» The European Investment Bank and Build America Bonds could serve as a model, but that strategy moves the burden of infrastructure spending to the next generation.

If you haven’t been following lately, it’s becoming increasingly difficult for members of Congress to get anything done. In terms of transportation, this fact is no laughing matter, because the nation’s ground transport systems is running on hot air — deficit spending — for lack of agreement about how to pull together financing for the next planned six-year transportation bill, now a year late.

What was once considered unthinkable — a reliance on the income tax-sourced General Fund to ensure continued cash flow to states for the purposes of highway and transit construction — has become something of the status quo. But the lack of a committed, long-term source of funds for the program has produced a situation in which an expansion of overall spending on transportation, something that many consider an urgent priority, is very difficult to undertake.

Rather than acting as a consensus-builder, the Obama Administration has systematically undermined potentially the most politically reasonable approach: raising the gas tax, an action that hasn’t been pursued since 1993. Just this week, Secretary of Transportation Ray LaHood ruled out a gas tax hike even though alternatives, like a vehicle-miles-traveled tax, would take years to implement. So a continued reliance on the General Fund seems likely — and it has some significant merits, mostly relating to the fact that it derives funds from the progressive income tax rather than regressive user fees.

Nonetheless, everyone involved in the process seems to want more funds for transportation — just not from the deficit-laden treasury. That’s why the Administration has been harping again and again on an idea it’s been fantasizing about since before Mr. Obama even won the Presidency: a national infrastructure bank.

According to its proponents, such a bank would provide a new funding source to the nation’s essential infrastructure projects, allowing cities, states, and even regions as a whole to build new rail lines or electricity grids. Theoretically, this independently-run institution would finance only meritorious projects and it would do so by leveraging the government’s guaranteed and virtually infinite bonding capabilities. In turn, voilà: the U.S. gets a renewed physical plant, and taxpayers are asked to foot less of the bill.

The usefulness of this concept is relatively easy to understand when put in context. Take the example of Los Angeles: under the leadership of Mayor Antonio Villaraigosa, the local Metro transportation agency wants to speed up spending on 12 major transit projects — from a planned thirty years to just ten. But sales tax revenue to pay for those projects will take decades to come in, meaning that the proposal is dead in the water. That is, unless the federal government steps in, lending Los Angeles the equivalent of two-thirds of total tax revenue, using as collateral twenty years of taxes that the region will eventually pay back to Washington. The end result: L.A. gets a big new transit network much more quickly than planned, all at the same price as initially assumed.

A national infrastructure bank could provide these loans, unlike the current executive departments that have no mandate to do so. So there’s a gap to fill.

But as nice as the infrastructure bank may sound, its own financing mechanisms have yet to be clearly defined, even though the way it would lend out is relatively easy to understand.

In his fiscal year 2011 budget, President Obama suggested appropriating $4 billion to establish the new infrastructure bank, with the assumption that the new agency would distribute grants to qualified projects and have its coffers refilled every year or so depending on need. Of course, what’s envisioned there is no bank at all, since it wouldn’t be generating revenue in return for its investments: it would be draining Washington’s coffers even more, with no clear explanation for why it is necessary. What’s the point of establishing another federal agency to dole out grants for infrastructure, when the Departments of Transportation, Housing and Urban Development, and Energy already do that all the time?

This non-bank idea, in other words, is a non-starter.

But what about an infrastructure bank that distributed loans at low interest rates and then expected to get its money back over time? What Connecticut Congresswoman Rosa DeLauro has been proposing for years is something modeled on the European Investment Bank (EIB). The EIB was founded in 1958 and provides low-interest loans at up to 50% of cost to qualified projects in a variety of sectors in Europe and North Africa. Recent projects funded by the EIB’s transport division include an extension of the Bilbao Metro in Spain, a tramway network in Lodz, Poland, and the high-speed rail line between Istanbul and Ankara in Turkey.

Despite its vast size and lending obligations — it is larger than the World Bank — the EIB is independent, does not rely on infusions of funds from any European governments, and has a stellar credit rating.

The principal of encouraging states and local governments to take out low-interest loans was championed by the stimulus act of early 2009, which included a provision for Build America Bonds. Governments have now issued $78 billion in these bonds, now representing 20% of the municipal debt market, mostly because the BAB program is such a good deal for public authorities that want to take out debt for new construction projects. Unlike the proposed infrastructure bank, however, the BAB program does not distribute funds based on merit, nor does it rely on a government bank — the federal government artificially produces low interest rates by subsidizing private loans.

But the EIB and BAB models, as interesting as they are, do not actually increase the amount of money being spent on transportation in the long-term — they simply transfer more of the current spending load into debt. Is that a good idea when governments are already so squeezed by limited budgets? How can we be sure that we’ll be in an adequate financial situation to pay back these debts in the future? Spending now through loans inherently means less spending in the future: If Los Angeles compresses thirty years of transit spending into ten, what happens during the other twenty? Nothing at all, unless another separate revenue source is established.

So none of the the infrastructure bank proposals put forth thus far will actually aid in reversing the current lack of adequate financing for transportation.

But there’s an alternative that would meld the idea of a bank and a grant-lending institution, leveraging the power of the federal government to invest and then using the profits to spend on necessary projects.

Imagine the federal government began offering a bank savings account package to young people and seniors with a very favorable rate of return, run through private banks in exchange for, say, their participation in the FDIC bank insurance system. Then say the government “collected” all of those funds together in a public bank and used the money to invest as it wished in the private sector. If well managed, this system could make enough money through its investments not only to give its depositors high interest rates, but also a large profit that would go not to shareholders but instead towards the construction of new social housing and infrastructure.

It turns out that this is not that far-off of an idea: it’s exactly how France’s Caisse des Dépôts works. The independent agency, originally formed in 1816, finances much of the country’s affordable housing and urban redevelopment schemes; more recently, it has contributed to the construction of new high-speed rail lines. For the most part, these expenditures are in grant form, meaning that the Caisse is increasing France’s overall spending on infrastructure without increasing the nation’s debt load. That makes it significantly more effective in moving forward with new spending than would be the infrastructure banks proposed for the U.S.

The Caisse can raise funds easily partially because it runs a huge percentage of the nation’s bank deposits, but also because it invests directly in (and helps run) a number of major French enterprises, a type of state involvement in the economy that is a hallmark of French policy but is unlikely to play a major role in traditionally hands-off American political decision-making. On the other hand, since the Caisse is autonomous — it makes its investment decisions without, say, the involvement of the National Assembly — it acts somewhat more like a non-profit than an arm of the national government. It does not rely on any kind of subsidy to maintain its operations.

Even without a savings account scheme, a similar bank in the U.S. could leverage existing government funds, such as those reserved for Social Security, to invest in the market and earn interest for the public sector. If properly managed, those dividends could be sent back to local and state governments in the form of grants for infrastructure. It’s hard to see the downsides of that idea.

Update, 9 March: I should point out that the investment-bank system I’m advocating would work much as public pension funds already do, investing and then using the returns to fund payments to subscribers. The use of this system for pensions produces some major problems, of course: if the market goes down, people stop getting their pensions, and that’s a huge problem. On the other hand, if this system were used for infrastructure creation, it wouldn’t need to be as stable and continuous year-to-year, meaning the use of market investment wouldn’t be as problematic.

Image above: European Investment Bank Headquarters in Luxembourg, from Flickr user Cédric Puisney (cc)

As expected, the Administration released its budget for fiscal year 2011 today. The Department of Transportation has been awarded with a total of $78.8 billion in expenditures, compared to $77.0 billion enacted by the Congress in fiscal year 2010.

Transportation spending did not suffer much from the spending freeze Mr. Obama proposed for the overall non-defense discretionary budget in his State of the Union address last week. Nor, however, did it see much of an increase. Transportation spending has been relatively flat relative to inflation since the passage of the last transportation bill in 2006, because that legislation defined expenditures on transit and highways over a five-year period. Because of a continued decline in revenue from the gas tax, which has not been increased since 1993, the Department of Transportation will continue to be funded through deficit spending, rather than some new source of revenues.

Congress is supposed to debate the implementation of a new transportation bill later this year, though it has been reluctant to determine any major new source of funds for such projects. Deficit spending will continue.

Though the proposed budget does not include specific decisions about allocations for the Federal Transit Administration or Amtrak, it does indicate that the President wants to continue an annual investment in high-speed rail: Mr. Obama proposes $1 billion for FY 2011, the same as he suggested in FY 2010. The Congress increased total spending on fast trains to $2.5 billion during negotiations last year; it seems poised to do the same again considering the bipartisan support for what’s becoming a national project.

The budget will also increase spending on livable community-related transportation to $530 million, which, if enacted, could bode great things for streetcar and bus rapid transit in cities across the nation. This is basically an extension of the $280 million in inner city circulator grants announced last December by Secretary of Transportation Ray LaHood.

Decisions about specific allocations for the FTA and the FHWA (highways) will be announced later in the month. There is little reason to expect significant increases.

Though the Congress decided last year not to fund Mr. Obama’s infrastructure bank, which would provide states a new method to finance merit-based projects, he has included it in his proposed budget once again this year, with a suggested $4 billion allocation. The Administration would also extend the current ability of state governments to release low-interest Build America Bonds to pay for important projects.

The budget did include a provision for a jobs bill, which would finance infrastructure construction as a sort of second stimulus as long as the Congress agrees to the proposal in the coming months. Preliminary indications from the Senate show that transit may receive $7.5 billion, highways $14 billion, and high-speed rail $2.5 billion under that program.

The President’s budget proposal does not represent the definitive outlays of the federal government in fiscal year 2011. Rather, Congress will spend the next few months debating and settling on final numbers. Last year, Congress increased spending on Amtrak, transit, and high-speed rail substantially over what Mr. Obama had suggested, as indicated above. We’ll see whether members of the House and Senate are in the mood to do the same this year as well.

» President Obama’s appeal to fiscal conservatives is likely to result in little substantial change, but it’s exactly the wrong message.

On Wednesday, President Obama will give his State of the Union address to the Congress, and next Monday he will release his proposed budget for fiscal year 2011. Late yesterday, staff aids leaked the news that the speech would include a pledge to veto any budget that didn’t freeze non-defense and non-security discretionary spending at $447 billion. The freeze would be set for three years, followed by spending increases limited by inflation. The goal would be to reduce federal spending by around $250 billion over ten years.

Discretionary spending does not affect mandatory programs like Social Security, Medicare, or Medicaid, which are financed through other funds.

Mr. Obama has no direct control over the budget; final decisions about the funding of federal agencies are made after months of negotiations between the two houses of Congress. As a result, the President’s proposals are unlikely to see the light, since Democrats on the left will balk at the idea of cuts in departmental financing and Republicans have proven themselves unwilling to compromise on almost anything.

But the message the President is planning to send on Wednesday with his proposed spending freeze — a policy close to that advocated by John McCain during the campaign — makes very clear the kind of government he wants to lead; one can’t help but note a similarity with President Clinton’s 1996 announcement that “the era of big government is over.” Mr. Obama seems willing to compromise the political ideals he may have held at the beginning of his Presidency and replace them with an appeal for conservative support. Any hope for an American political realignment following the 2008 election has been firmly put to rest here.

For those who would suggest that the U.S. has done too little to support its flailing economy, specifically through major investments in infrastructure, the President’s statements will be a major let-down. His, and his party’s, unwillingness to force through tax increases for the purposes of financing important social legislation this year foreshadowed this new move. If the best this “progressive” president can do is call for a spending freeze in the middle of a recession — exactly the opposite policy from what economists suggest creates jobs — what can be expected from the conservatives who will inevitably follow him?

In the short term, what’s most depressing about Mr. Obama’s efforts to regain financial accountability — the U.S. debt is exploding as I write — is that even if the Congress does agree to budget cuts, they will likely be aimed towards policies that affect the most vulnerable. The House and the Senate have had decades to lower Washington’s commitment to expensive and wasteful spending on things like agriculture subsidies, but, if anything, politicians on both sides of the aisle have only worked to increase them. Mr. Obama may suggest reasonable reductions, but the Congress will pick programs that have little electoral support, and that usually means aid for the poor. The Senate is likely to reject a non-partisan deficit task force this week, solidifying the sense that elected officials are likely to work for projects that “objectively” might be considered wasteful.

It is possible that the Administration chooses to increase funding for the DOT in this budget, with corresponding cuts elsewhere; we’ll have to wait for the budget release on Monday to find out more.

The negative effects of Mr. Obama’s spending freeze on the transportation sector may not be immediately apparent, but they will be important nonetheless. As the chart at the top of this piece shows, total U.S. discretionary spending as a percentage of gross domestic product has been decreasing basically uniformly since the 1960s. Spending on non-defense programs peaked at around 5.5% of GDP in the late 1970s and now represents around 3.5% of the economy. The consequences of this long-term reduction in financing social and infrastructure programs is obvious: increasing economic inequality and huge deficits in the maintenance and upgrade of transportation and other public utilities.

In other words, the spending freeze solidifies the current problems with the government: it does nothing to reduce massive defense and security expenditures and it makes no attempt to tackle the much larger financial problems related to “mandatory” spending on commitments like Medicare. It’s a blatant attempt to calm populist fears of too much government, while doing nothing to actually address the structural issues relating to long-term financial obligations to social programs. Meanwhile, the agencies that are to be sacrificed, including likely the Department of Transportation, contribute little to the deficit and, even better, are best suited to creating jobs — exactly the policy for which the Administration is claiming to be working.

Investments in projects like new transit or high-speed rail can be efficient in creating jobs and reorienting the society towards a sustainable lifestyle — but they require large government allocations. The President must demonstrate confidence in the ability of these programs to be effective, but his “spending freeze” will encourage the idea that federal spending is wasteful. How can transportation advocates push for more financing of such projects when Mr. Obama is solidifying their opponents’ claims that they are pork?

This announcement makes it difficult to believe the Administration is going to take adequate steps towards developing new revenue sources for the transportation program. Over the past year, it has proven itself increasingly susceptible to compromising its initial aims by diluting policy objectives to the benefit of conservatives — despite the fact that Democrats hold major majorities in Washington and Republicans are simply not interested in working with the President.

Update: Note Paul Krugman’s post this morning.

Image above: Discretionary spending as a percentage of gross domestic product since 1962, from Congressional Budget Office, with minor edits.

As many of you commented in the previous, and unfortunately inadequate, post on the administration’s high-speed rail strategic plan, the report – though significant – doesn’t tell us all that much more about how the U.S. government will spend the $8 billion approved for fast rail by Congress in the stimulus bill. On the other hand, I want to point out that the administration never promised such information: for god’s sake – the states haven’t even submitted their proposals for the use of the funds yet! I think that our collective enthusiasm for rail projects may be getting a bit ahead of reality.

But I think the report’s basic outlines of the kinds of projects the federal government wants to fund with rail money are demonstrative of the administration’s seriousness in undertaking this project. By arguing that high-speed rail is most applicable for corridors between 100 and 600 miles in areas of moderate to high density, we can be assured that the government won’t be funding just any project with the limited funds available for rail. It’s good to know, in other words, that a line between El Paso and Phoenix isn’t going to get money over the connection between San Francisco and Los Angeles.

The report’s attempt to define different qualities of rail is also an admirable response to the fact that no one thus far has been able to come up with a concrete series of words that can be used to provide meaningful definitions of different types of rail services. I think there’s been a major problem in discussions about high-speed rail because of the lack of uniform agreement about what the term means, so it’s nice to have officially-sanctioned definitions. For the time being, I’ll attempt to incorporate them into the transport politic:

• HSR-Express – 200-600 miles apart, more than 150 mph, dedicated rights-of-way.
• HSR-Regional – 100-500 miles apart, 110-150 mph, some shared track with positive train control
• Emerging HSR – 100-500 miles, with 90-110 mph speed service – developing the passenger rail market
• Conventional Rail – 79-90 mph
• IPR – Intercity passenger rail

Several blogs have pointed out that the report’s discussion of positive train control indicates that the Federal Railroad Administration will likely alter its rail safety requirements, which currently require passenger trains running on shared track to be able to survive accidents with extremely heavy freight trains. The negative consequence of the existing policy are trains that are too heavy and too slow, making it difficult to develop faster rail in the U.S.; a forthcoming policy change by the FRA could make it far easier to implement high-speed rail.

Funds, once states have submitted their proposals, will be distributed for projects (like a specific straightening of track that is “ready to go”), corridors (like the California High-Speed Rail program), and planning (for projects not yet ready for construction). The federal government has established a schedule for the distribution of the funds, with the first round of appropriations being made in the end of September. The schedule is below.

The document also mentioned the mandated national rail plan, which will expand the discussion of the goals for train service in the United States and be released by mid-October. This document, which will be elemental in defining the future of rail in America, must be “consistent with approved State Rail Plans and national rail needs to promote an integrated, cohesive, efficient, and optimized natioal rail system for the movement of good and people… [it] will expand upon the vision outlined in this document, including identifying specific corridor goals and measures of success. The plan will likely provide an opportunity to revise the high-speed rail designation, including a new category of approved corridors, i.e., those corridors for which a detailed corridor plan and institutional framework are in place to permit development of a successful corridor that meets the national rail goals.“

Does this mean that the national rail plan will revise the much-maligned national map of designated high-speed rail corridors? We’ll have to see – I certainly hope so. But what’s clear is that today’s document is the first step towards a major national consideration of high-speed rail for the first time in decades.

National Corridors reports that Joseph “Joe” Szabo, currently Illinois state director of the United Transportation Union, will be the President’s pick for chief of the Federal Railroad Administration, which oversees freight rail movements, Amtrak, and most commuter railroads. Mr. Szabo is currently serving on the FRA’s Rail Safety Advisory Committee and before that he was mayor of the Village of Riverdale, IL.

Mr. Szabo has a strong background as an on-the-ground railroad worker, having been an employee of the Illinois Central and then of Metra, which is the public agency that oversees suburban Chicago’s commuter rail network. That experience made a major player in the union for which he currently works. He remains on the executive leadership of Chicago Metropolis 2020, which is a partnership designed to encourage smarter, transit-oriented growth in the region.

Though I don’t know much about Mr. Szabo, a quick search reveals he’s been intimately involved in railroad policy making for a number of years and is likely a good choice because of his direct experience. Earlier this year, he spoke in favor of high-speed rail to a Midwest group. In 2006, he said “There is a pent-up demand for inter-city passenger rail, and increased frequencies raise ridership exponentially… The bottom line is that as the frequencies grow by addition the choices grow by multiplication—and so does the ridership… As long as we can get the quality up and keep it up, any quantity we add to the system will find its market and keep it. The future of passenger rail service in Illinois is whatever we want to make it. Think of the job growth…” These are the type of comments we want to hear from the FRA administrator.

Nonetheless, Mr. Szabo has quite a task ahead of him, namely that of leading the distribution of $8 billion in stimulus funds for an American high-speed rail network. It’s going to be a challenge to know where to start.

Last month, I wrote that we’d soon need a second economic stimulus because the first one, at $800 billion, is simply too small to deal with the mounting crisis that’s quickly tearing down the capitalist system. The unemployment rate increased to 8.1% in February, a figure that does not include the millions of Americans who have simply decided to stop looking for work nor the many more who are working part-time even though they’d like – and need – full-time employment. Paul Krugman and and Josh Marshall at TPMDC explore the problem, as does the Washington Post’s front page.

Compounding the situation is that too much of the first stimulus package simply doesn’t contribute to ameliorating the economy’s problems. Almost 3/8 of the bill goes to tax cuts, which might make sense if the economy was working, but when fewer people are paying taxes, and when even those who are paying pay less, the consequence won’t be more consumption: it will simply be a less severe drop in consumption.

The bill’s stated goal is to “create or save” 3.5 million jobs in the next two years, but in the last four months alone, the U.S. has lost 2.6 million jobs. At this rate, we will lose 15.6 million jobs in next two years. We need to do more.

While I was contented by the stimulus bill’s inclusion of funds for infrastructure, especially its strong focus on high-speed rail, I have always been skeptical of the program’s lack of overall vision. Not only do we have no national plan for actually implementing high-speed rail, but even with $8.4 billion appropriated to transit, we’ve yet to solve the huge funding problems of public transportation agencies around the country.

The administration has made a concerted effort to argue that the majority of the new jobs in the stimulus bill will be created in private industry. Republicans and moderate Democrats are afraid of pushing the U.S. towards the European social democratic state model, and President Obama coddles them by assuring, as he did in his address to Congress last month, that he doesn’t “believe” in “big government.” The fundamental problem, however, is that all we have right now is big government: over the past few months, the private sphere has proven itself quite incapable of sustaining the wealth upon which the western world has come to rely during the past few decades.

What I propose we need is not only a second, probably bigger economic stimulus, but also the creation of a national temporary work program that takes the tens of millions of unemployed Americans and provides them government-paid jobs building the infrastructure projects we need to rebuild our nation. Franklin Roosevelt’s Works Progress Administration, Public Works Administration, and Civilian Conservation Corps, implemented between 1933 and 1943, provided a nation less than half the size of ours more than 8 million jobs. Roosevelt’s programs were temporary: each program was disbanded by the middle of World War II, and the jobs they provided were replaced by employment in the private sphere… once the economy got back up to speed. These programs funded much of the infrastructure upon which we rely today and helped maintain natural resources that remain national treasures. These programs may have been implemented in a different period of our history, but their collective mandate – creating jobs and rebuilding the country – returns today as the national priority.

A second stimulus must push past the opposition of fiscal conservatives, who are intent on pushing the United States towards catastrophe on the back of tax breaks and spending cuts, which are likely only to lead to further fiscal problems in the future. It must also implement a national works program to reconstruct our suffering infrastructure, including the railroads and transit lines that are slowly deteriorating in every city in America.

The collapse of the economy merely confirms that which Mr. Obama expressed so eloquently during the campaign: that we must change if we are to move forward. Either we can accept the continued failures and disastrous social consequences of forty years of neoliberal policy, or we can work towards the creation of a new society. Our nation is sick; we have no choice but to take a leap to cure it.

Image above: Acheivements of the Works Progress Administration, from Wikipedia

Though President Obama’s first budget proposal, whose rough outlines were released yesterday, doesn’t say much about his transportation proposals, it does provide insight into our country’s new direction overall.

America’s fundamental problem is that it has allowed income inequality to increase rapidly over the past four decades, especially as compared to that in other developed nations. Because of our generous corporate tax breaks, lack of national health care, and inferior education system, we have simply made the problem worse, exasperating the plight of the poor and encouraging the rich to continue enriching themselves – but not the economy as a whole.

Since World War II, the world’s developed economies have provided increasing standards of living to their inhabitants, but at a slowly mounting cost. Pressure by private interests in recent decades has sacrificed many of those gains by destroying social protections at the alter of “free” trade; the result was a reduction in the power of democracies to govern as corporate multinationals, working under the auspices of organizations such as the WTO, have created markets that prioritize the profit-making of a few above the promotion of a quality of life for all. In the name of economic freedom, the liberty of the majority has been reduced.

The Bush administration marked the high point of this neoliberal philosophy by encouraging government to subcontract every aspect of its operations to the private sphere, at higher costs and at reduced dividends. The disaster represented by Hurricane Katrina, which Bobby Jindal claimed showed that “the strength of America is not found in our government,” rather was a demonstration that a government that doesn’t believe in government doesn’t work. The death of thousands of people in New Orleans was the result of a government not willing to take account for its responsibilities, which are fundamentally to provide for the public welfare. That mission has been diluted and sometimes lost since the rise of modern conservatism.

States and cities, quickly loosing the support of the federal government, often have had no choice but to sell off public assets – or let them rot. In transportation, the result was clear: Washington wanted much of the interstate highway system auctioned off to the highest bidder; it wanted a public Amtrak to fail; it was willing to let transit systems fall into disrepair; and it saw no reason to encourage sustainable transportation if it wasn’t profitable.

Mr. Obama’s budget promises a new day in the United States, a return to the hope that as a collective, we can ensure the health and well-being of all individuals. It turns its back on the premise that the market forever decides what is right or what is wrong. It encourages us as a people to ask what we can do for one another, rather than what we can do for our own self-interests.

This year, Congress will debate and eventually approve the new transportation bill. Lawmakers can choose to continue to deny the fact that automobiles and their product – sprawl – are the principal causes of the environmental disaster that lies ahead of us. They can continue to ignore the rapid deterioration of our infrastructure, sell it to private industrialists, and allow it to continue falling apart.

Or, our congresspeople can do something new, pushing for sustainable, environmentally-friendly mobility that encourages the kind of dense living that has been proven time and time again to be better for the health of the world’s ecosystems. Congress can choose to advance a massive reconstruction of our railways and roads and bridges that will secure our standing in the twenty-first century. It can choose to work on behalf of everyone, rather than just the wealthy few.

I hope that this week marks a turning point in American society, a recognition that somewhere, we went off course. Mr. Obama’s budget proposal represents a strong starting point. Now the rest of us need to get to work.

The Obama administration has officially released its budget outline, which provides a summary of how the federal government will spend money in fiscal year 2010 (from July 2009 to July 2010). It also provided some information about how it intends to use its limited funds over the next 10 years. Here is what we know so far:

• The bill will “increase” funding to public transit, focusing on public transportation’s environmental benefits,
• It will provide $1 billion a year for at least five years for high-speed rail, above the $8 billion already authorized from the stimulus bill
• It will form a national infrastructure bank, such as Mr. Obama proposed during the campaign, which will be funded by $5 billion in appropriations over the next 5 years

Note that the information we have right now is the preliminary budget outline. This means that it is not detailed since the final bill has yet to be written, and that the administration may choose to change certain aspects of the bill in consultation with members of the House and Senate. It will also of course have to be approved by the Congress to enter into the law.

The budget does promise increased funding for mass transit, something I’m excited to hear… but we’ll have to wait to see the official figures over the next few weeks. It is unclear whether discretionary funding for transit will increase over SAFETEA-LU-mandated levels, based on gas tax receipts. The budget’s inclusion of a 5-year fund for high-speed rail is a good sign, but unfortunately for the U.S. treasury, it’s going to cost a lot more than that to actually build fast train lines. In order to fund the future of intercity rail in the country, we’re going to have to keep asking for more funding on rail.

The table below summarizes transportation funding in Obama’s proposed budget with those in Clinton’s proposed 2000 budget, Bush’s proposed 2008 budget, and the actual expenditures by the U.S. government in fiscal year 2008. I’ll update the table on the transport politic as I receive more information about funding for transportation programs over the next few weeks.

—

Last night, President Barack Obama addressed the nation in a pseudo-State of the Union address in front of a joint session of Congress, with the Supreme Court and the Cabinet in attendance. His comments, meant to encourage the nation in this period of collective doldrums, were focused on energy, health care, and education, with a small element at the end focused on foreign affairs. In his 52-minute speech, he didn’t address how transportation is an integral element of the energy problem, but he did mention public transportation when talking about the stimulus bill:

“Over the next two years, this plan will save or create 3.5 million jobs.  More than 90% of these jobs will be in the private sector – jobs rebuilding our roads and bridges; constructing wind turbines and solar panels; laying broadband and expanding mass transit.”

That said, he did suggest that it was time for a new era of national planning:

“In the next few days, I will submit a budget to Congress.  So often, we have come to view these documents as simply numbers on a page or laundry lists of programs.  I see this document differently.  I see it as a vision for America – as a blueprint for our future….

“History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas.  In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry.  From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age.  In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle-class in history.  And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.”

There was no mention of high-speed rail here, but the overall impression is that he’s suggesting we need a national infrastructure project. The obvious candidate for such an investment is a fast railway network. We’ll see whether Mr. Obama replicates the advocacy he demonstrated for the mode in the stimulus in future spending bills.

That said, in his lackluster GOP response, Louisiana Governor Bobby Jindal didn’t have a problem mentioning high-speed rail:

“But Democratic leaders in Congress rejected this approach. Instead of trusting us to make wise decisions with our own money, they passed the largest government spending bill in history – with a price tag of more than $1 trillion with interest. While some of the projects in the bill make sense, their legislation is larded with wasteful spending. It includes $300 million to buy new cars for the government, $8 billion for high-speed rail projects, such as a ‘magnetic levitation’ line from Las Vegas to Disneyland, and $140 million for something called ‘volcano monitoring.’ Instead of monitoring volcanoes, what Congress should be monitoring is the eruption of spending in Washington, DC.”

I’ve pointed out in the past that this Republican line of thinking is not simply political spin on an issue… it is a lie. The bill includes no specific earmarks for a Las Vegas maglev line. While it is possible that the corridor will get some funding, it will be waiting in line along with other far more advanced projects in California, the Midwest, and the Southeast. Mr. Jindal’s line is embarrassing and repeats the Republican mistake of assuming that if a lie is repeated enough, it becomes true in the minds of the American people.

I think we’ll be seeing four more years of mindless Republican opposition to sensible transportation investments.

Tonight, President Obama will speak to a joint session of Congress in a pseudo-State of the Union address. He will describe his legislative priorities for the year – in terms of health care, the environment, and potentially transportation issues.

The Overhead Wire suggests that the President’s proposed Livable Community initiative might provide increasing funds for streetcars and other forms of transit, but we haven’t heard much about that program so far. With the economy continuing its downward spiral, it seems likely that this won’t be high on the priority list and probably won’t be mentioned in the speech to Congress.

There have been a number of reports, however, that suggest that Mr. Obama will be working for the inclusion of at least $1 billion more for high-speed rail in the 2010 budget, and considering that this is on top of the $8 billion already included in the stimulus, the President might see fit to at least mention the issue tonight. We’ll see.

No matter what, though, on Thursday, Mr. Obama will unveil his proposed FY 2010 budget. No details on transportation issues have leaked yet, but we should expect to see more details on funding for Amtrak, high-speed rail, and transit.