Categories
Chicago Congress Finance Infrastructure

If Washington Can’t Commit, Chicago is Ready to Go It Alone

» Chicago Mayor Rahm Emanuel announces billions for infrastructure upgrades. 

Though the details are not yet in full view, Chicago Mayor Rahm Emanuel’s proposal to spend $7.2 billion over the next three years on infrastructure upgrades represents a truly significant advance in the field of municipal investment in the United States. It’s a unified plan to spend public and private funds on improved transit, parks, water, and educational facilities.

What a contrast to the U.S. Congress, an allusion to which I can hardly overlook in this context. Last week, House and Senate officials pushed forward an extension of the existing surface transportation legislation — the ninth such extension since SAFETEA-LU, the previous law, originally was supposed to expire in 2009.

The problem, suffice it to say, is not cowardice or nonsense political wheeling-dealing, but rather relatively minor — but painfully partisan — differences in perspective on the national transportation system. Over in the House, Republicans have campaigned for no increase in spending on mobility infrastructure (under the guise of fiscal moderation, with the goal of remaining within the constraints imposed by revenues provided by the Highway Trust Fund). Transit and other alternative mobility programs have been put under threat. In the Senate, Democrats promoted (and passed) a small increase in overall funding through a diversion of money from general (non-gas tax) revenues.

Now the Congress has given itself an extra ninety days to pick up the slack and somehow pull together a bipartisan transportation bill in the middle of campaign season in a presidential election year. The task is practically herculean.

In that sense, comparing Mr. Emanuel’s progress with the non-action out of Washington is unfair — Chicago’s strong mayoralty, which has almost direct control over public transportation, education, and the parks, allows swifter, more direct action than is possible in the heavily contested national legislature. And perhaps unlike in the federal government, there is basically universal support at the local level for the idea that the public infrastructure must be improved upon.

Emanuel’s plan, which has been dubbed “Building a New Chicago,” would guarantee investments in significant upgrades across the city. Some of the announcement is a media device — much of the spending would have occurred announcement or not — but much of it is being financed through “reforms, efficiencies, cuts in central offices, direct user fees, and… the Chicago Infrastructure Trust,” according to the mayor’s office. This is not, in other words, the same-old, same-old.

The city must be able to show that it can save significantly by improving the delivery of its existing services. One example, for instance, is in the creation of bus rapid transit services on Jeffrey Boulevard and in the Loop, both of which are part of the plan, and each of which would improve the daily experience of transit users even as they reduce operations costs for the Chicago Transit Authority. Similar improvements, such as a $225 million retrofit program, would save money in the long term by reducing energy consumption.

Other projects, such as the completion of the Bloomingdale Trail (the Chicago equivalent of New York’s High Line), the upgrading of many of the city’s parks, the update of the water system, the improvement of many schools, and the renovation of 100 El rapid transit stations, would be funded as well. Though the exact method by which they would be financed has not yet been established, it seems evident that some mix of user fees and private spending will be on hand. The latter will be made possible through the Infrastructure Trust, which Mayor Emanuel announced a month ago. The Trust would use debt and equity investment to leverage private investment for infrastructure. It could be an innovative mechanism to speed repairs to the city’s public environment.

Unlike his predecessor, Mayor Richard Daley, Mr. Emanuel has produced a plan that would not result in the privatization of infrastructure. Mr. Daley’s 2008 parking meter deal notoriously lost the city billions of dollars, even as it deprived the city of control over much of its street space. The Trust would allow for private profit-making without handing over full control — a reasonable compromise.

Mr. Emanuel’s interest in investing in infrastructure is a logical extension of the arguments he has made since he was sworn in to office about 11 months ago. His administration, like that of most other cities, has been troubled by the decline in tax revenues resulting from the nation’s extended economic difficulty. He has had to balance budgets through difficult moves like school closings.

Yet unlike leaders of other cities, Emanuel has not yet made the push for increases in taxes to pay for infrastructure, unlike, say, Los Angeles. In some ways, this represents a strategic move; rather than assume that voters are ready to contribute more to a not-perfect system, there has been an effort here to live within the city’s existing means. If this can be done without imposing too much austerity on public services, it will raise confidence in the local government’s ability to perform adequately.

Chicago’s decision to fund its projects in such a manner is something that most cities could likely emulate with few negative political results. They just have to be more willing to experiment with creative financing and efficiencies.

In the years ahead, though, even a $7.2 billion investment will be inadequate to resolve some of the city’s most significant transportation needs, such as the renovation of northern section of the Red and Purple Lines and the extension of the Red Line south to 130th Street (each of which Mr. Emanuel has announced his intention to pursue) — not to mention more long-term efforts to extend the Orange Line, build a new downtown subway tunnel, and create a citywide BRT network. If those projects are ever going to make it into construction, Washington will need to step up its game, as even cities like Chicago need federal support for the biggest investments.

Image above: Bloomingdale Trail, from Flickr user vespar avenue (cc)

Categories
Congress DOT Finance

The Senate’s Transportation Program

(I) The Accomplishment

The U.S. Senate’s passage of a transportation reauthorization bill Wednesday was big news, if only because it has now been 898 days since the last transportation bill officially expired. Three years of debates in both houses of the Congress have brought us one proposal after another, but only one piece of legislation has actually made it out the doors of one of the chambers. That is a serious accomplishment for Barbara Boxer’s leadership in the Senate Environment and Public Works Committee.

Senate Bill 1813, also known as MAP-21 (“Moving Ahead for Progress in the 21st Century“), is a $109 billion law that will remain in effect for 18 months if it is passed by the House. It reorganizes several national transportation programs and includes a number of interesting features, some of which I describe later in this piece.

Of course, the specific policy measures of MAP-21 may be meaningless despite the bill’s 74-22 passage margin, which included about half of the GOP contingent in the Senate; House Republicans have suggested that they have little interest in moving forward with this bipartisan legislation. Current funding for transportation runs out on March 31st; at that point, if nothing happens at the Capitol, collection of fuel taxes and distribution of transportation funding from Washington to the states will cease. What seems most likely is yet another extension of the existing transportation bill, originally passed in 2005 but now woefully out-of-date and underfunded.

Some have noted that MAP-21, for all the acclaim it has received (at this point, any bill to get through would likely be lauded…), is ultimately little more than another extension of the existing law. But, as Lisa Schweiter has written, it does nothing to resolve the financing difficulties that plague America’s transportation funding situation. The bill will require a significant infusion of money ($12 billion) from sources other than the Highway Trust Fund. In other words, it will not be fully funded through the fuel tax user fee, which many would like to see increased to cut down on automobile-produced externalities and force a link between spending on transportation infrastructure and revenues derived from transportation. It is unclear how the next bill, facing even fewer revenues from the Trust Fund, would be funded.

Yet the political conditions in which MAP-21 did pass are indicative of the bill’s importance. We are, after all, in a tightly contested election year in which Republicans have set their sights on the White House and Senate as Democrats eye the House. The bipartisan passage of the legislation — though not as close to unanimity as many previous transportation bills — suggests that there continues to be relative consensus among both parties that there is a rationale for federal investment in transportation infrastructure. Republicans in the Senate could have easily deflected the bill’s passage, forcing yet another extension — but they chose to cooperate and produce a less-than-ideal bill that will nonetheless keep people employed and America’s infrastructure in reasonable condition.

It is true that the Highway Trust Fund’s diminishing pot of funds — caused by the coinciding effects of an overall decrease in driving, better fuel efficiency, and the lack of any inflation adjustments on the levy since 1993  — imperils the future of U.S. transportation funding, whether or not MAP-21 makes it to President Obama’s desk. But Congress is not run by economists. It is run by politicians who, for better or worse, must respond to the demands of their constituencies.

What is unquestionable is that the level of support for a national increase in the fuel tax is minimal. Republicans are hammering the Administration for presiding over a significant increase in fuel costs since 2009, despite no increase in the tax. Meanwhile, Democrats are legitimately worried about increasing the burden of transportation costs on the nation’s lower- and middle-income households. In discussing how to pay for transportation, we cannot forget the fact that a majority of the nation’s poor now live in suburbia — most of them far away from the nation’s underdeveloped public transportation system. Increasing the gas price will do significant damage to the purchasing power of tens of millions of Americans in the short and medium term. There’s a reason that doing so has little political momentum.

Transportation experts may not like the sound of it, but funding for national infrastructure is not — and likely will not be — fully user funded (it wasn’t even when the Highway Trust Fund was on more solid fiscal ground). In fact, its role is as somewhat of a redistributive tool, encouraging mobility by subsidizing cheaper travel both through cheap roads and, in the cities, transit. Helping people to get around is a bipartisan policy goal. This leaves MAP-21 in the uncomfortable position of relying on outlays from federal funding sources other than the gas tax. In this day and age, that comes in the form of debt.

(II) The Policy

Despite the limited nature of the MAP-21 legislation, there were nonetheless some significant changes to federal transportation law contained within. Most intriguingly, the bill puts into question the future of private sector involvement in the transportation field.

What MAP-21 does not do is either cut funding for sustainable transportation dramatically (as would have the still-born House Republican proposal, H.R. 7) or devolve transportation funding and decision-making entirely to the states, a revision whose primary consequence would be putting more highway-crazed State Departments of Transportation in charge. It was, in other words, not a good policy. Thankfully, two amendments to MAP-21 that would have done so failed by huge margins in the Senate (Senator Jim DeMint (R-SC)’s by 30 to 67; Senator Rob Portmans (R-OH)’s by 30 to 68), suggesting that there is little support on either side of the aisle for moving all transportation policy to the states.

MAP-21 is designed to provide a framework for a significant reworking of the nation’s transportation policy structure. It does so first by establishing a set of national goals for the mobility system — to improve the freight network, to ensure a state of good repair for existing infrastructure, and to reduce congestion, for instance. These largely symbolic efforts may come to play a larger role if MAP-21 enters into the law and is eventually expanded by future legislation.

More importantly, this bill consolidates duplicative programs in the Department of Transportation and at least in theory streamlines project delivery processes to ensure faster construction timelines and cheaper costs. Whether these changes will actually improve the construction and operation of transportation in the U.S. remains to be seen.

Though MAP-21’s investment strategy is generally designed to continue existing levels of federal transportation investment (at an inflation-adjusted pace) including the now-standard 20% of funds for transit, it includes several measures that are beneficial to sustainable transportation options. For one, the TIFIA program, which offers federal loan support and can back significant private investment in new infrastructure, would be expanded from $122 million a year to $1 billion a year. For cities like Los Angeles, which wants to expand its transit network at a breakneck speed, this could be a huge boost, as it allows cities to take out more loans at lower, federally backed rates.

The bill permanently equalizes commuter tax benefits for transit commuters with those received by people who park, a long sought-after rule. It also allows transit agencies to use federal funds to pay for operations costs in certain situations. This is currently not to be covered using money from Washington (because transit funding is currently reserved for capital expenses). This is a huge advance that could provide downtrodden metropolitan areas the ability to maintain services on their bus and rail lines even when they face declines in revenues from other sources, which has happened in most U.S. cities since the beginning of the economic crisis.

Despite the inclusion of more money for TIFIA, the bill’s stance on private involvement in transportation is mildly contradictory. The House bill H.R. 7 would have given transit agencies a monetary incentive for contracting out their services to private operators. This was, to be frank, a giveaway to the private transportation industry. MAP-21 has no such provisions.

On the other hand, MAP-21 includes an amendment proposed by Senator Jeff Bingaman (D-NM) that passed 50-47 that excludes private highways from the calculation of a state’s guaranteed transportation funding through standard federal formulas. Currently, states are provided highway funds in part based on their mileage of federal highways; the Senator’s amendment simply says that roads that used to be public and were transferred to a private entity should not be counted in that calculation. Bingaman argued that “drivers across the nation shouldn’t be subsidizing any state that has chosen essentially to “sell off” an existing highway to the highest bidder.” He has a point, and his amendment seems likely to dissuade states from continuing down this particular path, but it does seem to be somewhat of a contradictory move on the part of the Senate: Does it want private investment through programs like TIFIA, or not?

Altogether, the Senate’s proposal is a significant advance over the existing law. If it were passed by the House, American cities would benefit.

Nevertheless, MAP-21’s ultimate failure remains the fact that it fails to provide for a significant expansion in funding for sustainable infrastructure projects. President Obama, whose administration continues to officially promote the passage of a bill that would double national transportation spending and devote a far higher percentage of it to transit, livable communities, and high-speed rail, has been shunned to the sidelines in the Senate’s debate. And the nation’s mobility systems will suffer as a result.

What, then, can we make of the future of the nation’s transportation network? What is inevitable is that MAP-21’s success or failure in the House of Representatives will do nothing to resolve the legislative confusion between the oft-repeated claim that transportation should be paid for through user fees and the embarrassing fact that there aren’t enough user fees being collected to pay for the things we want.

Image above: The subway connecting the U.S. Senate office buildings and the national capitol building, from Flickr user goldberg (cc)

Categories
Congress DOT Elections Finance

Time to Fight

» With a House like this, what advances can American transportation policy make?

Actions by members of the U.S. House over the past week suggest that Republican opposition to the funding of alternative transportation has developed into an all-out ideological battle. Though their efforts are unlikely to advance much past the doors of their chamber, the policy recklessness they have displayed speaks truly poorly of the future of the nation’s mobility systems.

By Friday last week, the following measures were brought to the attention of the GOP-led body:

  • The Ways and Means Committee acted to eliminate the Mass Transit Account of the Highway Trust Fund, destroying public transportation’s source of steady federal financing for capital projects, first established in the 1980s. The members of the committee determined that to remedy the fact that gas taxes have not been increased since 1993,* the most appropriate course was not to raise the tax (as would make sense considering inflation, more efficient vehicles, and the negative environmental and congestion-related effects of gas consumption) but rather to transfer all of its revenues to the construction of highways. Public transit, on the other hand, would have to fight for an appropriation from the general fund, losing its traditional guarantee of funding and forcing any spending on it to be offset by reductions in other government programs.** This as the GOP has made evident its intention to reduce funding for that same general fund through a continued push for income tax reductions, even for the highest earners.
  • The House Transportation and Infrastructure Committee approved a transportation reauthorization bill on partisan lines (with the exception of one Republican who voted against it, Tom Petri of Wisconsin) that would do nothing to increase funding for transportation infrastructure in the United States over the next five years despite the fact that there is considerable demand for a large improvement in the nation’s road, rail, and transit networks just to keep them in a state of good repair, let alone expand them to meet the needs of a growing population.
  • The committee voted to eliminate all federal requirements that states and localities spend 10% of their highway funding on alternative transportation projects (CMAQ), such as Safe Routes to School, sidewalks, or cycling infrastructure, despite the fact the those mandated investments are often the only ones of their sort that are actually made by many states.
  • The committee eliminated the Obama Administration’s trademark TIGER program, which has funded dozens of medium-scale projects throughout the country with a innovative merit-based approach. Instead, virtually all decisions on project funding would be made by state DOTs, which not unjustly have acquired a reputation as only interested in highways. Meanwhile, members couldn’t resist suggesting that only “true” high-speed rail projects (over 150 mph top speed) be financed by the government — even as they conveniently defunded the only such scheme in the country, the California High-Speed Rail program.
  • The same committee added provisions to federal law that would provide special incentives for privatization of new transportation projects — despite the fact that there is no overwhelming evidence that such mechanisms save the public any money at all. And under the committee’s legislation, the government would provide extra money to localities that contract out their transit services to private operators, simply as a reward for being profit-motivated.
  • Meanwhile, House leadership recommended funding any gaps in highway spending not covered by the Trust Fund through a massive expansion in domestic energy production that would destroy thousands of acres of pristine wilderness, do little for decreasing the American reliance on foreign oil, and reaffirm the nation’s addiction to carbon-heavy energy sources and ecological devastation. New energy production of this sort is highly speculative in nature and would produce very few revenues in the first years of implementation. As a special treat, the same leadership proposed overruling President Obama’s decision to cancel the Keystone XL pipeline by bundling an approval for it into the transportation bill.

This litany of disastrous policies were endorsed by the large majority of Republicans on each committee, with the exception of two GOP members in House Ways and Means*** and one in the Transportation Committee who voted against the bill, though the vote was entirely along party lines for an amendment attempting to reverse course on the elimination of the Mass Transit Account.

Fortunately, these ideas are unlikely to make it into the code thanks to the Senate, whose members, both Democratic and Republican, have different ideas about what makes an acceptable transportation bill. I’ll get back to that in a bit.

The House’s effort to move forward on a new multiyear federal transportation bill — eagerly awaited by policy wonks for three years — follows intense and repeated Republican obstructions of the Obama Administration’s most pioneering efforts to alter the nation’s transportation policy in favor of investments that improve daily life for inhabitants of American metropolitan areas. As part of that process, federally funded high-speed rail, streetcar, and transit center projects have been shot down by local politicians as a waste of money, even as road construction has continued apace.

The Tea Party’s zany obsession with the supposed U.N. plot to take over American land use decisions through Agenda 21 seems to have infected GOP House members and even presidential contenders. Michele Bachmann’s claim in 2008 that Democrats are attempting to force people onto light rail lines to travel between their housing “tenements” and government jobs may have made it into the mind of Newt Gingrich, who recently made the claim that the “elite” in New York City who ride the subway and live in high-rise condos don’t understand “normal” Americans. What kind of language is this?

In the Senate, there is clear evidence that the hard-core proposals of the House will not become law. The upper body’s Environment and Public Works Committee unanimously endorsed a different type of transportation reauthorization, one that would last only two years but that would reform and simplify the grants provided by the Department of Transportation so that they are more based on merit in such matters as ecological sensitivity and the creation of livable communities.

Similarly, in the Senate Banking Committee, the transit portion of the proposed bill (approved unanimously) would maintain funding guarantees and allow transit agencies to use federal dollars for operations spending during periods of high unemployment, which would be an excellent policy if pushed into law. How the Senate will be able to compromise with the House in time for the March 31st deadline set by the current legislation is up in the air.

The strange and laudable part of the Senate side of the story — at least as compared to the House — is the bipartisan nature of decision-making there. Why are Republicans in the Senate promoting a transportation bill that explicitly would promote multimodalism as a goal, in a contrast to the highway focus of their peers in the House? Why are they accepting environmental criteria as appropriate measures of quality in transportation policy? Perhaps the Democratic Party’s control of the Senate makes fighting such ideas a waste of time. Or perhaps longer Senate terms in office allow clearer, more reasonable thinking.

Whatever the reason, in the long-term, it is hard to envision reversing the continued growth of the GOP’s strident opposition to sustainable transportation investments in the House. As I have documented, density of population correlates strongly and positively with the Democratic Party vote share in Congressional elections; the result has been that the House Republicans have few electoral reasons to articulate policies that benefit cities. Those who believe in the importance of a sane transportation policy need to make more of an effort to advance a sane transportation politics to residents of suburban and rural areas, who also benefit from efforts to improve environmental quality, mobility alternatives, and congestion relief, but perhaps are not yet convinced of that fact. Doing so would encourage politicians hoping for votes outside of the city core — Democratic or Republican — to promote alternatives to the all-highways meme that currently rules the GOP in the House.

In the face of such actions, it becomes imperative in the short term not only to ramp up citizen opposition to the defunding of transit and associated programs, but also to full-throatily endorse those leaders who will stand up to fight. Not working for their election in the fall risks policies like those being advanced in the House being passed by an acquiescent Senate and signed by a future president. Such actions would put in question the potential improvement of existing programs and turn back on the policy strides that must be made to contest the vision some have of an all-automobile America.

* The Congressional Budget Office recently estimated that based on current tax receipts, the government will run out of funding for new highways next year and for new transit in 2014.

** I have in the past frequently cited the failings of the current user-fee based transportation funding system. By taxing people based on their automobile use and using some of the funds for transit, we are of course attempting to counteract the negative externalities produced by pollution and congestion. But in the process, we are charging drivers — even in places with no alternatives — a regressive tax that limits the mobility of the poor. Thus we are directly tying funding for transit to revenues from automobiles, a perverse relationship. Yet the alternative to the user fee is guaranteed funding from the general fund, not arbitrary annual appropriations to transit that House Republicans seem to be promoting.

*** Erik Paulsen of Minnesota and Vern Buchanan of Florida, both of whom represent districts just outside city centers.

Categories
Congress Finance High-Speed Rail Infrastructure

Ignoring Inaction in Congress, DOT Pushes Through Grants for Intercity Rail

» Congress isn’t able to do much in terms of passing new legislation — but the Department of Transportation hasn’t hesitated to move forward to fund intercity rail projects.

Americans are frustrated with the Congress: Over 80% of the population disapproves of the job the national legislature is doing. And no wonder. With the unemployment situation out of control and the economy still on the skids, this is the time for government action.

All we seem to be getting, however, are repeated demands from Republicans to reduce spending drastically — and meek replies from Democrats worried about upsetting the electorate. President Obama’s Jobs Bill, introduced twenty days ago, would provide a real, albeit too small, stimulus to the economy, specifically through the construction and refurbishment of infrastructure.* But the legislation has yet to be introduced in either house of Congress. Meanwhile, getting any transportation spending approved other than short-term extensions of the previous multi-year bill (which expired 729 days ago) has been impossible thanks to disagreement between the parties and a general reluctance to identify funding sources.

When Republicans took control of the House of Representatives early this year, they promised to fight to eliminate previously approved grants for states across the nation to invest in intercity rail projects. Facing a Democratic Senate, that would not be an easy proposition, but the intense effort to reduce government spending over the past year could have meant the loss of funds already promised to states — but for projects not quite ready for prime time.

In the meantime, the Department of Transportation has been pushing grants out of the federal government’s hands as quickly as possible so that they can not be rescinded.

In September alone, the Federal Railroad Administration has approved hundreds of millions of dollars for intercity rail upgrades nationwide: $149 million for New York State, $116 million for New England, $49 million for Texas, $48 million for North Carolina and Virginia, $35 million for the Northeast Corridor, $31 million for Washington State, and $13 million for Oregon, among others. Earlier this summer, hundreds of millions of dollars were appropriated to California and the Northeast. Unless states turn back the money, unlikely considering that the projects have gotten so far and their pro-rail sponsors, these funds cannot be taken back by Congress.

It’s worth questioning how ready most of these states are to use these funds now that they have them, or how quickly they’ll be able to get construction started. The first high-speed rail grants were announced in January 2010; other than the project to upgrade tracks between Chicago and St. Louis, has any major construction begun?

The DOT, perhaps, wouldn’t be rushing these grants out to the states if it were completely confident that the high-speed and intercity rail funding program were alive and well. Under an Obama Administration and a fully Democratic Congress, that would be likely.

But the Senate came very close a week and a half ago to approving a fiscal year 2012 budget that had no money at all for high-speed rail — and Mr. Obama seemed ready to go along, in the spirit of budget-cutting bipartisanship. The compromise that was eventually reached last week saved $100 million for the mode (a pittance compared to years passed), though even that could face considerable obstacles in the House.

Though Republicans now seem willing to spend a bit more money on transportation than they did a few months back because of an outcry that set in once it became clear that initial plans would reduce funding (and therefore transportation-related jobs) by 30%, their investment strategies would do little to increase the annual federal appropriations now spent on mobility. We are at a standstill, unable to make a big move.

What has been made manifest over the past few months is that President Obama’s efforts to alter American transport policy have been far from universally accepted, that their long-term effect on U.S. mobility is unclear, and that the DOT has been forced to descend into a defensive mode in which it has no choice but to push grants out as quickly as it can for fears that legislators will change their minds mid-stream.

Mr. Obama’s affection for high-speed rail is well-known, and he has included it as an integral element of his transportation plans from the beginning, unlike former President Bill Clinton, who said he cared about intercity rail during the 1992 campaign but then proceeded to forget about it. Yet, possibly because of low approval ratings stemming from other issues, the current Administration has been unable to convince other politicians — especially many Republicans — that such projects are worthy of investment. Mr. Obama’s message, rebooted several times (first as a way to “win the future,” then as part of the Jobs Bill), simply has not come across loud and clear.

These difficulties, along with the GOP-Governor-forced destruction of three marquee projects in Wisconsin, Ohio, and Florida, has once again reinforced the idea that Americans simply cannot handle the idea of spending government funds on intercity rail — despite the quite positive effects it has produced abroad. The fact that the Congress continues to debate transportation investments in terms of mode, with a certain pot of money reserved for roads, another pot for transit, etc., suggests that few in power have taken seriously the concept that transportation decision-making should be mode-neutral and oriented towards providing the best-possible mobility, economic, and environmental benefits. The fact that future rail investments are predicated on getting specific outlays for that mode is a sad reflection of the way we currently invest in our travel corridors and in our cities;  we seem to be considering mostly vehicles, not the passengers in them.

So the DOT moves forward, articulating a strategy to distribute the funds it does have as quickly as possible. This is not a long-term approach and it is not a sustainable one.

* The U.S. Department of Transportation recently announced how Mr. Obama’s Jobs Bill dollars would be distributed: $27 billion for rebuilding roads and bridges; $9 billion for rebuilding transit systems; $5 billion for TIGER-like competitive grants; $4 billion for high-speed rail projects, $3 billion for aviation improvements; and $10 billion for an infrastructure bank.

Image above: Albany-Rensselaer Station, set to receive aid from the Federal Railroad Administration for improvements, from Flickr user mava (cc).

Categories
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.