Obama Infrastructure Plan Is Long-Awaited Conversation-Starter

President Obama this week proposed $50 billion in new infrastructure spending for roads, railways and airport runways and promised to pair it with “a long-term framework to reform and expand our nation’s investment in transportation infrastructure.” While the plan was welcomed by many, others wondered if it was too little, too late and pretty much dead on arrival with just eight weeks to go before the mid-term elections. It was—at the very least—a long-awaited conversation starter that included some not altogether unfamiliar or unexpected ideas.

According to a White House fact sheet, the President’s plan would use the $50 billion to:

  • Rebuild 150,000 miles of roads.
  • Construct and maintain 4,000 miles of rail.
  • Rehabilitate and reconstruct 150 miles of runway while putting in place an improved air traffic control system that will reduce travel time and delays.

The White House calls the $50 billion an “up-front investment” that would “help jump-start additional job creation, while also laying the foundation for future growth.”

In his Labor Day speech Monday in Milwaukee, the President said the $50 billion program would not add to the deficit.

“This is a plan that will be fully paid for,” he said. “We’re going to work with Congress to see to that.”

The administration is reportedly eyeing new taxes on oil and gas companies to cover the $50 billion price tag.

But it’s just the first step.

“If we are to enjoy the benefits that come from a world-class transportation system, Congress must enact a long-term reauthorization that expands and reforms our infrastructure investments and returns the transportation trust fund to solvency,” the White House fact sheet read.

To that end, the White House also offered a long-term framework for reauthorization, which included a number of familiar ideas. Among them:

  • The establishment of an Infrastructure Bank to “leverage federal dollars and focus on investments of national and regional significance.”
  • The integration of high-speed rail on an equal footing in the surface transportation program “to ensure a sustained and effective commitment to a national high speed rail system over the next generation.”
  • Streamlining, modernizing and prioritizing surface transportation investments. The Administration proposes consolidating more than 100 different programs and incorporating performance measurement and competitive grant programs similar to the “Race to the Top” education initiative.
  • Expanding investments in areas like safety, environmental sustainability, economic competitiveness and livability.

Livability has been a major focus for Secretary Ray LaHood during his tenure at the U.S. Department of Transportation. Competitive grant programs were a key feature of the infrastructure spending in the Recovery Act. The concept of an infrastructure bank has been floating around for a long time as well.

Of the latter, the White House said: “This bank would leverage private and state and local capital to invest in projects that are most critical to our economic progress. This marks an important departure from the federal government’s traditional way of spending on infrastructure through earmarks and formula-based grants that are allocated more by geography and politics than demonstrated value.”

The chairman of the U.S. House Transportation and Infrastructure Committee James Oberstar reacted positively to the President’s infrastructure plan and long-awaited list of principles for reauthorization.

“I am very pleased that the President wants to build on the success of the American Recovery and Reinvestment Act with further investment in our national transportation infrastructure,” Oberstar said in a statement. “I am also pleased that the President shares the Committee’s objectives of restoring our surface and air transportation systems to a state of good repair, increasing energy efficiency, and relieving the road and rail congestion that is crippling our economy.”

Oberstar also said the principles outlined by the President are consistent with those offered in legislation proposed by his committee last year.

The American Association of State Highway and Transportation Officials had encouraging words for the President as well.

“We are highly supportive of President Obama’s proposal,” said AASHTO executive director John Horsley. “We have demonstrated that investing in transportation infrastructure is one of the fastest ways to create and sustain jobs… If Congress wants to pass legislation investing in our transportation infrastructure, the states stand ready to put those dollars to work.”

Horsley offered as proof a previously circulated list of 9,800 ready-to-go projects valued at nearly $80 billion.

But many of the President’s Republican critics declared the infrastructure plan more of the same and dead on arrival.

“Recycling the same disastrous policies that failed to generate sustainable job growth and resulted in record deficits is not the response struggling middle-class families are looking for from this White House,” said Republican National Committee chairman Michael Steele.

Economist and New York Times columnist Paul Krugman had a different take on the $50 billion spending fund.

In a Tuesday blog post, he wrote: “1. It’s a good idea. 2. It’s much too small. 3. It won’t pass anyway—which makes you wonder why the administration didn’t propose a bigger plan, so as to at least make the point that the other party is standing in the way of much needed repair to our roads, ports, sewers, and more—not to mention creating jobs.”

What was left somewhat unclear by the White House with Monday’s announcement was whether they would seek passage of a long-term authorization bill soon or if they would push for the $50 billion as a “down-payment” to get things started while Congress sorts out the legislation.

The funding of long-term transportation legislation remains the key issue holding up the process of course.

Last week in South Carolina, U.S. House Majority Whip James Clyburn was again touting a stock-trading fee as a possible revenue mechanism to fund transportation programs much as he did earlier this summer at the Southern Legislative Conference annual meeting.

“We shouldn’t fund a transportation bill by asking people to pay more at the gas pump, so I am asking that Wall Street repay Main Street,” he said at a press conference at a construction firm in Columbia.

But a rosy prediction last week from the Congressional Budget Office may mean Congress and the President have more time than most people thought to work out details of how to fund the next transportation authorization.

The CBO estimated that the nation’s Highway Trust Fund should be able to cover its projected spending needs into fiscal 2013. That would mean negotiators would have at least two years, at current revenue and spending trends, before they would need to replenish the Highway Trust Fund either by increasing fees that go into it or with money from the general fund. The administration has thus far opposed hiking federal fuel taxes, which provide the main funding source for the trust fund, due to the weak economy.

But evidence continues to mount that lawmakers in Washington would be wise to not let those two years slip away before tackling a renewed investment in the nation’s infrastructure. A report released last week by AASHTO says that immediate attention and investment is needed to ensure that America’s rural areas stay connected. According to the report, “Connecting Rural and Urban America,” that investment is needed to keep agriculture, new energy products and freight moving; improve access for the travel, recreation and tourism industries; connect new and emerging cities; and to ensure reliable access to key defense installations. Among the report’s other findings: 66 cities with populations of 50,000 or more do not have immediate access to the interstate system.

There is more on the pressing need for infrastructure investment in our Capitol Research brief entitled “Condition of U.S. Roads and Bridges,” including why two or three years might make all the difference in the world in our ability to turn the tide on aging infrastructure and save money in the long run.   

Still, one gets the feeling that President Obama’s speech Monday was closer to the beginning than the end of what's likely to be a long conversation on the future of our transportation system.

Read the CSG Transportation Policy Task Force’s principles for the next transportation authorization here.