look at how Washington works behind the scenes.
WASHINGTON – If there’s anything that can unite Democrats and Republicans in the partisan swamp of Capitol Hill, it’s free money.
The latest example of free money in Washington is a retread proposal called “pension smoothing” that raises money but doesn’t increase anyone’s taxes. To some people’s way of thinking, that’s a win-win situation. But others say lose-lose is more like it, arguing that it’s budget fakery at its worst and that it could undermine pension security for millions of workers.
Lawmakers reprised the pension provision Tuesday to help find money for a government fund that finances highway construction projects, with both Democrats and Republicans getting into the act. The highway bill passed by a sweeping 367-55 vote.
Here’s how it works: The pension measure would allow companies to reduce the amount that they contribute to their pension funds now and make up for it later. Since pension contributions are tax deductible, companies would owe more tax revenue in the next few years as more of their earnings are taxed. But in the later years, they would be able to claim higher deductions from larger contributions to their pension funds.