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CHAPTER 1

The Left and the Right Agree on One Thing: Congress Misrepresents

On June 30, 2010, transportation officials closed Seattle’s South Park Bridge because it was on the verge of collapse and beyond repair. The bridge had received a grade of four out of a hundred on the Federal Highway Administration’s safety scale, far worse than the fifty-out-of-a-hundred grade given to a bridge in Minneapolis whose collapse in 2007 killed thirteen people.¹

Spanning the Duwarmish River, the Seattle bridge had linked South Park, a working-class neighborhood, with a Boeing plant and other large workplaces on the opposite side of the river. No longer could Boeing employees pop across the bridge to eat in South Park during their half-hour lunch break. The shortest alternative route required traveling an extra five miles in urban traffic. “It’s going to kill us,” said Chong Lee, the owner of one of the lunch spots.²

On the bridge’s final day of operation, the residents of South Park mourned their loss. Thousands of them, led by Native American drummers and followed by bagpipers, walked across the bridge one last time. At the foot of the bridge stood a couple with handmade signs reading, “Rest in peace dear old bridge, you’ll be greatly missed.”

The loss of the bridge also harmed people far beyond South Park. The bridge had been crossed every day by twenty thousand cars and trucks plus the buses on three urban routes. The trucks had carried ten million tons of freight per year.³

Photograph by Meg Brown, 2010.

FIGURE 2. South Park mourns its bridge.

Even with emergency funding from every level of government, it took four years to replace the bridge. These years of disruption were unnecessary. Transportation officials had known for years that the bridge was beyond repair and repeatedly sought money to build a replacement before it had to be closed. Only five months before the bridge closure, federal officials rejected a proposal to fund a replacement, allocating funds to other projects instead.⁴

The old South Park Bridge was in sad shape, and so, too, is our nation’s overall transportation system. One in nine of the nation’s 607,380 bridges are structurally deficient, according to the (not-altogether-disinterested) American Society of Civil Engineers, and it finds roads and mass transit to be in even-worse shape.⁵

Yet, only a half century ago, the federal government paid for building and maintaining a highway system that was the envy of the world. In 1956, Congress imposed a three-cents-a-gallon tax on gasoline to finance the Highway Trust Fund, which would pay for building and maintaining the Interstate Highway System and some of the lesser highways connecting it to homes, factories, and farms. Three cents might not sound like much, but back then a gallon of gas cost only about twenty-three cents, tax included. As the years went by, Congress increased the gas tax to keep up with inflation and changing needs, and in 1982 it started using the trust fund to pay for mass transit as well. In 1993, when the price of a gallon of gasoline was $1.16, Congress increased the gas tax to 18.4 cents per gallon.⁶

Since then, Republicans in Congress, with significant support from Democrats, have refused to increase the gas tax. At the same time, inflation has reduced the buying power of the tax on a gallon by 39 percent. Moreover, with cars and trucks getting more miles per gallon, drivers pay tax on fewer gallons while causing much the same wear and tear on the roads. As a result, the Highway Trust Fund pays a smaller share of the cost of providing decent roads, bridges, and mass transit. Bad transportation hurts the economy, which is why the usually tax-shy Chamber of Commerce urged Congress to increase the gas tax in 2013.⁷ Congress didn’t act.

Of course, increasing the federal gas tax isn’t the only way to increase funding for transportation. States and localities provide three-quarters of the funds for highways. Congress was not, however, about to say that the states should be the source of any additional transportation funding. With the money gauge on the Highway Trust Fund pointing toward empty by the summer of 2014, federal officials would have to stop authorizing any new projects after September. That threatened to idle the contractors that were paid by the Highway Trust Fund and their employees.⁸ If that happened, many corporations and unions would have used their money and manpower to unseat members of Congress in the 2014 elections. That prospect, unlike broken bridges for constituents, stirred Congress to act.

On July 31, 2014, Democrats and Republicans in the House and Senate joined in passing, by wide margins, a statute that kept the contractors and their employees working, but without increasing the gas tax. Signed into law eight days later by President Barack Obama, the Highway and Transportation Funding Act of 2014 put $10.8 billion into the fund to pay for projects from October 2014 through May 2015. Spending at that rate is too slow to fix our broken transportation system. Fixing just the fifteen structurally deficient bridges on one interstate highway (I-95) as it runs through one city (Philadelphia) would, according to former Pennsylvania governor Ed Rendell, cost $7 billion.⁹ However, the $10.8 billion saved the legislators from the wrath of the contractors and unions during the 2014 elections.

From here on in, the plot thickened, but it’s not important to recall all of its twists and turns. Just note the various kinds of blame that members of Congress have ducked, and continue to duck, as the plot unfolds. There have been two so far: they ducked the blame that would have come their way had they (1) increased the gas tax or (2) inflicted losses on construction contractors and layoffs on their employees.

Legislators, of course, had to get the $10.8 billion from somewhere and in this, too, they ducked blame: they ducked the blame that would have come from (3) having the government borrow it. To avoid being accused of adding to the deficit and the national debt, they claimed to have generated additional revenue. How they got away with this claim is really bizarre, so take a deep breath and read the next sentence slowly. Legislators temporarily eased a law that requires businesses to put aside enough money to honor their promises to their employees to pay them fixed-benefit pensions after they retire. Because putting money into a pensions fund counts as an expense in calculating a corporation’s profits, cutting payments to the fund increases corporate profits and therefore increases the current revenue the federal government earns from the tax on corporate profits. Largely because of this increased revenue, the Congressional Budget Office concluded that the Highway and Transportation Funding Act of 2014 would not add to the budget deficit for the coming ten-year period.¹⁰

This change in the pension law delighted corporations because it meant they would have more profits to keep even after paying taxes. “It means more cash for us,” stated International Paper’s chief financial officer Carol Roberts.¹¹

Congress had thus seemingly produced more money without increasing the tax rate on corporate profits. So members of Congress thereby also ducked blame for (4) increasing the tax rate on corporate profits.

Congress did not, however, produce something for nothing. Businesses will have to make up for their temporarily reduced pension contributions by increasing contributions years from now, which will then reduce the taxes they pay. So Congress did not increase tax revenues long term but rather arranged to collect future taxes early. To make up for this advance, Congress will have to raise taxes or cut spending later on. The legislators, in effect, borrowed the money but finagled to keep the borrowing off the official books. For that reason, reporters and editorial writers working for newspapers as diverse as the New York Times, the Wall Street Journal, and the Washington Post called the statute’s funding mechanism a “gimmick.”¹²

The gimmick increased the risk that some businesses would not be able to pay the pensions that they had promised employees. Congress had in 1974 required companies promising defined-benefit pensions to their employees to make minimum payments to their pension funds to ensure the employees would get the promised pensions. Even with that 1974 law, however, some companies still stiffed their employees. As a worker who baked Wonder Bread in Hostess’s Lenexa, Kansas, plant explained:

In July of 2011 we received a letter from the company. It said that the $3+ per hour that we . . . contribute to the pension was going to be “borrowed” by the company until they could be profitable again. Then they would pay it all back. . . . This money will never be paid back. The company filed for bankruptcy and the judge ruled that the $3+ per hour was a debt the company couldn’t repay.¹³

Hostess Brands, which produced Twinkies, Ding Dongs, and other confections along with Wonder Bread at thirty-three plants across the country, used the pension money for corporate expenses including compensation for executives. When the company went bankrupt, it owed huge sums to the pension funds for its 18,500 employees.

This outrage at Hostess suggests that Congress should have strengthened the 1974 law to protect pensions, but it instead weakened it by resorting to its transportation-funding gimmick. This has put many people at risk. According to Milliman, a leading pension consulting firm, just before Congress passed the gimmick, the hundred largest pension plans operated by individual corporations were underfunded to the tune of $257 billion. This figure does not include the shortfalls with any of the twenty-seven thousand smaller pension plans. The transportation-funding gimmick weakened pension plans that cover thirty-two million workers.¹⁴

In the course of debating the 2014 transportation statute, a few members of Congress warned that it was leaving members of future Congresses to impose the tax increases and spending cuts needed to fund the $10.8 billion in current transportation spending and that it also put pensions at risk. Yet, no legislator responded to these concerns. The lengthy congressional report on the statute also failed to do so.¹⁵

Because Congress had in 1974 established the Pension Benefit Guaranty Corporation “to insure the defined-benefit pensions of working Americans,”¹⁶ it might seem that legislators need not have addressed whether they put pensions at risk with the transportation-spending gimmick. The PBGC collects insurance premiums from employers with defined-benefit pension plan, puts the money collected into a fund, and uses the fund to pay pensions to retirees if their former employer’s pension plan goes broke. Yet, the PBGC’s maximum guarantee for an employee is less than $13,000 per year, meaning that the transportation-funding gimmick does in fact endanger employees.

Worse still, according to Joshua Gotbaum, the PBGC’s director appointed by President Obama, speaking two months before Congress passed the transportation-spending gimmick, “Congress has continued to set PBGC premiums and has done so in ways that . . . [underfund] PBGC.” As a result, according to a footnote buried deep in its November 2014 annual report, the corporation lacks “the resources to fully satisfy PBGC’s long-term obligations.”¹⁷ The PBGC as a whole had a net worth of minus $62 billion. In underfunding the corporation, members of Congress also ducked blame for (5) charging employers premiums adequate amounts to insure the pensions they promised. This is a relatively small instance of the Debt Guarantee Trick.

The PBGC’s lack of cash raises the question of what would happen if in a crisis it can’t pay even its meager guaranteed pension. Its 2014 annual report states, “The U.S. Government is not liable for any obligation or liability incurred by the PBGC.” That is what Congress has said, but if you believe that, “I have a bridge to sell you,” as the saying goes. Congress similarly disclaimed liability for the debts of government-sponsored mortgage firms Fannie Mae and Freddie Mac, but paid their debts anyway. We the taxpayers will foot the bill if the PBGC goes broke. However, by taking the position that the taxpayers will not have to pay, members of Congress also ducked the blame for (6) the potential costs of bailing out the PBGC.¹⁸

Meanwhile, Congress uses the PBGC to fudge its budget accounting by including the corporation in the federal government’s books on the basis of its current cash inflows and outflows. This means that, according to Professor Howell E. Jackson, the PBGC seemed to have made “a positive contribution to the federal budget (reducing deficits) over the past five years,” even though it would likely produce an immense long-term loss to the public.¹⁹

In sum, members of Congress maneuvered to duck many kinds of blame:

1. blame for increasing the gas tax

2. blame for losses and layoffs in transportation construction

3. blame for borrowing more money, and thus blame for adding to the deficit and the national debt

4. blame for raising the tax rate on corporate profits

5. blame for charging employers premiums an adequate amount to insure the pensions they promised

6. blame for the potential costs of bailing out the PBGC

Essentially, members of Congress twisted and turned to avoid blame without regard to the ultimate impact on the people.

Moreover, having escaped responsibility for the burdens required to raise the money for transportation, legislators also didn’t feel pressure to focus the money on the projects that would do the most good for voters—projects such as replacing the South Park Bridge before it had to be closed. This they have pervasively failed to do.²⁰

At every step in the South Park Bridge story, members of Congress structured policy to maximize their credit and minimize their blame. For them, it was “every man for himself, and the devil take the hindmost.” We the People are the victims.

The Highway and Transportation Funding Act of 2014 is no worse than most statutes that Congress enacts today.²¹ Congress-as-usual routinely uses tricks that let its members promise something for nothing or very little. One trick is to leave to members of future Congresses the job of imposing the burdens needed to pay for the things Congress promises now. This is the Money Trick.

Most people know that Congress plays this trick but do not know the scale on which it does so. Congress has used this trick so repeatedly that current policy, if continued into the future, will leave a roughly $100 trillion gap between future spending and future revenue. This is about ten thousand times greater than the $10.8 billion bill left by the 2014 transportation statute. In chapter 6, I will explain why the gap is so large and what the consequences are for us and our children, but here is the bottom line: Future Congresses will inevitably have to increase taxes and cut spending from the levels reflected in current policy to a painful extent. Detailed studies from the left and the right conclude that an increase in economic growth won’t close the gap.²² Yet, by “kicking the can down the road,” as members of Congress have described their conduct, they make the gap bigger and thus will inflict upon us even-more pain in the future.

The trick that Congress uses for taxing and spending is only one of those for ducking blame that members of Congress have been using since the late 1960s (see chapters 3, 4, and 7). The tricks have changed the role of legislators, which under the Constitution is to make themselves accountable at the polls for the consequences of the acts of Congress. When they do so, they align their interests with those of their constituents. By avoiding doing so, however, they create a conflict between their interests and those of their constituents. They accept responsibility for the self-professed “hopes of Congress,” but not the unpopular consequences of the “acts of Congress.”

As agents of the people, legislators have a plain moral duty to make clear to us, their constituents, the unpopular as well as the popular consequences of their decisions whether we want to hear of them or not.²³ Yet legislators are dishonest, even though they expect to be addressed as “the Honorable.” If they are to act honorably, as they should, they will need to stop the tricks that relieve them of personal responsibility for the choices that so profoundly affect our lives.

Their dishonorable conduct wounds us, their constituents. Having evaded blame, modern legislators have little reason to grasp, let alone discuss, what effect their statutes will have on us. In particular, they don’t need to analyze whether the government can actually deliver the benefits they promise and the scope of the burdens they impose upon us, or whether the benefits are worth the burdens. They also don’t need to design statutes to give us the most benefits for the least burden. They only need to know their talking points on bills, not what’s actually in them or how it will actually affect us.

Oscar Wilde defined a cynic as “a man who knows the price of everything and the value of nothing.”²⁴ It is not much of an exaggeration to say that our legislators know the popularity of everything and the effect of nothing.

Legislators’ seeming cynicism makes us cynical about them. Approval ratings of Congress have dipped as low as the single digits. According to one recent poll, “Just 14% of voters nationwide think most members of Congress care what their constituents think.”²⁵ Even though overwhelming majorities of Americans believe that most members of Congress don’t deserve reelection, most people like their own members of Congress in no small part because they provide services to constituents.

We cannot escape the tricks of Congress by looking to presidents for salvation. As I will show, presidents have often instigated the tricks that Congress uses. With the power to veto bills, the president usually has more power over legislation than anyone and therefore more responsibility. As the legislator-in-chief, the president is the trickster-in-chief.

The tricks poison the entire government rather than just the legislative branch. The executive branch’s primary job is to execute the statutes legislated, and the judicial branch’s primary job is to apply those statutes in litigation. Statutes once gave the executive more leeway, but to take full advantage of the blame-shifting tricks, the statutes enacted since the 1960s have imposed so many precisely specified duties on the executive branch that it has much-less leeway to rescue us from the bad decisions that statutes make. So, for example, in December 2008 the newly elected president, Barack Obama, asked Congress to pass a bill to stimulate an economy in the depths of recession by putting people to work on “shovel-ready” projects repairing roads and other deteriorated infrastructure. Later, however, he lamented that “there’s no such thing as shovel-ready projects.” The White House reported in February 2014 that the government could devote only 3.6 percent of the $832 billion program to fixing bridges, roads, and the rest of our transportation system. As Philip Howard explained: “The President had no authority to build anything, and most of the money got diverted to a temporary bailout of the states. The money was basically wasted.” Howard showed that the president’s hands were tied again and again by old statutes.²⁶

Presidents are often tempted to circumvent Congress by usurping the legislative powers that the Constitution assigns to the legislature. In this, commentators on the left and the right see grave danger. For example, on the left, Bruce Ackerman, a prominent progressive professor of law and political science who had vigorously defended the growth of executive power during the New Deal, expressed alarm at more recent changes in our government. In The Decline and Fall of the American Republic, Ackerman noted presidents disregarding the decisions of Congress and daring the courts and Congress to do anything about it. He also predicted that someday extremists would have a chance to get the Democratic or Republican party’s nomination for president. This prediction, published in 2010, gained in credibility during the presidential primaries of 2016. To follow his prediction, Ackerman wrote, “We face new constitutional realities—on the one side, a potentially extremist presidency with the institutional capacity to embark on unilateralist action on a broad front; on the other side, a politicized [military] high command, which has assumed a powerful role in defining the terms of national debate.”²⁷

Ackerman also warned that although presidents try to dress their unilateralism in high purpose,

in America, it is not enough to be right. Before you can impose your views on the polity, you have to convince your fellow citizens that you’re right. That’s what democracy is all about. So it makes good sense to require the president to gain the support of Congress even when his vision is morally compelling. He should not be allowed to lead the nation on a great leap forward through executive decree.²⁸

Nor do the American people want their president to usurp the powers of Congress. Although opinion polls for decades have reflected disapproval of Congress, the public continues to believe that Congress rather than the president should make the major policy choices. I share that belief, because systematic studies show that nations with strong executives and weak legislatures tend to suppress political liberty, go to war more frequently, and suffer from more corruption.²⁹

So we must fix Congress. At first blush, however, the barriers to doing so seem overwhelming. Although many members of Congress went into politics in the hope of exercising power responsibly, these legislators find that they must engage in trickery in order to have power to exercise. The reason is that many voters want something for nothing and will reject politicians who fail to promise it. So legislators are “running scared,” as the political scientist and professor Anthony King put it.³⁰ Moreover, when they were first elected to Congress as junior legislators, these politicians found themselves in an institution that did business through tricks. They had to go along or become irrelevant. They found that using tricks to get credit and avoid blame was a recipe for getting reelected, and showing other legislators how to do the same was a recipe for getting the power to shape legislation within Congress. In sum, powerful evolutionary pressures have turned Congress into the trick-playing institution that it is today.

As a result, we can’t simply get rid of the tricks by ousting the members of Congress who join in using them. Their replacements would also feel pressures to deceive voters.

The 2014 transportation statute neatly illustrates these pressures. The statute might seem to have been a good candidate for stopping the trickery as newspaper articles on the left and the right noted the funding “gimmick” involved. Yet, even voters who read such articles would have seen only a small portion of the sleights of hand at work. And even those who understood all the sleights of hand at play in the 2014 statute would have had scant reason to feel injured by it. The costs that it left to the future added only a tiny bit to the total bill that the Money Trick had already kicked down the road. Besides, no one knew who would end up having to pay that tiny portion of the bill, or who might lose their pension because of the statute or when. In contrast, the contractors and unions that stood to gain from the transportation statute knew they would gain a lot and soon. So, most legislators would have gotten far-more votes by supporting the bill than opposing it.

Few if any voters would have taken the time to learn about all the sleights of hand in the bill and then criticize a legislator for supporting it. Even if they had, the legislator would have had a pretty-persuasive defense, which might have gone something like this:

“If I had opposed the bill, I would have been less effective in securing projects to help our district. And, even if I could have gathered enough legislators to slow down the bill, the bills’ supporters would rightly complain that an alternative bill that did not shift blame so much would have had even more trouble passing. We would have ended up wasting time, but probably passed a bill that was just as bad. That’s how Congress works.”

So we can’t stop the Five Tricks by voting against the reelection of incumbents who have voted for bills that use them. We can, however, succeed in stopping the tricks by calling upon candidates for office to pledge to change how Congress works. DC Confidential proposes new ground rules for the game of politics to block the Five Tricks. As the saying goes, “Don’t hate the players, hate the game.” Or, if you are determined to hate the players, recognize that the best chance of changing their behavior is by changing the game.

Switching the focus from whether legislators previously supported a tricky statute to whether legislators should stop the tricks will make it far more apparent to voters how the tricks hurt us. The stakes are ten thousand times greater with the Money Trick as a whole than they were with the individual instance of its application in the 2014 transportation statute. With this trick and the four others in regular use, almost all of us can be sure that on balance, the trickery harms us gravely.

The question then becomes how, despite the powerful pressures that gave rise to the tricks, we can get Congress to adopt new trick-stopping, game-changing ground rules. Archimedes, the most celebrated scientist of antiquity, having shown how a properly designed lever can move any weight, said, “Give me a place to stand on, and I will move the Earth.” The place to stand to stop the Five Tricks of Washington is the vantage point that lets us see clearly the sleights of hand with which members of Congress and the presidents get away with the tricks and how they hurt us. This book provides that vantage point. From here, we can stop the Five Tricks.

Voters on the left and the right agree that Congress has become ineffective, self-serving, and more beholden to special interests than to the American people. Yet, voters on the left see conservatives as the problem, and voters on the right see liberals as the problem. What neither side sees is that a Congress that lets its members fool the people (and lets the people fool themselves) is the even-more-fundamental problem. Policy analysts on the left and the right agree on substantive policy to a surprising extent, and the electorate is less polarized than those who are active in politics.³¹ Nonetheless, Congress fails to enact such policy because the tricky legislature is stacked against doing what makes sense for us.

So, while the Left and the Right fight over legislative priorities, the real battle remains unfought. That battle is the struggle between honesty and trickery in Washington. DC Confidential will start the fight by stripping away the veils through which members of Congress and the presidents misrepresent their legislative actions and show how we can win the battle by making them once again shoulder the responsibility that comes with their job and thereby actually work for us.

Placing responsibility on them for the consequences of their decisions will change how they legislate. I will not attempt to forecast those changes, let alone show that they are good. Voters will decide. That is how things should be with a government that derives its “just Powers from the Consent of the Governed.” What I will show is that were voters no longer fooled by the Five Tricks, they would act more wisely.

• Chapter 2 explains how Congress is supposed to and did work for a century and half.

• Chapter 3 describes the beginnings of the trickery in the 1960s and ’70s.

• Chapter 4 explains the four tricks that Congress uses in making domestic policy (the Money Trick, the Debt Guarantee Trick, the Federal Mandate Trick, and the Regulation Trick) and how Congress came to get away with using them.

• Chapter 5 shows how these tricks harm us now.

• Chapter 6 shows that these tricks cannot continue indefinitely, because, unless stopped, they will eventually bring ruin.

• Chapter 7 explains the War Trick.

• Chapter 8 proposes a statute that would stop the Five Tricks: the “Honest Deal Act.”

• Chapter 9 shows how voters could get Congress to pass the Honest Deal Act.