Infrastructure Key Part of Obama’s $450 Billion American Jobs Act; Highway Bill Extension Clears a Hurdle

This week, President Obama banks again on infrastructure investment to stimulate the nation’s economy. Also, a key Senate committee approves a four-month extension of surface transportation programs as a House Appropriations subcommittee passes a 2012 transportation budget that cuts overall spending and Administration-favored programs. There are also items this week on congestion reduction, sprawl and smart growth.

‘Jobs Act’ Highlights Infrastructure

In a speech to a joint session of Congress Thursday, President Obama offered a $450 billion series of proposals aimed at creating jobs. The President’s proposed “American Jobs Act” includes $50 billion in immediate investments for highways, transit, rail and aviation. It would also provide $10 billion to capitalize a new National Infrastructure Bank, which could leverage private and public capital and invest in infrastructure projects of national and regional significance. The bank would be modeled after one proposed in legislation offered by Senators John Kerry and Kay Bailey Hutchison.

Devin Dwyer of ABC News writes that the President’s pitches for infrastructure in recent days should sound instantly familiar to anyone who was paying attention in 2009 as the President was pushing for the American Recovery and Reinvestment Act, which set aside $48 billion for transportation infrastructure projects.

But although the ARRA kept tens of thousands of construction workers on the job, repaired 34,000 miles of roads, and repaired or replaced 1,300 bridges, it was seen by some as a stimulative disappointment. One reason was that it took too long to get many of the ARRA-funded projects off the ground. Even the President himself said last year that the experience with the ARRA convinced him there is no such thing as a “shovel-ready project.”  

But, as Jack Roberts, an Oregon businessman and former state labor commissioner writes in an op-ed for The Oregonian newspaper this week, that shouldn’t have come as a surprise to anyone.

“The reality is that it costs money to get a project to the shovel-ready stage,” he writes. “It’s simply not prudent to have a bunch of shovel-ready projects standing by in case funding suddenly drops out of the sky.”

So why go to the well again? The answer of course is the potential of infrastructure spending to create jobs. Bloomberg reported that the consultancy Macroeconomic Advisers is forecasting that the American Jobs Act’s combination of tax incentives and infrastructure spending could create at least 1.3 million jobs in 2012 with an additional 800,000 jobs in 2013. That would be enough to shave more than a percentage point off the nation’s 9.1 percent unemployment rate.

Transportation experts also believe that a more concentrated infusion of infrastructure funding could help deliver the swift kick to the nation’s economy the Recovery Act did not.

“The president wants to jump-start the economy and create jobs, and so if he could manage to get the authority to spend $50 billion all in one year, you would probably have a much higher number of jobs created (higher than the 64,000 employed on highway projects at the peak of the Recovery Act a year ago), if it all happened in one year,” John Horsley of the American Association of State Highway and Transportation Officials told ABC News.

A National Infrastructure Bank—Do We Need It & Would It Help?

Some however are questioning whether the creation of a national infrastructure bank would provide the kind of immediate stimulus the nation needs and the President wants from the jobs plan.

“An I-Bank will not create any jobs on day one; it probably won’t create jobs on day 365,” Janet Kavinoky of the U.S. Chamber of Commerce told CNN Money this week. “In my view it could take three years.”

Ron Utt of the Heritage Foundation, a conservative think tank, concurs.

“Obama’s infrastructure bank would likely yield only modest amounts of infrastructure spending by the end of 2017 while having no measurable impact on job growth or economic activity—a prospect woefully at odds with the economic challenges confronting the nation,” he told CNN Money.

Others question the need to create an infrastructure bank as a new entity when resources already exist that allow the federal government to accomplish many of the same things a bank would.

“We already have a national infrastructure bank,” Geoffrey Yarema, a partner with the infrastructure-oriented law firm Nossaman LLP, told the public finance newspaper The Bond Buyer following the President’s speech. “It’s called the TIFIA program.”

TIFIA, which stands for Transportation Infrastructure Finance and Innovation Act, is a program originally created in 1998 that sets up loan partnerships between the federal government and state and local governments, transit agencies, railroads, special districts or authorities and private entities to provide financing for transportation projects of regional and national significance.

Veteran transportation analyst Ken Orski told Energy and Environment Daily that “there is a widespread sentiment both in the House and Senate, rather than creating a new federal fiscal bureaucracy, we ought to strengthen and expand existing financial instruments, primarily TIFIA.”

Some also believe the federal government might be wise to move to bolster existing and already successful state infrastructure banks instead of creating a national one. That’s the way that U.S. House Transportation and Infrastructure Committee Chairman John Mica has said he would like to go.

“A National Infrastructure bank run by Washington bureaucrats requiring Washington approval and Washington red tape is moving in the wrong direction,” Mica said in a statement after the President’s speech. “A better plan to improve infrastructure is to empower our states, 33 of which already have state infrastructure banks.”

You can read more about SIBs in my Capitol Research brief from earlier this year.

Senate Committee Passes Highway Bill Extension

The Senate Environment and Public Works Committee this week voted to extend the legislation that authorizes surface transportation programs through January 31, 2012. The current extension is due to expire September 30 along with the authority to spend from the Highway Trust Fund for transportation projects around the country. The committee’s vote, which was unanimous, is the first step toward congressional passage of the extension. Passage would allow lawmakers more time to agree on a more long-term reauthorization bill. The committee has put forward a two-year, $109 billion bill that would require finding an additional $12 billion above existing gas tax revenues to fund. Debate on that bill could begin as early as next week. House Republicans have pitched a six-year $230 billion bill that would rely solely on available revenues. The Hill newspaper has more about the politics involved in the extension and authorization proposals.

The Federal Transit Administration issued a report this week on just what is at stake if the authorization is not extended on time. According to the report, 134.936 active highway projects and 847,294 jobs are at stake nationwide. The report includes a state-by-state breakdown of the number of jobs at risk and the number of active highway and transit projects in each state.

House Subcommittee Passes 2012 Transportation Budget

The House Appropriations Subcommittee on Transportation, Housing and Urban Development this week approved its version of the FY 2012 spending bill that provides funding for the U.S. Department of Transportation. The $55 billion measure would allocate $16.7 million directly to U.S. DOT. President Obama’s proposed budget called for $74 billion to go to transportation spending next year, with $13 billion going to the department’s operating budget. This table compares the subcommittee’s mark to the President’s request and the FY 2011 budget.

One casualty of the subcommittee’s version of the bill was the TIGER (Transportation Investment Generating Economic Recovery) program. That’s the discretionary grant program created by 2009 American Recovery and Reinvestment Act to fund innovative, multi-modal, multi-jurisdictional transportation projects that promise significant economic and environmental benefits. The House bill would zero out funding for the Administration-supported program, as well as funding for the transit-oriented TIGGER program and for high-speed rail, as DC Streetsblog reported this week.

Congestion & Transportation Demand Management

I have a new Capitol Research brief out this week on “Transportation Demand Management.” That’s the term for a diverse series of policy strategies designed to reduce traffic congestion. Well, the South Carolina Department of Transportation is taking an innovative approach to efforts to reduce congestion along Interstate 526 (also known as the Mark Clark Expressway), the beltway around Charleston. The department is asking for public input from commuters on how to solve the road’s congestion problems, which are expected to worsen as existing businesses and industry expand in the years ahead. A public meeting this month will help collect information for a study of possible remedies. According to the Charleston Regional Business Journal, options may include “travel demand management strategies, opportunities for shifting traffic to other modes of travel, low-cost traffic operations improvements and capacity improvement projects.”

Dan Vock of Stateline reports this week on California’s introduction of one type of demand management strategy—pay-as-you-drive car insurance.

The Effects of Sprawl

The Yale Daily News reported this week on a new study that predicts a major global expansion of urban land over the next two decades. The growth of cities worldwide is expected to intensify concerns brought about by urban sprawl (including increased pollution and energy inefficiency due to people driving more), the study by a Yale urban environment professor found.

Meanwhile, the Christian Science Monitor reported this week that sprawling new housing developments in Texas have been particularly hard hit by raging wildfires in that state. That’s prompted some officials to ponder whether homes are being built in places they shouldn’t be.

A new book by The Economist’s Ryan Avent suggests that sprawl and the suburbanization of America may have also contributed to the economic circumstances the nation now finds itself in. The book, entitled The Gated City, argues that an economy seemingly incapable of growth is at least partially the result of an inability or unwillingness to cash in on the benefits of urban density, which encourages higher incomes and increased productivity. The New York Times has an excerpt from Avent’s book. Yonah Freemark of The Transport Politic offers his assessment of Avent’s arguments in a blog post this week.

Smart Growth Defense

Todd Litman of the Victoria Transport Policy Institute has been offering a defense of the principles of smart growth in a series of columns for Planetizen in response to recent claims by the National Association of Home Builders. His latest examines the benefits and costs of smart growth. You can read more about smart growth in our 2009 policy brief on the subject.

Games with Frontiers

Finally, also on Planetizen this week is one of those examples of where a couple of this blogger’s diverse interests intersect. Mark Ferrall writes about three board games that might appeal to those interested in urban planning. Ferrall reviews the train game “Ticket to Ride,” the city building, tile placement game “Carcassonne” and the colonization game “Puerto Rico.” As an avid gamer, I can heartily recommend all three. If another endless game of “Monopoly” is more than you can stand this weekend, I encourage you to check them out.