Who wants to hear about pensions? No one. But that’s sort of the point! Yesterday, I noted that the Senate’s two-year highway bill used a few gimmicks to paper over shortfalls in gas-tax revenue. And one of those was a little-noticed tweak in pension rules that could end up being quite important.

California Gov. Jerry Brown also wants you to pay attention to pensions. (Rich Pedroncelli/AP)

Here’s the back story. At the moment, thanks to the recession, interest rates are extremely low. And so, under the rules that employers have to follow for their federally backed benefit plans, companies have to chip in more money right now to make sure their pensions are properly funded. (Lower rates, after all, mean that it takes longer for compound interest to work its magic.) Companies don’t love this because they’re doling out more money now to meet obligations far into the future.

So what the tweak in the Senate transportation bill does, essentially, is allow companies to act as if interest rates are at their 25-year historical average, higher than they are now. And that means firms can get away with smaller pension contributions in the near future. And, since contributions are tax-deductible, that also means that companies will pay more in taxes to the federal government right now. All told, the JCT estimates that Congress will raise an additional $18 billion over the next seven years — with some of that going to roads and bridges and transit. Plus, companies are less vulnerable to swings in interest rates when making contributions. Good deal, right?

Well, there's just one catch. One problem, argue Alex Brill and Alan Viard of the American Enterprise Institute, is that this “tax boost” is fairly short-lived. If companies are contributing less to pensions now, when interest rates are low, they’ll have to make up the gap later on with higher contributions. And that means the government will lose money in the more distant future. Indeed, the JCT estimates that the government will lose $9 billion in the following three years of the 10-year window. And those losses will presumably mount thereafter, but the JCT didn’t score those years.

There’s an additional problem, say Brill and Ward. Company pension plans across the country are already woefully underfunded: “The 100 largest plans were roughly $200 billion underfunded at the end of last year. And, the [Pension Benefit Guaranty Corp., the government agency that takes over obligations from companies that go bankrupt,] already faces a $26 billion gap between the assets it holds and its liabilities from past pension failures.” Allowing companies to further underfund pensions now means that taxpayers might be on the hook for more failed plans later.

In any case, this all might prove moot. As Ezra noted this morning, the House has no interest in taking up the Senate’s highway bill — House Republicans want to pass another short-term stopgap while they try to figure out their own magical maneuvers for maintaining transportation spending without raising the gas tax. So perhaps this pension tweak will end up getting scrapped entirely.

But there are two broader lessons here. First, and most obviously, the fact that politicians are loathe to raise the gas tax means that Congress is twisting itself in knots trying to find obscure sources of funding for roads and bridges. Second, pension policy is the sort of thing that makes people’s eyes glaze over — and, as such, fiddling with pension rules for short-term revenue gains is an easy temptation for Congress. But that doesn’t mean it’s free money.

* By the way, I need to make a correction to yesterday’s post. I’d reported that the Senate would raise $2.8 billion for the highway bill by ending the tax deduction for “black liquor,” a byproduct of paper manufacturing. That’s wrong. As it turns out, this provision was actually stripped from the final bill. Sincere apologies to Kevin Drum for getting his hopes up that this program might finally be sunsetting — he has more on the long sordid history of (and problems with) the black liquor credit.