Taxpayer's Tab: Will Congress Confront Disability & Debt Ceiling Crises?

As part of our ongoing BillTally project, NTU Foundation scored bills this week concerning the looming Social Security funding crisis, the debt ceiling, and freight transportation infrastructure. Meanwhile, Congress continues to debate the details of the Fiscal Year 2016 budget, and we've analyzed some of the options that they'll be considering. And as Tax Day approaches, be sure to check out our recently-updated "Who Pays Income Taxes?" page for a unique look at how much of the federal income tax burden you're paying.

Most Expensive

The Bill: H.R. 1308, Economy in Motion: The National Multimodal and Sustainable Freight Infrastructure Act

Cost Per Year: $8 billion ($40 billion over five years)

Every day, businesses and individuals all over the world rely on American freight shipments to get the goods they buy and sell from one place to another. Everything from the fuel we use in our cars, to the food we buy at the grocery store, to the clothes and gadgets we purchase online are transported over the country’s vast network of rail, road, water, and air infrastructure.

The Department of Transportation’s Bureau of Transportation Statistics periodically releases the Commodity Flow Survey (CFS), a report highlighting data concerning domestic freight shipping. According to the most recent edition, American freight shippers transported 11.3 billion tons of goods worth $13.9 trillion in 2012. CFS data indicate that the average shipment traveled 630 miles that year. While the distance varied widely depending on the particular mode of transport (plane shipments traveled an average of 1,295 miles compared to 57 for private trucks), that is an increase of 1.7 percent from the previous year.

That has some policymakers, like Congressman Alan Lowenthal (D-CA), as well as transportation lobbyist groups, concerned about the condition of the infrastructure that shippers rely on. He recently introduced H.R. 1308, which would establish a dedicated funding source for a new Freight Transportation Infrastructure Trust Fund to repair and maintain the roads, bridges, and canals used for freight shipments. The funding would be distributed through a competitive grant program as well as a formula system that factors in how much freight infrastructure already exists within a given state.

While some news articles about the proposal refer to the funding source as a “waybill fee” the text of the bill is clear: this would be a new tax. The legislation would impose a Ground Transportation Freight Tax of 1 percent on all cargo transported via freight rail, truck trailers, and semitrailers.

Rep. Lowenthal said in a statement that “[g]oods movement is one of the most powerful economic engines in our nation. And yet, the infrastructure this engine depends on is crumbling around us. We have the ability to fix it, make it stronger and make it better… .”

The Congressional Budget Office reported that the federal government spent $96 billion on transportation infrastructure in 2014. The new tax included in the bill is expected to raise about $8 billion per year for additional transportation infrastructure spending.

The Bottom Line: The National Multimodal and Sustainable Freight Infrastructure Act would levy a new one percent shipping fee in order to fund freight infrastructure improvements. It would cost about $40 billion over the next five years.

Least Expensive

The Bill: S. 499/H.R. 918, the Social Security Disability Insurance and Unemployment Benefits Double Dip Elimination Act

Savings Per Year: $570 million ($2.85 billion over five years)

The Social Security Disability Insurance Trust Fund is in dire fiscal shape. By some estimates, the Disability Insurance (DI) program – which currently provides payments to 11 million beneficiaries – will run out of sufficient funding as soon as next year. Costs for the DI program have exceeded income in every year since 2005 and unless Congress acts to fix the problem, benefits will automatically be cut by 20 percent beginning next year.

President Obama offered a short-term solution in his budget proposal earlier this year. Currently, employers and workers each pay a 6.2 percent payroll tax that funds all Social Security benefits; 0.9 percent of that goes towards the DI program exclusively. The President proposes to reallocate an additional 0.9 percent, effectively increasing the proportion of the payroll tax that would go towards funding DI payments while decreasing that which supports retirement benefits. Under such a plan both the retirement and DI trust funds would remain solvent until 2033, though the plan is facing Congressional opposition for transferring money without reform of the underlying problem.

In light of the fiscal challenges facing the DI Trust Fund, the Government Accountability Office (GAO) has suggested examining who is eligible to receive benefits under the program. According to a 2012 report from GAO, nearly 117,000 people received concurrent DI and Unemployment Insurance (UI) payments in FY 2010. Although that is less than 1 percent of the total number of beneficiaries between both programs, it amounted to payments of nearly $850 million in that year alone. GAO observed that “[r]educing or eliminating overlapping or improper payments could offer substantial savings” and the Social Security Administration agreed with the recommendations it made to find those savings.

Accordingly, Congressman Sam Johnson (R-TX) and Senator Orrin Hatch (R-UT) have introduced the Social Security Disability Insurance and Unemployment Benefits Double Dip Elimination Act in each of their respective chambers. The legislation would end the ability of applicants to receive both UI and DI benefits at the same time (beginning in 2016, so that current recipients aren’t affected). According to the sponsors the ten year savings would total nearly $5.7 billion, an average of $570 million per year.

The Bottom Line: H.R. 918/S. 499 would prevent anyone from receiving both UI and DI benefits at the same time in order to reduce overlapping payments made from each program’s trust funds. The bills would reduce federal spending by $2.85 billion over the first five years.

Wild Card

The Bill: H.R. 1246, Fiscal Sanity Act for the National Debt

Cost Per Year: No new funding.

As we noted a few weeks ago, the suspension of the limit on the level of public debt that the Department of the Treasury can issue expired in mid-March. The ceiling was suspended last February through the Temporary Debt Limit Extension Act. Upon passage, the statutory debt limit was $17.2 trillion. Because nothing was accomplished during the 13-month suspension to address the government’s chronic overspending problem, the Treasury issued $900 billion in new debt. Upon reinstatement, the limit was reset to reflect this amount and is now $18.1 trillion. Until the limit is revised upward or the federal budget is balanced – which unfortunately is pretty much outside the realm of possibility – the Treasury undertakes so-called “extraordinary measures” using various accounting tricks and fund transfers in order to avoid breaching the ceiling. CBO estimates that Treasury will have exhausted its ability to shuffle funds by late fall.

Representative Alan Grayson (D-FL) issued a series of bills, each titled “Fiscal Sanity Act for the National Debt,” that would further suspend the debt limit for increasing durations ranging from 30 days (H.R. 1235) up to 1 year (H.R. 1246). Rep. Grayson introduced similar legislation in 2013 during the government shutdown that also provided for continuing appropriations.

No other reforms or conditions are included in the newly proposed legislation. If the spending trend from the past year were to persist and no significant reforms are enacted, the government could run up $625 billion in new debt each month. In 2011, debate over raising the debt ceiling – then at $14 trillion – was the impetus for the Budget Control Act which set in place budget caps (it also inspired a viral video from Remy at Since then, Congress and the White House have preferred to avoid conflict over the debt, hence the suspension.

A quotation often misattributed to Einstein is that the definition of insanity is doing the same thing over and over again and expecting different results. Is it “fiscal sanity” to keep piling on debt, or should our leaders take this opportunity to review, reassess, and re-evaluate federal spending?

The Bottom Line: The bills H.R. 1235 through H.R. 1246 would each further suspend the debt ceiling (which expired on March 15) for specified time periods ranging from 30 days to 1 year. During this time, the Treasury would be permitted to accumulate debt as necessary to meet the financial obligations of the federal government. While this would not result in new spending over the short-term, it could increase the long-term net interest costs for the federal debt.

National Taxpayers Union Foundation is a nonpartisan research and educational organization dedicated to helping Americans of all ages understand how taxes, government spending, and regulations affect them. Through our timely information, analysis, and commentary, we’re empowering citizens to engage in important policy debates and hold officials accountable.

Our findings are provided for educational purposes only and are not intended to aid or hinder the passage of legislation or as a comment on any Member’s or Candidate's fitness to serve. Photo Credits: Wiki Commons