Tales of an Unbalanced CBO #2: The Transportation Tango

Previously, we wrote about the Congressional Budget Office’s (CBO) flawed estimate of the Senate farm S.3240). This tale of inaccurate math comes to us from Taxpayers for Commonsense (TCS). The CBO must calculate how much a bill will cost based on current law and how the legislation is written when it is presented. In a recent post, TCS details the distorted math in both the Senate and House transportation bills:

“So, here’s how the Senate math works:

  1. Add up the revenue (from things like changes to pensions) and subtract out the expenses (for things like Secure Rural Schools and Payment in Lieu of Taxes) = $16.3 billion in deficit reduction
  2. Ignore the $18.8 billion transfer from the Treasury (because, in Congressional parlance that nobody in the real world could possible understand, it would not increase “direct spending”, duh!, so it doesn’t count) and the $2.4 billion transfer from LUST. In fact, you can see how the Senate treats both provisions (“This provision does not have a budgetary effect.”) in the Senate Finance summary.
  3. Result? $16.3 billion in debt reduction!!!!! (see how easy that was?)

“The House math is a little different, because their budget rules treat the HTF differently:

  1. Add up the revenue (from things like changes to pensions) and subtract out the expenses (for things like Secure Rural Schools and Payment in Lieu of Taxes) = $16.3 billion in deficit reduction
  2. Unlike the Senate, the House rules don’t let them ignore the $18.8 billion transfer from Treasury (but they are still allowed to ignore the LUST transfer).
  3. Result? $2.5 billion in deficit spending. Well, that’s no good, what shall we do?
  4. Count the $2.7 billion in revenue increases from the National Flood Insurance Program, despite that CBO itself concluded: “However, because many policies would continue to be subsidized and the program would continue to face significant interest costs from its prior and future borrowing, CBO expects that additional receipts collected under this legislation would be spent to cover future program shortfalls, resulting in no net effect on the budget over the 11-year period.”
  5. Result? $200 million in debt reduction (see how easy that was?)”

But this math ignores money transfers from other parts of the budget, making it appear to cost less. When commonsense is applied, TCS finds the following:

“Let’s do the math as we see it:

  1. Start with the $16.3 billion in deficit reduction the CBO found. Looking good so far!
  2. But we need to subtract the $11.2 billion increase in pension premiums, right? Since the PBGC is $26 billion in debt and any premium increase should go toward that. Result = $5.1 billion in deficit reduction. Not great, but still in the black!
  3. But don’t forget the $18.8 billion transfer! For our purposes, we’ll count that as real spending, because it is. Result = $13.7 billion in deficit spending. Uh oh.
  4. But what about the money from the flood insurance reforms? Yeah, we won’t be counting that. We’ll leave that to settle the debt the National Flood Insurance Program owes the Treasury. Result = still $13.7 billion in deficit spending. D’oh.
  5. Should we add the $2.4 billion LUST Transfer, which would only make the deficit spending figure even worse? Some would, some wouldn’t. But either way, it doesn’t really matter.
  6. The simple facts are that: Result: MAP-21 is a terrible bill for taxpayers.”

Many in Congress – especially those trying to convince conservatives – sold the transportation bill as deficit reduction plan. However, it is clear that this was based on faulty premises put forth by the bill writers and the math was then “verified” by the CBO, thus perpetuating the myth.

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