How Washington rolls in 2014: With short-term gimmicks

Congress is inching toward the worst possible solution to the government's highway funding crisis—the only kind it's capable of right now.

Republicans and Democrats agree the nation needs a highway program. They know its legal authority is about to expire. They understand that the program's "Trust Fund," financed by the federal gas tax, will fall into insolvency if they don't act before their August recess.

So how are the House and Senate preparing to handle the problem?

They will extend the program's authoritybut only for several months, rather than the traditional five years. They will come up with enough money to cover the shortfall in gas-tax revenuesbut only by employing a transparent gimmick that actually costs the government money in the long-run. The House voted 367 to 55 on Tuesday to to pay for road and bridge repairs for just 10 months.

A car drives past potholes and broken asphalt on West 1st Street in Los Angeles, California.
Jonathan Alcorn | Bloomberg | Getty Images

The gimmick, called "pension smoothing", allows companies to set aside less for their retirement commitments now, which means higher profits and a higher tax bill. But that just means they have to pay more later, which means lower profits and a lower tax bill. In other words, the revenue source for highway projects across the nation has all the structural soundness of a sand castle.

If it sounds like the opposite of how a well-run enterprise should be run, that's because it is. Indeed, it's a classic example of the kind of counter-productive short-term thinking that Washington politicians have often criticized American business for.

Call it democracy or, if you are more jaded, politics. But it's the only way Washington rolls in 2014.

Read More Boehner backs pension-linked plan for highway funds

Democrats point to crumbling roads and bridges and want higher spending levels. Republicans insist government spends too much and oppose anything revenue measure that can be called a tax increase.

A bipartisan Senate plan to raise the gas taxwhich has remained unchanged for two decades as more fuel-efficient cars have eroded its valuehas no chance in the House.

Neither party has the power to simply impose its will.

The results: Nearly all business on Capitol Hill has halted. Even legislation that both parties agree onon energy efficiency earlier this year, and on hunting and fishing rights more recentlycan't reach the finish line. Sometimes it's because one party wants to deny a sponsor of the other party an achievement that has value in this fall's campaign; sometimes it's because votes on unrelated amendments might prove politically embarrassing.

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The only good news is that Washington retains the capacity to act in moments of genuine crisis. Congress passed the Wall Street bailout in the home stretch of the 2008 presidential campaign when the alternative was financial collapse. It passed the fiscal cliff deal at the end of 2012 when the alternative was an economically damaging tax increase for every taxpayer.

Though Congress has initially balked, chances are good that lawmakers will approve supplemental spending to ease the crisis of unaccompanied children from Central America on the southern US border. The specter of unchecked border crossing and homeless children is too much for even gridlocked legislators to ignore.

Read More Pothole pain: The cost of this winter's pitted roadways

And the same is true of the highway bill. Infirm as it is, Congress retains some sense of when it's about drive into a wall. The potential halt of road repair and construction in every state is one of those walls.

The last minute turn away won't be pretty. But for beleaguered American voters, at least it's better than a crash.

—By CNBC's John Harwood