Accounting gimmicks

funding our highways

Many observers, especially officials in the 50 states worried about highway funding, applauded action by Congress last week to provide $281 billion in transportation funding during the next five years. Where, some may have wondered, did lawmakers come up with the new money?

They didn’t, to a disturbing extent.

Forty-nine billion dollars was provided through a transfer from a special Federal Reserve capital account. The transportation funding bill counts that as new revenue – but it simply is not.

More money came by ordering the Fed to reduce dividends it pays to large banks, from 6 percent down to 1.5 percent. You may rest assured the banks will find some way to make up for that loss, probably through their customers.

Something needed to be done about federal funding for highways. But what Congress has done represents more of the accounting sleight-of-hand that seems to be business as usual in Washington. Such trickery avoids addressing the underlying problem of a government allowed to grow beyond our means.