Dem lawmaker to Senate: Ditch plan to use pensions to pay for roads

A Democratic House member who has pushed to tax overseas corporate profits to pay for transportation projects is urging the Senate to abandon a proposal to take money from a federal employee retirement savings plan to finance road projects. 

Lawmakers are facing a July 31 deadline for the expiration of current infrastructure funding, and Republican leaders in both chambers are proposing tapping other areas of the federal budget to help pay for an extension. 

The plan that has been floated by the Senate would take in roughly $80 billion in offsets, including a controversial plan to take $30 billion in savings from a federal employee retirement savings plan. 

{mosads}Rep. John Delaney (D-Md.) said a proposal to tax corporate profits being held overseas that has been endorsed by President Obama would be a better solution to the transportation funding cliff. 

“We face a stark choice right now: we can either begin work immediately on a six-year highway bill that uses revenues from international tax reform or we can choose a two-year bill paid for by cutting benefits to federal workers,” Delaney said in a statement. 

“The House has passed an extension that gives us the time we need to get a robust bipartisan six-year highway bill done,” he continued. “There is strong momentum in both parties for using international tax reform, a fiscally-responsible pro-growth approach that will create jobs and allow us to invest in our future. I’ve sat across the table from over 100 Republicans to talk about this approach and know the support is there. Let’s get this done.”

The overseas corporate tax idea, known as repatriation, was included in a proposal from Obama for a six-year, $478 billion transportation bill. 

Republicans have largely ignored Obama’s transportation proposal because they disagree with his recommendation to tax corporate profits being held overseas at a 14 percent rate.

Republicans have said they are open to the president’s repatriation idea, but they have said the taxes should be collected at a lower rate and on a voluntary basis in the form of a “tax holiday” for companies that return profits to domestic banks. 

Delaney introduced a bill that would tax overseas profits at 8.75 percent rate, which he has said would generate $120 million that could be used to pay for transportation projects. 

“Under the Infrastructure 2.0 Act, existing overseas profits accumulated by U.S. multi-national corporations would be subject to a mandatory, one-time 8.75 percent tax, replacing deferral option and current rate of 35 percent,” the Maryland lawmaker’s office said Friday.

“This frees the estimated $2 trillion in overseas earnings to return to the United States, spurring private sector re-investment and growth,” Delaney’s office continued. 

The squabbling over pay-fors comes as lawmakers are scrambling to prevent an interruption in the nation’s transportation spending at the end of the month.  

The Department of Transportation has warned that its Highway Trust Fund will dip below a mandatory critical level of $4 billion at the end of the month. The agency has said crossing that threshold will necessitate a cutback on payments to state and local governments. 

Congress has been grappling since 2005 with a transportation funding shortfall that is estimated to be about $16 billion per year, and lawmakers have not passed a transportation bill that lasts longer than two years during that span. 

The 18.4-cents-per-gallon federal gas tax has been the main source of transportation funding for decades, but the tax has not been increased since 1993 and more fuel-efficient cars have sapped its buying power. The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in approximately $34 billion annually.

The nonpartisan Congressional Budget Office has estimated it will take about $100 billion, in addition to the gas tax revenue, to pay for a six-year transit bill.

Transportation advocates have pushed for a gas tax increase to pay for a long-term bill, but Republican lawmakers have ruled out a tax hike. 

Senators have also toyed with the idea of including an extension of the controversial Export-Import Bank’s charter, which expired in June, in their version of the new highway bill. 

Republicans in the House have vocally opposed the idea of adding Ex-Im to the infrastructure legislation, setting up a standoff with two weeks to go before federal transportation funding runs out.