Transportation Policy Academy Pt. 4: U.S. Chamber of Commerce’s Janet Kavinoky

In October 2011, CSG hosted an invitation-only Transportation Policy Academy in Washington, D.C. for a group of 11 state legislators from around the country, many of whom serve in leadership positions on transportation-focused committees in their states. In addition to providing an opportunity for these state leaders to meet with their members of Congress about the future of transportation policy, CSG also invited a group of policy experts, public officials, advocates and observers to speak to the group about the policy landscape, what may lie ahead for states in transportation and what some states are doing in the absence of federal action. In the interest of sharing their insights and expertise with a broader CSG audience, this series of blog posts will feature extended excerpts from their remarks on a wide variety of transportation policy issues. Janet Kavinoky is the Executive Director for Transportation and Infrastructure at the U.S. Chamber of Commerce. In her remarks to policy academy participants, Kavinoky discussed the relationship between infrastructure and economic performance, the focus of the federal transportation program, the future of transportation funding, and America’s intermodal needs.

Kavinoky is a nationally recognized expert in transportation policy, funding, and finance and leads the U.S. Chamber’s efforts related to maintaining, modernizing, and expanding transportation and infrastructure. Kavinoky is vice president of the Chamber-led Americans for Transportation Mobility (ATM) Coalition, a nationwide effort by business, labor, transportation organizations, and concerned citizens to advocate for improved and increased federal investment in the nation’s aging and overburdened transportation system.

Here are some excerpts from her remarks:

Infrastructure’s Impact on Economic Growth

Kavinoky: “We have a massive amount of gridlock in Washington—literal, physical gridlock. It exists all over the country. It’s beginning to exist in places that have never seen it before… Western North Dakota because of energy development is now experiencing traffic jams… They’re talking about serious hour-long traffic jams because suddenly they have a lot of movement of freight, a lot of movement of energy products. They don’t have a system that’s ready for that kind of economic growth.”

“The Chamber set out a couple of years ago to figure out just how well transportation was working for the economy and working for business. And we did this … because we felt that people had heard the information, had heard the message that infrastructure was important … They’ve understood or they’ve been in traffic but they haven’t been able to grasp that that actually has a dollars and cents impact on the economy. So we looked across all modes of transportation—surface, air, and water transportation… and we found that an underperforming transportation system cost this country close to a quarter of a trillion dollars in 2008 in foregone economic growth. And that is because if you looked at the best performing states in the union where things were free flowing, the infrastructure was where it needed to be, it was reliable, predictable and safe and there was capacity for future growth and you compared those top performing states to where we were as a whole, we’re leaving a whole lot of money on the table.”

[Editor’s note: In 2010, the U.S. Chamber of Commerce issued its Transportation Performance Index, which measures how well transportation and other infrastructure is meeting the demands of the nation, including businesses, and correlates the results to measures of U.S. economic performance. The index can be found here.]

Kavinoky: “We had to first build a measure of how the system worked and then had an economist work on could you relate what worked to economic benefit, taking out the dollars that were actually being invested. So, what’s the impact on GDP from the system itself, not from the spending on it. It’s really hard to do … I think the biggest challenge is that in part transportation is and always will be a public good. It’s there, people consume it but it’s still there for everybody else and they don’t necessarily have to pay for it. That means that the benefits are very diffuse and they’re also linked in with other benefits. In addition, you’ve got a situation where business has learned to work around infrastructure not with it or not leveraging it. That’s why we’ve seen the rise particularly of a lot of logistics companies, who are very, very good at saying ‘y’know what? It’s here, it might not work very well, but we’ll work with what we’ve got.’ But it’s incredibly difficult to quantify.”

Infrastructure Investment and Job Creation

Kavinoky: “I always caution people to use job creation numbers very carefully. The rule of thumb for years was $1 billion in federal investment gives you—for awhile it was 45,000 jobs. Then it was 41,000 jobs. Now, it’s 34,775 jobs. Other people will tell you it’s 29,000 jobs. The reality is you’re going to have direct employment in construction that is, by nature, temporary. It might be temporary for a year or two years or five years but it’s temporary. You have induced employment in companies that are in design, engineering, aggregates, cement that are longer lasting physical plants in your community and your towns but they rely on the overall investment. And then you have the employment that comes from where infrastructure is strong and companies are locating. We have not had a whole lot of success using macro jobs numbers in large part because the (2009 American Recovery and Reinvestment Act) didn’t produce the new jobs that appeared to be promised. It saved some jobs. And there was the perception that all of it went to infrastructure so those macro numbers have been really tough to argue.”

Role of States, Federal Government in Transportation Investment

Kavinoky: “People say ‘well, how much is it going to cost?’ And the numbers are so, so large that it’s very hard to grasp … But what we realized is it’s not just about condition. It’s about how well (the transportation system) works. And how well it works is related in some degree to … the flexibility of states and communities to design the solutions that they need. But when you’re talking about using federal money, it’s also making sure that the things being invested in do align with national needs or federal economic growth.”

“Right now we’re in a debate for the heart and soul of the country. The question of what is the role of the government. How big should it be? How much money should be spent? What should the focus of the government be? And transportation is caught up in that overall debate.”

 “What we’ve really come to realize is that for us to sell transportation at the national level, we need to start doing what has been done at the state and local level for a very long time, which is figuring out exactly where the money is going to go.”

Finding a Clear Vision

Kavinoky: “We started out with the Interstate system having a very clear vision of what was going to be built. There was a map. People said ‘okay, this is it. At the end of the day we’re going to have this.’ Well today we’ve got a different challenge. Today we have to maintain what we have and in some cases rebuild it. We have to modernize it, which means that we have to infuse it with technologies—whether those are digital technologies or other technologies—to give it lower life cycle costs and allow us to actually manage it better. And then in places where we actually have to expand capacity—and in some places expanding capacity is adding lanes, adding infrastructure and in others it is doing better management adding technology.”

“So what we found is that people recognize infrastructure is important. No, they don’t really want to pay for it. They definitely don’t want to pay for an abstract idea. But they’re willing to consider paying for very, very specific things in understanding what’s in it for them. So our most recent effort that we’re launching this week working with our local chambers is going out and collecting … lists of what’s important locally, what’s important on a statewide basis. So we can go out and try to get that grassroots support.”

“The reality is we don’t need to spread the money (for transportation) out like peanut butter. We need to figure out where we need to maintain, where we need to modernize, where we need to expand. But since you’re all legislators, you understand that somehow you’ve got to add up the votes so you can actually pass a bill. And you don’t add up votes by targeting money to places where it’s really needed. You add up votes by making sure everybody gets some amount back of what they need.”

Agreement on Policy, Not on Funding

Kavinoky: “We don’t have a policy problem right now … We know we need to refine the focus of the federal program. We need to make sure that national needs are met. We need to pay attention to freight. We need to maintain and modernize what we have. Streamline project delivery, make it work faster, make permitting work faster. We need to provide incentives for private investment in transportation … But at the end of the day… it you want a road or you want a runway, lock or a dam, you’re going to have to pay for it.”

“And the simplest and most straightforward way of doing that in surface transportation at the federal level is to raise the gas tax, which has a negative 30 percent chance of moving anywhere on its own. So we’re going to have to go and find any sort of offset we can in order to move it forward at the federal level. If we don’t, (they’re) going to hand you all a bill… to make up at least—depending on where you are in the whole formula—a 35 percent hole in highways and transit. And there are more than enough people here in Washington who will be more than happy to hand you that bill and say ‘it’s not Washington’s problem, we had to cut spending. Now it’s your problem.’ That’s a big hole to make up … Understand that over the next six months … it is very, very critical that if you don’t want to be handed that bill, you make it very clear to your members of Congress that they have a responsibility to figure out how to maintain federal funding.”

“We can go in over and over again to members of Congress. We can go in and talk to staff. They don’t want to hear from us anymore. They want to hear from you (state legislators). They want to hear from the heads of state and local chambers of commerce. They want to hear from real, live businesses that aren’t in the construction industry. And then they want the technical advice and support of their state departments of transportation in order to make those important decisions. But most of all, in the absence of earmarks, they need to have a sense that there is a reason for them to go to the floor and make the decision to say ‘I’m willing to support increased revenues to spend the same amount of money,’ which is a pretty complicated message to have.”

“We have a hard time ourselves at the U.S. Chamber. I’m the one person who gets to go out and say ‘go spend more money. Raise taxes and spend more money.’ Our people at the strategic level, at the message level are saying ‘Kavinoky, shut up. No, you can’t put that blog post out. We don’t want you on Fox (News). We don’t want you doing this. How are we supposed to message we have to cut spending and make the government smaller and ask for entitlement reform and say everything’s on the table for cuts, if you’re out there asking for more transportation dollars. So it has to be a very nuanced message.”

America’s Intermodal Future in States’ Hands

Kavinoky: “In other countries, Canada most notably, they actually have a national freight strategy. They decided they were going to become the gateway into North America for freight from the Pacific. They invested in Prince Rupert. They invested in Vancouver. And they basically cleared a path to Chicago. They did highway and transit and rail and water improvements all along the corridor so they could move freight very efficiently. We don’t do that here. There’s been a lot of talk about corridor development and a lot of talk about that kind of intermodal investment. But we haven’t really ever had that big picture. I don’t hold out a whole lot of hope that you will see a tremendous amount of leadership at the federal level on that. There will probably be some talk about investing in freight corridors. But it’s really going to come down to the states’ deciding together that they’re going to make those investments and doing state by state partnerships to make that happen. And I do tell our state and local chambers of commerce if you’re waiting around for the feds to come in and help you out, my mantra is there’s no more money and there are no earmarks so you better be asking now ‘what am I going to do?’ Otherwise you’re going to be sitting around waiting a really, really long time.”