Congress Finance President

With Diminished Expectations, President Obama Renews Attempt to Expand Transportation Financing

» Major components of the President’s American Jobs Act include direct grants for improved transportation and an infrastructure bank.

A year and two months away from the United States’ next big election, politics in Washington are at a virtual standstill, with Democrats and Republicans completely at odds with one another when it comes to government policies. The situation has aggravated an already difficult funding situation for the nation’s transportation, which lacks an adequate funding source and faces a murky future. Meanwhile, the unemployment situation worsens.

President Obama’s speech tonight, in which he introduced a proposed American Jobs Act, was designed to stake a strong ground in opposition to the anti-investment GOP. In addition to a number of other policies, it promoted transportation investment as a great opportunity for reducing the rate of joblessness and improving the sometimes miserable condition of the country’s highways, rail, and transit. While the speech is unlikely to result in much Congressional action — Republicans do not seem inclined to support any of the President’s initiatives — it came across as thoughtful and in line with the nation’s great economic needs of the moment.

For transportation, the bill would direct $50 billion to the construction of highways, transit, rail, and aviation. Another measure would deposit $10 billion into an infrastructure bank. Both funds would identify and sponsor the projects most likely to spur job growth as quickly as possible. Though the proposal was not laid out in further detail tonight, it represented another variation of the ramp-up in investments in transportation the Obama Administration has been attempting to promote for several years now.

Even so, the project was a clear step back from the far more ambitious proposals Mr. Obama made at the beginning of the year, when he suggested directing $70.4 billion to highways, $18.5 billion to transit grants, and $8.0 billion to high-speed rail in 2012 alone.

In response to the President’s new plans, House Majority Leader Eric Cantor (R-VA) criticized him for being unwilling to describe how the investments would be paid for, evidently unwilling to accept the Keynesian evidence that in difficult economic periods it is a good idea for governments to use deficit funding to support the economy. Chair of the House Transportation and Infrastructure Committee John Mica (R-FL) immediately articulated a position against the plans for the infrastructure bank, arguing that states should take on the responsibility.

Just yesterday, the Republican leaders of the House Appropriations Committee unveiled their proposals for massive reductions in spending at the U.S. Department of Transportation, reducing highway expenditures to $27.7 billion in 2012 (from $41.8 billion in 2011) and transit formula spending to $5.2 billion (from $8.3 billion). No new New Start or Small Start transit capital grants would be funded. The high-speed rail program, which had once been one of Mr. Obama’s signature policies, would be entirely cut. These are austerity measures completely out of step with an economy desperately in need of stimulus, job creation, and infrastructure improvements.

Alternatives to Mr. Obama’s plan that would continue to limit transportation funding from the federal government have little credibility — at least if we believe that keeping the nation’s mobility networks in a condition of acceptable repair is an important national goal. States have limited ability to increase their indebtedness, and the cutbacks that have followed the recession have demonstrated that governors and state legislatures have been almost universally unwilling (or unable) to invest their own funds to shore up their roads and transit lines — in spite of a decline in support from D.C.

At this point, with a Congress that has now dithered on the matter of transportation funding for 709 days, the President’s proposal is about as good as it gets. That doesn’t mean, however, that it has any chance of making it into law.

77 replies on “With Diminished Expectations, President Obama Renews Attempt to Expand Transportation Financing”

Hey Yonah, I’m not sure about the detail on New/Small Starts. THUD didn’t cut New Starts entirely, but cut it down to about $1.5 bn from $2 bn in FY 2010. They’re pitching it as small cuts from 2011, but 2011 made cuts above and beyond other programs to New Starts to take it down from 2010 levels. There’s definitely still funding there for New Starts.

This was the text from the House Appropriations Committee:

“The legislation also limits transit capital investments – only funding “Small Starts” projects and those projects that have signed Full-Funding Grant Agreements with the FTA prior to November 1, 2011. The legislation also includes language that prohibits new Full-Funding Grant Agreements if the project is more than 50% federally funded.”

Upon reading this again, this seems to imply that the legislation will fund:
– Existing New and Small Starts (those that have signed FFGAs up to November 1);
– More Small Starts, but no new New Starts in 2012 (this is not so clear to me);
– New New Starts in future years, but only if local grants cover at least 50%.

CAHSR would not qualify for Small Starts.

The language suggests no funding of New Starts projects that do not already have their grant agreements in place by the end of October. Not sure what is going on with that proviso, but it may be that if the measure is enacted before the continuing resolution expires, and so pre-empts the continuing resolution, New Starts funded under the continuing resolution that get full grant agreements completed by the deadline would be allowed to go ahead.

New spending on infrastructure is money set on fire until we get costs under control. What would $100 billion buy us? Five miles of new subway in NYC? 10 of high speed-rail in California?

Every part of our system for building stuff adds needless costs to the mix. Imitate the most efficient systems in the world, cut 80 to 90 percent from construction costs (depending on the type of project) and then spend money on this stuff. You might actually find that our point of view, which just gets laughed at now, would actually get some support.

10 of high speed-rail in California?

The whole system and then some.

Imitate the most efficient systems in the world, cut 80 to 90 percent from construction costs (depending on the type of project) and then spend money on this stuff.

It’s a factor of 3, not 5-10, and it would take years and quite a lot of money to implement (much of it being due to in house design and such).

Andrew, some of the “imitations” would require a Constitutional Amendment, like limiting nuisance lawsuits based on jury trials – a major drive of overkill solutions like deep-than-needed tunnels to reduce vibrations, tunnels instead of viaducts etc.

Part of the high costs, though, are related to frequent changes on projects after groundbreaking to accommodate last-minute demands from some affect group.

Any spending offset from out-of-control construction costs will only go toward more politically connected constituencies who are even more irresponsible.

The “Keynesian evidence” is pretty thin and much disputed in academic literature, outside of the well established evidence on automatic stabilizers.

Regardless, the Keynesian argument is far more appropriate than this bill. Keynesians believe that taxes should be raised after the economy recovers…that budgets should be balanced over the course of the entire business cycle. In that sense, it is entirely appropriate for people to ask how it will be funded…even if the answer is that we will be taxed higher in the near future.

There was a classic Keynesian surplus in 1999-2000, it was given away by the Bush tax cuts — the administration wanted to return the surplus to the taxpayers rather than (theoretically) saving it for a rainy day.

It’s hard to “lock it in”–one legislature can undo any act of its predecessors.

The PAYGO rules used by the Democrats during 2006-2010 are a good compromise–spending had to be offset by tax increases, though not necessarily in the same year.

But it is typically very hard to undo. If it were easy to undo legislation, we would probably not have the ACA today.

Furthermore, if you spend today and plan to pay for it tomorrow, it is those that plan on undoing the legislation that have to take the political hit for being fiscally irresponsible.

It’s proven startlingly easy to undo tax legislation. :-P Bush and the Republicans should have taken the political hit for throwing away the surplus. Did they? It should have been difficult to pass. Was it?

This is actually a sign of a serious political problem. There is one party in the US which is intent on cutting taxes on the rich. They call for it when Keynesianism says we need a surplus; they call for it when Keynesianism says we need a deficit; they call for it when historical evidence says that we need to transfer money to the poor; they call for it when the rich got rich by *stealing* their money. The other thing this party’s leaders always call for (regardless of the circumstance) is privatization. That’s not a coincidence.

This is the modern Republican Party, the one which destroyed the classic Republican Party of the 1950s. It’s essentially intent on destroying government and transferring its powers to small private cabals — in other words, the reinstatement of feudalism, the creation of undemocratic private powers which are beyond the control of government, but which control people’s lives. Those powers think they need two things: control over core government functions (hence, privatization of water systems, police, etc.), and gobs of money. The Republican Party of today, at the national level, is plainly and simply devoted to giving them those things.

It’s kind of sick.

Danny, you’re just wrong. The Keynesian evidence is as thick as any evidence in macroeconomics. It’s proven, full stop.

It is widely disputed…. by people *paid* to dispute it. The economists *paid* to dispute Keynesian theory don’t actually have a functional theory of their own (they generally circulate stuff which was demonstrated to be false repeatedly over hundreds of years), but they *do* have rich backers who would really like to eliminate government control over the economy so that they can loot and steal from it.

If you actually want to understand this, try reading Nobel Laureate Paul Krugman’s discussion of the models which actually make accurate predictions (Keynesian!), versus the models which don’t (monetarist, Austrian), versus the economists who don’t have models and just make up stuff based on their prejudices or what they’re paid to say (most of the academic “opposition”, unfortunately).

“Danny, you’re just wrong. The Keynesian evidence is as thick as any evidence in macroeconomics. It’s proven, full stop.”

There are plenty of well-respected economists who disagree with Keynes, such as Nobel Prize winner Milton Friedman:

I support increased spending on HSR, mass transit, etc., but I don’t agree that “Keynesian evidence” is “proven”.

Ah, yes, Wikipedia, that inviolable arbiter of truth.

Yes, when it was found that some of the econometric results in one of Milton Friedman’s major work was falsified, he blamed it on a graduate student. So if we accept that, while some work published under his name was directly discredited, it was not his work under his name that was directly discredited, and we would have to look elsewhere to see how credible the Monetarist theory might be.

We tested the Monetarists empirically in the 1980’s, with the Fed trying to target growth in the money supply to control inflation. It repeatedly failed to succeed in hitting its target money supply growth. By contrast, the major Reserve Banks around the world reliably hit their target cash rates. So its an observable fact that a Reserve bank can control the cash rate ~ the cost of the shortest term liquidity ~ but much of the growth in the money supply in a modern monetary production economy is beyond a Reserve bank’s direct control.

In the Monetarist Theory, MV=PQ so under the total differential, dM% + dV% = dP% + dQ%

Now, if we assume that Velocity is determined by economic factors and relatively stable, dV% with respect to a change in the money supply is approximately 0. And if we assume that real GDP growth is determined by economic factors and unaffected by growth in the money supply, and that growth in the money supply is unaffected by growth in real GDP, then dQ% relative to a change in the money supply is approximately 0, and dM%=dP%.

But if money is at least partly endogenous, which it has been observed to be, then dQ% affects dM%. And if Velocity is determined by a combination of factors in finance and production, and money is partly created within the finance sector, there is no basis for simply assuming dV% with respect to a change in the money supply is 0.

And Monetarism falls apart.

This may be part of why Friedman’s intuition involve money dropping from helicopters, because his system does not work for money actually being created and entering circulation the way it is created and enters circulation in our economy.

Without applying labels to the theories, we’ve been trying the new fangled stuff for 30 years. It was supposed to unleash the power of the market to bring forth a new age of prosperity unlike any seen before. Instead we got 30 years of stagnant or declining wages and the world economy teetering on the brink of collapse every other month.

There are varieties of Keynesians who believe that the budget should be balanced over the business cycle, but there are also Keynesians who recommend functional finance, and Keynesians who recommend that the deficit as a percentage of GDP over the business cycle should be about the rate of growth over the business cycle, a modest bit under if the public debt in private hands is too large as a percentage of GDP.

Stating “Keynesians believe that the budget should be balanced over the business cycle” is an undergraduate cartoon version of economic theory.


Pardon me for momentarily going off the transportation track, but my comment below is related.

To have any intellectual honesty and credibility about the argument for eliminating/saving the Bush Tax cuts, you have to admit that NO other president has massively cut taxes in the middle of a one major war, let alone two. That has not been done since Johnson because every president has learned that wars create budget deficits, long wars create huge budget deficits.

What makes matters worse is that even Rumsfeld admitted that they got the Iraq WMD issue wrong and therefore, wasted over $1 Trillion in Iraq alone, plus many lives.

Now put on your fair reasoning cap for one minute. If Cheney-Rumsfled hadn’t hoodwinked/bamboozled/mislead Bush II to invade Iraq and instead did a surge in Afghanistan, as requested by the generals in October 2001, then relied on more intel & drones (which Obama has done), we could have been completely out of Afghanistan by 2004. Bush and the Repubs would have not only kept political power, but moral authority, which they lost and cost Rumsfeld his job.

Then in his 2nd term, instead of just tax cuts, Bush and moderate Repubs could have eagerly listened to the Civil Engineers and U.S. Chamber ofCommerce who told everyone that transportation infrastructure were falling apart and educators who told us that our nations test scores and public school facilities were falling behind other nations. They could have cut deal with Democrats to double transportation and school infrastructure investment (remember “No Child Left Behind”) in return for tougher school standards and MUTUALLY AGREED UPON tax reform & reduction.

The kicker is, Bush-Cheney could have invested in highways, airports and bus rapid transit without investment in Sustainable Energy hated by many of his oil & gas company friends. Also remember that many Bush-Cheney campaign contributors were construction companies. Other than military-construction contractors, they got little love from his administration. When the 2008 Recession hit, its impact would have been lighter. In response, Bush-Cheney and the Repubs could have turned up transportation infrastructure investment. A new wrinkle could have been investing in routes shared between Freight Rail and Emerging HSR and more seaports, to lower long term freight costs while throwing a cost-effective bone to Democrats and Indies.

Using over $1 Trillion in savings from Iraq War, Bush could have been the Eisenhower of his generation in terms of 21st century transportation and education infrastructure.

Instead, Bush-Cheney and the 2000-2006 Republican Congress snatched defeat from the jaws of victory. And now the Tea Party, pushing amnesia to the limits, want to hide these Bush-Cheney failures of war and economic judgment by bashing President Obama and just the sort of Keynesian economics needed to get the economy moving again.

Mica’s proposal includes ditching part of the gas tax that will soon expire and leave the matter to states.

Seems like a pretty good idea. The lack of a sufficient gas tax would bankrupt states pretty quickly…giving the incentive to tax more appropriately.

Nope, states like Texas which refuse to raise taxes will just continue to cut from education.

And then in 10 years we’ll be left with even more millions of uneducated fools voting for more of the same.

“I did get no education, and look how good Im doing. We dont need dem skools”

Exactly, their would be some reforms to state DOT budgets such as Missouri DOT commission realizing that they didn’t need a MoDOT facility/garage in every town nor equipment that sits more then being used. But have to agree with JJJJJ, states will preserve DOT budget by cutting other state services and/or raid tollway revenues. NJ probably being the poster child at the moment. In other states, such as Florida with continuing job growth, its going to be tolls, tolls and more tolls if you don’t want to sit in traffic. The price is going to be steep if the House gets its way.

Texas has a track record of raising taxes when they are needed…even under the psycho of a governor that they have now.

Furthermore, there are fairly robustly proven diminishing returns to school spending, and simple correlations (which I wont venture to claim causation) actually show negative returns…with states like UT performing far superior to states like NY and NJ, which spend 5x more than them. Clearly school performance depends far less on funding than you think.

Here’s a graph from the New America Foundation showing graduation rates per pupil expenditure, with the greatest over-performers being the likes of Wisconsin, Vermont, Iowa, Minnesota and South Dakota and the worst under-performers being DC and Nevada.

Utah’s above the trend line (though at the lower end), as is New Jersey—though they spend more, they have a higher graduation rate (New York’s below). As you note, though, these are only correlations, the study assumes that all graduations are created equal, and we’re definitely missing a lot of factors.

Three times more. A lot of that is teacher’s salaries which are much higher in places like New York and New Jersey because real estate prices are much higher.

Thanks for the correction. Regardless…3x isn’t just a teacher’s salary.

The r-squared of spending and school performance is low enough to conclude that, at least within the ranges of spending found in the US, spending doesn’t matter. If Texas had cut an extra $2000 per student, they would likely perform about the same as if they boosted funding by $2000 per student.

You have to rememeber you are not dealing with computers or machines you are dealing with living people in general which can be unpreductibe or a lot of times go agest the studies everyone can think up.

But it really does boil to teachers’ salaries. New York’s per-student spending is high in nominal dollars, but medium-high relative to the cost of living, and even lower relative to the cost of living for people from the social class teachers are drawn from. When NYPD cops, who are the same social class as teachers, are being recruited to move to Rochester, you know something is wrong.

A low r-squared can not “prove” that a factor “doesn’t matter”, it only proves that a factor is not the sole determinant. We see that all the time when we compare quite significant cross section results with very low r-squares to statistically insignificant time series with much higher r-squares.

And, indeed, an extraordinarily high r-squared on a regression analysis wouldn’t establish causality ~ a perfect correlation between school spending and educational outcomes could be because those who experienced good educational outcomes for other reasons are more eager to pay teachers better.

A school system under No Child Left Untested is going to result in lower educational outcomes than a well managed school system with the freedom to actually teach its students, even if both have roughly equivalent salaries, corrected for the cost of living in the respective locations.

Whether a badly managed school with the freedom to actually teach its students is worse than a school under No Child Left Untested … I dunno. As we’ve seen recently, part of that may involve whether we are thinking about the incentive in No Child Left Untested that rewards school systems that find a way to successfully and systematically cheat the tests.

Danny, I think it depends largely on the method of fundraising—in Illinois, tolls just went up by 88% to pay for rehabilitation and expansion (some of which probably wouldn’t be eligible for federal funding due to air quality rules), but the Tollway Board has a degree of independence from everyday politics. I don’t think it was a good choice—a smaller hike plus tax contributions from communities benefiting from expanded roads would have been better, IMO—but it shows that if a transportation asset has a degree of self-sufficiency, it will fund itself as it sees fit, even if contrary to public opinion.

In states where road funding would be totally dependent on legislative approval, I think anti-tax pressure would make them lean towards some acceptance of decay, plus the odd new project for ribbon cuttings. A couple months ago I saw a presentation about Indianapolis’s new metropolitan transportation plan, and during the course of his speech the consultant offhandedly mentioned that they don’t project having enough money to maintain all the bridges in the system. At the end of his talk showed what was adopted—deferring lots of maintenance on the existing system (although the Indianapolis MPO obviously didn’t phrase it that way) while expanding at the periphery.

Sounds a bit like Cleveland where I currently live.

I think people discount the impact of a strict budget and a single source of revenue. Businesses that are mismanaged can often delay cost-structure reform if they have one revenue stream making up for their mismanagement. I don’t see it any different with government.

If you have a department of transportation where funding comes from 4 different sources, blame is more easily shifted and funds are more easily redirected. Cutting out the federal government gives one less scapegoat blocking the way to real accountability.

Yep, are we really surprised at the end of the day considering that we spend a god awful amount of money for homeland security and defense but can’t adequately support a decent national transportation policy let alone maintain our current infrastructure, locks and dams, harbors and ports.

If a invading force where to start bombing Norfolk VA or even gave the impression that they where going to attack they would shut down that great milltary system make it useless by getting everyone to try and make a run for the bay tunnels jamming them up making them usless to the milltary. Then the invading force could take their sweet time smashing apart the mainly bases in their way and not have to worry about renforcements coming in from the mainland do to all the roads being blocked.

The issue is contentious on this blog, but essentially, name-calling (on the press release) aside, they are proposing that the federal government stops subsidizing trains that are partially state-financed.

It’s another development of the debate: should federal government finance the direct operation of vehicles or only capital expenses (including good SOR for all modes of transportation)?

What were they supposed to say? I don’t think a press release reading “some people proposed reducing funding for state-supported corridors; we don’t agree with that but respect their opinion” would have been very effective. Whatever you think of Amtrak, you can’t blame them for pointing out who proposed the funding cut and why they think it’s a very bad idea.

Surely it is laudible for the national legislature to propose that the national rail authority does not use central government funds to cross-subsidise locally commissioned rail services. If a local authority or state wishes to subsidise rail services in addition to those commissioned under national auspices, it should be wholly responsible for that subsidy. Otherwise, citizens living in frugal states or local authority areas end up subsiding services elsewhere that they have no control over, thus violating the principle of no taxation without representation.

Amtrak subsidy of regional corridors is already scheduled to be phased out (by 2013, I think) as a proviion of PRIIA. Accelerating the schedule just disrupts the planning that’s already going on at the state level.

What is happening in practice is the exact opposite. Amtrak is still going to subsidize services – all the long-distance trains, for one. Since those trains disproportionately serve small rural states, the result is that people in New York and California will keep paying taxes for trains in Montana and North Dakota. Because of the one-vote-per-state rule in the Senate, this is exactly taxation without representation.

….well two votes per state… Occasionally there will be two senators from the same state with opposing viewpoints.

Not just train pork, any kind of pork. The ones most vehement about out of control government spending are usually the one best at directing lots of it to their district. But when it’s in their district it’s not pork it’s a vital service being provided to the stalwart taxpayers of Real America.

@David, that is neither the letter nor spirit of “taxation without representation.”

It does not mean all states must be made whole by getting back the same or more what they get in. If it were so, by definition there would be no existence of a national government. Even if you still see that as a dream, you’ll still see the donor/contributor dynamic played out at the state and local levels of government.

There are many shortcoming of this “the-US-Senate-is-not-democratic” critique.

If one is to consider “my state pays y and gets 0.8 y whereas the other state pays y and gets 1.2y, we could easily extend the argument to the county, city and – why not – neighborhood level, which is what many histrionic people claim from time to time like in “the hard-working family people of subdivision High Creek pays $2.200.000/yr in property tax but they spend half of it in welfare and remedial programs for the much poorer, ‘part of the 43% of Americans that don’t pay net income tax’ subdivision Low Creek. How dare they build a new school there while our Oak trees need nurturing?”.

Taken to its most extreme, we’d end with late medieval-based taxes that were charged on a per capita basis.

One could also push the argument that since the federal government own much land in less populated states under the form of wilderness preserves, native reservations and national parks, which were established mostly against the will of the states, part of the federal budget should be accrued on a land-area basis, not only a population basis.

The bit about income taxes is just a sand in the eyes technique. It’s used by people who forget, or strategically forget, about payroll taxes, sales taxes, higher property taxes on renters, and so on. Actual tax burden as a share of income is fairly flat in the US.

I see, Wad. I was writing the argument to offer some counterbalance for the idea that US would be better off as a sort of unitary state without mechanisms to offset demographic skew roughly along East, West and Gulf coasts.

The U.S., as a whole, is better off with the status quo system.

It’s the system of governance that determines the balance of power.

The two chambers of Congress are an interesting check and balance on the power of the legislative branch within itself.

The Senate offers a political check and balance to the economic power of the House. Since state boundaries are more or less static and aren’t adjusted for population shifts, the Senate gives disproportionate weight to underpopulated areas. This ensures the economic domination of the House won’t allow for political domination as well.

What does the House have to do with economic domination? Well, House seats are drawn according to population, and districts are redrawn every decade. Also, economically productive areas draw larger populations from elsewhere, and economically inert areas have stagnant or declining population.

There’s also yet another check in the House, favoring rural areas and disfavoring urban areas. House seats are capped nationally, each state is at least guaranteed one representative, and House seats are meted out according to states, not according to average national population or national-level districts.

This is a problem particularly for metropolitan urban areas that are economically tied but cross state lines. New York City’s power is tempered because it cannot fuse together the economically and culturally similar NYC and New Jersey because they are in separate states, even though the state line is a weak barrier.

Wad, the only states whose lonely representatives give them a inhabitant/representative ratio lower than the national average, e.g., a further “concentration of power”, are Vermont, North Dakota and Wyoming.

The Senate is an unmitigated disaster which prevents the government from being responsive.

Political scientists who’ve studied it uniformly consider it far, far too undemocratic (at this point, with the huge populations of CA, TX, and NY, and the nonexistent population of Wyoming) to be appropriate.

Nor does it represent communities of interest, with the undifferentiated Upper Midwest getting a dozen states, while NY and CA contain multiple essentially divergent communities of interest.

As you may have guessed, I favor Senate abolition. The demented “filibuster” rules are just the icing on the cake when demonstrating its worthlessness.

There is no test of the thesis that its broken intrinsically independent of the filibuster, holds, unanimous consent requirements and other departures from decisions by majority vote other than eliminating the departures from decisions by majority vote and seeing what that does.

Certainly eliminating the Senate while retaining winner to all electoral voting for the President would result in a system grossly biased to the large states ~ which is perhaps an application of the theory of the second best.

@BryceMcF: filibuster, anonymous indefinite holds and other absurdities of US Senate arcane rules have nothing to do with the procedures by which Senators are elected.

But outcomes cannot be strictly due to ways that Senators are elected, while in no way being affected by supermajority rules.

Supermajority rules undermine democracy, since they remove effective responsibility for outcomes from the presently elected majority.

And of course, its not clear that big states have less than proportionate political clout, all things considered: under a winner take all Presidential electoral system, for instance, they have far above proportionate clout in determining who gets to be President.

Actually, Bruce, the demented system we use for our Presidential elections means that voters in Texas, California, and New York have next to no influence.

The miniscule states of Iowa and New Hampshire have the largest influence. Followed by “swing states” such as Ohio and Florida.

No reputable political scientist thinks that the Presidential election system as currently constituted is really democratic.

An organisation using national funds to pay for local projects with national approval is acceptable. I merely suggested that using such funds to pay for local projects that don’t have national approval is inappropriate. The body which is making this proposal is the House of Representatives, which (as its name implies) is representative.

I can understand a cooling of major new projects until “costs are under control.” But what makes little sense is why any moratorium would then be applied to just major transit projects, and not equally across the board.

If you have a drinking problem, it’s foolish to cut out wine, but still drink a lot of beer. Otherwise, it sounds like the beer drinkers are those making up the rules in the name of sobriety for others.

The relative (to other countries of similar income) excessive cost of transit projects in US is not present to anywhere near the same extent in regard of road projects, or airport terminals/runways construction.

Are you sure about this? The comparison of the Big Dig to the A86 tunnel in Paris, or of the Tappan Zee and Bay Bridge Eastern Span replacements to the Øresund Bridge, doesn’t look any more favorable than a comparison of rail construction costs.

A lot of these costs depend on which area you are building it in such as to add a thrid lane to Interstate 81 for six miles though the hard rocks of the mountains of Western Vriginia costs Vdot 75 million dollars. But Vdot is right now going to spend 110 million dollars to rebuild and widen a one mile section of Route 7 in Northern Vriginia.

Which if you look at the two projects the interstate 81 widening is the much larger one in terms of lane miles and size of new road that will be built. Not to mention the amount of over all rock and earth that will need to be moved.

The Northern Vriginia project on Route 7 for 110 million is really a one mile long protect that will add a extra lane on each way on Route 7 though the Northern Vriginia suburbs.

@Progressive Capitalist, transit’s being cut because the people who won power in 2010 want to take money away from people who don’t look or think like them.

That’s not really true. US progressives and conservatives both have coherent policies about taxes and spending. They for the most part do not have transportation policies independent of other concerns.

The “childish” part being the “just”, in both cases?

Certainly the wealthy should pay a greater share of their income to taxes than the less wealthy, since on the one hand a progressive tax structure results in a more stable business cycle, which benefits everyone, while the wealthy benefit disproportionately from the protection of financial wealth provided by removing a portion of the purchasing power injected by government spending via taxes.

However, at the same time it is easier to persuade people of that who think of rich people as being “different” from themselves and harder to persuade people of that who think of rich people as being “the same as” themselves.

Equally well, its easier for rural and suburban residents to persist in a fantasy that the “Auto Uber Alles” system has a future in addition to a past, independently of how they perceive residents of areas where congestion demanded alternative means of transport even before “Auto Uber Alles” became obsolete in general … but its easier to convince them to hold onto the fantasy if they think of urban residents as “different”.

The GOP does not “just” have an ideological hatred of trains ~ that ideological hatred of trains has a long history of being funded by the Oil lobby, and Big Oil jumped from the Democrats to the Republicans back in the 70’s, so there’s been over three decades to foster that ideological position.

This is why the more sane members of the GOP like Ron Paul say that if spending is going to be cut, it’d just be a broad 10-20 percent cut, not this “cut highway spending by half and HSR spending entirely and leave our sacred cows (MIC, wars, corporate subsidies, etc) alone.”
Even if these proposed cuts do go into effect, don’t expect them to produce any positive changes – ie, reducing the national debt and inflation.

Across the board cuts are the worst ones in infrastructure, regardless of the mode concerned. If one has 3 new airport runways to build and has its building cut 25% across the board, it will end with 3 semi-completed but useless runways.

Except in small scale projects like rural roads paving or new streetcar stops, cuts on investments need to be made considering what use can be made of the infrastructure that can be paid for. Which stations to cut? How to shorten the streetcar propose? Where to put the new end of the highway?

Then, throw in maintenance. Federal funds from gas taxes can be used to maintain highways in a good state-of-repair, and are important for that. Congress legislation forbids the fed from financing the operation of closed-transit systems.

Except larger scale projects have greater debt capacity and can offset cuts with higher user fees. Hence, runways can be close funding gaps with landing fees, while major highways can charge tolls. Even high-speed rail can charge higher fares than currently projected, so long as aviation spending is equally cut to remain competitive.

In that sense, urban/regional transit systems can also hike fares to offset costs and take debt. The problem is to come up with financial schemes that make them attractive to bondholders and investors. Still, semi-completed subway lines, streetcar network with gaps and the like degrade the ability of the system to deliver service noticeably.

Conventional demand-side strategies won’t work (beyond a short-term bubble), when past, short-sighted, supply-side strategies have outsourced so many jobs. The US government can’t reap the rewards, when conventional stimulus now feeds economies external to its taxing authority. Keynes didn’t account for the production responding to any stimulated demand to be external of one’s domestic economy.

Cheap fun never feels good the next day. Welcome to the hangover. But what’s worse, few are admitting to that we suffer from addiction. And that’s just the first step to our recovery.

This is why former-free-trade-advocate Krugman is now pointing out that protectionism sometimes works. And would work now.

Well, he’s defending protectionism politically, not economically. Basically he writes posts saying “There is a case for it,” but then at the end giving brief explanation why it’s a bad idea. The one thing he does support is threatening retaliatory tariffs on China if it keeps its currency undervalued, but that’s not the same as protectionism.

Leave a Reply