DOT Finance President

Obama Administration Begins Push for New Transportation Legislation

» Administration, some members of Congress hope to introduce and pass a bill during the lame duck session. Without agreement on how to fund it, though, the process seems futile.

When Barack Obama campaigned for president, one of his primary campaign planks was that he would not raise taxes on families making less than $250,000 a year. That political move, however nice sounding for the country’s middle class, has paralyzed the development of a new transportation bill in the United States. There is a significant need for improvements to the American infrastructure system but no new revenue to pay for them; because of its initial campaign pledge, the Administration has been unwilling to move ahead on such straight-forward ideas like an increase in the gas tax or the implementation of a vehicle miles traveled fee.

The result? The last transportation authorization legislation, a five-year bill that laid out the federal government’s plans and priorities for spending on highways and transit, expired more than a year ago. More funds have been shifted to the states, but only through the expenditure of general revenues; the fuel tax, which is supposed to pay for transportation infrastructure, is not producing nearly enough funds to cover the costs of the national transportation program. Thus the importance of these appropriations of general revenues, which are sourced from the federal income tax.

But now those temporary extensions are coming to an end; on December 31st, Washington will have no more money to pay for any transportation projects. Thus President Obama’s announcement yesterday of a push to pass a $50 billion down-payment on the next transportation bill during the lame-duck period after the November elections but before the new Congress is installed in January. The Administration also released a report completed by the Treasury Department demonstrating how many jobs such infrastructure investments might produce.

These funds, playing off the President’s plan announced last month to spend $50 billion on an infrastructure bank, would be the first part of a new transportation bill that would dedicate up to $75 billion a year to all forms of transportation. Mr. Obama has said in the past that he wants to renovated 150,000 miles of existing roads, construct 4,000 miles of railways, and rehabilitate 150 miles of runways. Los Angeles Mayor Antonio Villaraigosa, present at the President’s speech yesterday, has his own ideas about how the money could be used: He wants much of the funds to be loaned to his city for the construction of his 30/10 rail expansion program.

The problem is that despite all the hoopla over the President’s new transportation agenda, he has yet to promote a sustainable funding plan for the investments that he has claimed will “pay for themselves” somehow without requiring the increase of any taxes. It’s a fantasy.

There is no secret plan being developed by the Administration: It is clear that the first $50 billion, if approved, would come from general revenues and once again be used simply to shore up the transportation program to ensure that the states are able to continue their work on essential roads and transit projects. Mr. Obama’s appeal to the public about the importance of transportation is undoubtedly actually a plea to members of the House and Senate, who he wants to take the fall and propose tax increases to pay for the project.

Yet Republicans now appear to have a significant chance to take back the House of Representatives; their resistance to tax increases is even more solid than that of the Administration. Is the current Democratic majority expected to solve the nation’s transportation funding problems during the lame-duck session? Is it possible for a six-year transportation bill to be developed over the next two months and then be passed? Is there any way a consensus can be developed between members of Congress and the White House on how to fund any increase in expenditures on transportation? The answers to these questions better be “yes:” A GOP-led House is not likely to be particularly cooperative when it comes to finding the funds for transportation.

Congressman James Oberstar (D-MN), current head of the House Transportation and Infrastructure Committee, must be fuming; he has been working for two years on the development of a new transportation bill but the Administration has been thoroughly uncooperative because of its interest in other legislation such as health care and financial reform. Mr. Oberstar could lose his chairmanship in this fall’s elections.

But he is advancing the idea of a 15¢ increase in the federal fuel tax to pay for transportation nevertheless, an almost doubling of the existing 18.4¢ revenue source. Though Transportation Secretary Ray LaHood has repeatedly said that the Administration would not support any increase in that funding stream, the lack of agreement about how to pay for transportation today means this approach could be the only reasonable one. There are, of course, long-term limitations to the fuel tax because of the increase in fuel efficiencies of automobiles and the growing presence of cars not powered by gas.

And then there is another possibility: Simply removing Washington altogether from its involvement in the funding of transportation. That is what Texas Governor Rick Perry (R) is suggesting. Mr. Perry says he would rather have states simply keep the money collected on fuel taxes in their jurisdiction, rather than have the federal government get its hands wet in the middle as the distributor of dollars.

That, however, would be devastating to advocates of alternative transportation. State governments have been notoriously bad at spending their own funds on anything other than roads; how can they be trusted with the entire pot of money? Moreover, the involvement of the federal government encourages the development of national plans for interstate highways and high-speed rail. If states were to take over transportation funding in its entirety, those proposals would likely be relegated to the trash heap.

The Obama Administration, despite its announcement yesterday, has yet to engage a serious conversation about these issues. Will it do so, or is it hoping that the problems in transportation financing will simply go away? They won’t.

18 replies on “Obama Administration Begins Push for New Transportation Legislation”

With a strong push the administration could already have had this in the bag. This has been the most active Congress in more than 40 years, despite the lethargic appearance of the Senate. But like on too many other issues the administration has held back.

The gas tax phobia is an especially big problem. The alternative is road pricing, which falls more heavily on owners and drivers of passenger cars, particularly small ones. Road pricing, including tolls and use of photo radar to track vehicle movements, is therefore a more regressive fee and a bigger hit upon middle and working class people than the gas tax, which encourages the use of smaller vehicles. It’s understandable that the government would not like the gas tax because of its inherent tendency to diminish as people move to smaller cars, but in the end I would suggest that it is more politically palatable, better connected to the ability to pay and more encouraging of energy efficient behavior than tolls. Only in select geographic situations, like the central London congestion charge, should road pricing be considered — for its ability to deter very specific types of vehicle use (e.g. driving in a grossly overcrowded area, or deterring use of a particularly overcrowded stretch of road).

But who at the federal level is going to raise any taxes in this climate? It’s like Minnesota which went 20 years without a gas tax increase until the legislature finally got up the gumption to produce a two-thirds override of Governor Pawlenty’s veto — in 2007, before the crisis broke. Lucky MN took care of business then. And if the politicians won’t move on this, the only real alternative is to open up roads to tolling and privatization.

about privatization, while i know there pros and cons, do u think it would really work here in the US? pretty much all of Japans (mass transit i believe) is privatized. i just don’t understand, they’ve got a lot of people. not as many as the US but it’s a lot people. why were they able to figure out a sustainable (if it’s safe to call it that) system?

I don’t think it’s safe to call the whole of the Japanese system sustainable, and I don’t even think it’s safe to call the whole of it privatized.

The practical impossibility of using roads as an alternative transportation means in places like downtown Tokyo is what makes the genuinely sustainable, genuinely private lines function.

Finally!!! It seems that the last opportunity to make real progress in my youth will be the last months of the Democratic Majority. If they fail to pass a transportation bill this year, more roads will crumble, more bridges will fall, and national high speed rail will be a figment in our imagination.

If anyone is unaware of the situation in New Jersey, Wisconsin and Ohio, they should acquaint themselves with the full-fledged backwardness of the Republican Party. They will derail passenger rail for their constituents and screw up any high speed rail network that can be developed in their regions.

As for the gas tax they should try rising it by $0.05 to $0.08 cents right now vs trying to go to $0.15 cents right off the bat in that it will some of the bite off of it now and at least have a better chance of passing.

A easer idea would be to let the Bush tax cuts expire on their own and then when the top income makers in this county that 5% of the population but have 95% of the wealth that the tax cuts manly went to die it would but tens of billions of new funding back into the county. Then they could take most of that from the general fund and put that into the sick Highway and Railroad Fund that is running out of money.

I would hate to see a car miles traveled tax in that I don’t want the Man knowing how many miles I travel and where I travel to.

Maybe letting the states keep much of the gas tax might actually help. The Federal Government could still keep some to fund some interstate connections and maintain some kind of eminent domain to force projects in the national interest. They could then reward states that choose to spend on rail and public with additional federal funding. States might actually begin to compete on building smart transit to attract development and ensure their economies.

I also think letting states keep their gas tax money would be a good idea, as it would do at least something to stop the current flow of money from dense, efficient, economically-active states (which tend to be more liberal and would likely invest in transit on their own) to sprawling and empty states (which tend to be more conservative), both through gas tax redistribution and through the general fund. Each state can choose for itself whether it prefers higher gas taxes or crumbling roads. Interstate HSR projects can be developed by interstate compacts; this may delay some projects but I’d rather wait longer for HSR than continue to see my tax dollars subsidise freeways in Alabama.

By its disproportionate support for freeways, the current federal transportation funding system is worse for transit than no system at all. Unless truly serious reform can be achieved in the lame duck session, I hope that the system goes away so it stops holding progressive states back.

Well, y’know, if more than a handful of Representatives had stood up against Bush’s massive bankster bailout…. or if Obama had reversed course…. maybe we wouldn’t be in this fiscal mess.

I’ve been following, which has documented that we are *screwed*. The economy is not going to straighten out until the *rule of law* is restored, and for some inexplicable reason very few people at the federal level are willing to do anything but “extend and pretend”, as the saying goes. All credit to Alan Grayson and the few who are doing something though.

This may seem off topic, but I think the core reason that really dreadful Republicans may be elected is that so many Democrats have done very similar things to the Republicans on the crucial economic issues. Makes it hard for your average voter to vote rationally.

And transport funding is just one of a dozen casualties of this sort of feckless policy.

I think GOP members could be persuaded to suport the bill if:
a) The money came from cuts to spending instead of increased taxes
b) Pork. Get a lot of pork for a few republican votes. Say prioritise their states HSR in return for their votes.

Letting the money flow to the states would be a disaster. Look at the way the NY general assembly botched the congestion pricing pilot program for NYC, leaving hundreds of millions on the table. And this in a state that flexes nearly 50% of it’s flexible funds to transit! Here in NC, the new DOT leadership is good but their funding still has to pass through the state govt prism, which means freeways in the middle of nowhere. If gas tax monies could be directed to MPOs or metropolitan areas where they are generated, I could get behind that. But otherwise, the rural bias of the US Senate is nothing compared to most state DOTs and state govt’s.

“Congressman James Oberstar (D-MN), current head of the House Transportation and Infrastructure Committee, must be fuming; he has been working for two years on the development of a new transportation bill but the Administration has been thoroughly uncooperative because of its interest in other legislation such as health care and financial reform. Mr. Oberstar could lose his chairmanship in this fall’s elections.”

i agree with this. one thing that bugs me, is that protest after protest after protest over these 2 issues primarily and other things that can wait (not saying what i don’t want to offend anybody) but not one protest over sitting in traffic all day. or being late for work. or not being able to afford and maintain a vehicle. alot of times, and don’t get me wrong, i think the citizens are as much to blame. but that would also contradict the fact that taxes or some other funding would have to result and people definitely don’t wanna hear they have to pay more. it’s funny how out of all the agenda’s of the presidents, Eisenhower was the only one to think about the future of infrastructure and actually get it through congress(correct me if i’m wrong). If Obama pushed for transportation like he did with health care, i think they would’ve had better results and less lawsuits, lol. but yeah, at least he would’ve got something in the pipes as far creating jobs. with healthcare, while needed, there were hardly any jobs from the start let alone creating them. so if a transportation bill was passed instead, there would’ve been more positive effects. THEN, start on health care. but now, we’re screwed.

it’s funny how out of all the agenda’s of the presidents, Eisenhower was the only one to think about the future of infrastructure and actually get it through congress(correct me if i’m wrong).

You’re wrong. The Interstate system was the last bit after decades of government spending on roads; it’s just more famous. Wilson spent money on Federal-Aid Highways, Hoover helped create the US Highway system as Secretary of Commerce, and FDR spent large amounts of money on road projects in the New Deal, emulating Robert Moses’s parkways.

The Good Roads push for government sponsored highway improvements actually began in the late 19th century with the bicycle craze. It was convenient for the auto industry that some improved roads already existed as the industry took hold.

I’m well-aware of that. But those early roads were built by private interests, or local governments. By the time of the federal-aid highways, the intention was to build roads for cars.

There’s partly a cultural problem here. The politicians were all stuck in the mode of thinking rail==robber barons until the 1970s. A good many of them still think that. The push to build roads in the Progressive Era grew out of that mentality. And it was a big push. It started with funding from other federal taxes, but the gas tax came in thanks to President Hoover in 1932, and was then sharply increased for the interstates in the 1950s. It has not increased at all in almost 20 years, and there’s our problem today. Modern needs in infrastructure have run aground on the Heritage Foundation-inspired antitax movement. While the country’s needs have evolved, the country’s politics have de-evolved to the mentality of 19th century southern plantation owners. Investment is a dirty word, and they know the price of everything but the value of nothing.

Well this Congress had better pass something because the Republican majority that will be voted in next month cerainly won’t be passing anything the President wants.

I remember looking for info on 19th cy. US private toll roads, without being very successful. They went out of business because they lost money, from my recollection. In the early 20th cy., the Vanderbilt corporate empire built the Long Island Motor Parkway, but it also went out of business. I can’t find any other such roads.

In 20th Century Sprawl, Owen Gutfreund mentions briefly that turnpikes were successful in the early 19th century, but were then wiped out by the railroads. He also mentions how in the 1930s, the few toll roads that were built all made a lot of money, contrary to predictions of doom by the anti-toll AAA.

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