CQ WEEKLY
– IN FOCUS
Oct. 4, 2008 – 3:57 p.m.
Issues: Infrastructure: Approach With Caution
By Colby Itkowitz, CQ Staff
From the earliest days of the Republic, presidents and congresses spent huge sums of money building turnpikes, canals, railroads and other critical infrastructure, believing the investment would expand commerce and generally serve as an engine of growth.
The ability to move people and goods has always been an essential feature of national prosperity. But now, with the economy in trouble and the government weighing a $700 billion bailout of the financial system, Washington politicians are facing a different kind of question: what role federal spending on roads, bridges and public conveyances should play in any recovery.
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Neither Barack Obama nor John McCain have spent much time discussing infrastructure investment on the campaign trail. But whoever wins will quickly be drawn into a tough policy fight about a crowded, overstressed transportation system that many experts say is quickly becoming obsolete.
The nation’s transportation network is decaying — a fact driven home by calamities like the I-35 bridge collapse in Minneapolis in 2007, deteriorating passenger rail bridges and track beds that have become commonplace along busy commuter corridors on both coasts and the increasingly congested highways that hinder shipments of freight and complicate domestic and foreign trade.
The last major overhaul of the nation’s transportation systems occurred during the administration of Dwight D. Eisenhower, who presided over creation of the Interstate Highway System. Today, the Department of Transportation estimates the annual cost of maintaining the highway system at its current capabilities is 12 percent more than the government is now spending. For mass transit, the gap is 25 percent.
How to modernize the system without worsening the deficit will be an early focus of the next administration, largely because Congress next year is due to take up a wide-ranging reauthorization of federal surface transportation programs. Among the most pressing questions will be how to replenish the federal Highway Trust Fund, the repository for federal excise taxes on gasoline and other fuels that are distributed to states.
The fund, which pays for as much as 90 percent of federally supported road work, as well as some mass transit, ran out of money for highway work in September, forcing the Transportation Department to delay some payments to some states just as they were completing summer road projects.
Among the options for fortifying this dedicated pot of money are raising the federal fuel tax (currently 18.4 cents per gallon) or redirecting money from low-priority projects. States also could float bonds to raise cash, though turbulence in financial markets might make that option particularly dicey.
Many experts are calling for a bold response that includes significant new investment, saying U.S. competitiveness is at stake, because European and Asian nations already are investing heavily in transportation systems and new technologies. Absent a major new push, the experts say untold millions of dollars will be wasted each year, in the form of shipping delays, extra fuel costs and lost productivity and trade.
“Traditionally, one of the problems with this issue is that it tends to fall under the radar,” said Polly Trottenberg, executive director of Building America’s Future, a nonpartisan transportation group representing state and local officials. “I think for better or for worse a lot of the federal infrastructure programs have been on autopilot and we haven’t funded them properly.”
Deferring a decision is not an option, these experts say, because shifting population patterns and urban sprawl are putting more and more pressure on an aging transportation system. Appeals for increased funding from elected officials, including California Republican Gov. Arnold Schwarzenegger and powerful lobbyists such as U.S. Chamber of Commerce President Thomas Donohue, are prompting public officials to, at the very least, acknowledge that the nation’s infrastructure is in peril.
“We’re going to have to change the revenue model and our investment in surface transportation, and expand our investment,” said James L. Oberstar , who as chairman of the House Transportation and Infrastructure Committee likely will spearhead the 2009 reauthorizing legislation.
Issues: Infrastructure: Approach With Caution
To Tax, or Not to Tax?
But the presidential candidates have deep philosophical differences over just how the government should pay for maintenance and improvements. These were evident on Oct. 1 when Obama voted for, and McCain against, a five-year, $13 billion reauthorization of Amtrak, the nation’s passenger railroad.
The 12-member National Surface Transportation Policy and Revenue Study Commission, composed of congressional and White House appointees, earlier this year offered an assessment of the challenges the next administration will face.
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The commission said in order to keep highways, bridges, tunnels and other infrastructure functioning, the federal government would need to spend at least $225 billion per year for the next 50 years. It suggested new financing streams, such as implementing a federal freight fee on shippers and dedicating a portion of customs fees to the Highway Trust Fund.
But the most noteworthy recommendation was to raise the tax on gasoline by 5 cents to 8 cents per year over the next five years until other revenue sources — perhaps a tax based on vehicle miles travelled — could be enacted. The 110th Congress was generally cool to the idea of raising the tax, and lawmakers are not likely to embrace it as long as their constituents are grappling with high gas prices and a host of other economic anxieties.
McCain has made it abundantly clear that he’s no fan of the gas tax. He campaigned this summer for a moratorium on the gas tax during the summer driving season to alleviate the strain on Americans at the pump.
Obama called McCain’s plan gimmicky and fiscally irresponsible, because it would deprive the trust fund of even more revenue. But the Democratic standard-bearer has stopped short of endorsing a gas tax increase, for fear of handing the GOP a potent pocketbook campaign issue.
“Right now, it would be very difficult to begin that conversation [about raising the gas tax], but there aren’t many options,” said Robert Puentes, a fellow in the Metropolitan Policy Program at the Brookings Institution. “The good thing about the fuel tax is that it’s already implemented. The challenge is the resistance [to any tax increase] from the American public.”
Running on Empty
The federal fuel tax hasn’t been raised since 1993. The Bush administration argues that raising it at a time when fuel consumption is waning would not keep the highway fund solvent, anyhow. “We can’t keep playing it the same way,” Transportation Secretary Mary E. Peters said of the funding options.
The administration would like to scrap the tax altogether and impose new user fees, possibly in the form of “congestion pricing” for vehicles at peak hours in some crowded urban areas, or increased tolling at the state level. Long term, the White House also wants to wean transportation off federal funding through such means as selling sections of highways to private companies, which would have the responsibility of maintaining and improving them.
Though McCain’s campaign hasn’t offered a detailed transportation policy, experts say his administration would probably endorse similar ideas.
Issues: Infrastructure: Approach With Caution
Obama has laid out a detailed transportation agenda, and has spoken about his desire to increase federal investment for infrastructure projects. In a speech to 1,000 labor activists before the Democratic National Convention, Obama said he wanted to be “the infrastructure president.”
Obama has proposed a National Infrastructure Reinvestment Bank, to consist of a $60 billion investment from the Treasury over 10 years.
“I think both candidates have left themselves a lot of flexibility, because its not one of the sexy areas that get picked up and asked a lot of questions,” said Jack Schenendorf, a former Republican chief of staff on the House Transportation and Infrastructure Committee who now lobbies on transportation issues. “It’s not clear to me that either of them have boxed themselves in one way or another.”
Beyond the fuel tax, next year’s transportation debate will provide the next president with a forum to inveigh against excessive congressional spending. Surface transportation bills have customarily provided senators and representatives with prime opportunities to designate dollars for specific projects in their districts.
The 2005 highway law included numerous pet projects for members, including the now infamous “Bridge to Nowhere,” a $400 million bridge project in the small coastal town of Ketchikan. McCain was one of four senators to vote against that bill in 2005 because of its earmarks, and has vowed to restore some fiscal order as president.
In a recent campaign speech, Obama also said he planned to slash earmark spending in half.
John Horsley, the president of the American Association of State Highway and Transportation Officials, said he shares those concerns, but worries about a ripple effect that could intensify pressure to trim federal transportation investment. Horsley said the state group would submit a wish list of projects to be included in the next surface transportation bill, with a special focus on those that are in the entire nation’s interest.
“The interstate program was a legacy of the last two generations,” Horsley said. “The question many people are asking is will this generation leave a legacy for our children and grandchildren.”
Comments
Very good article. However, I'm struck by the amount of reporting done only on transporation infrastructure. What about stormwater/sewage infrastruture? How many local governments have consent decrees leveled against them because they cannot pay for severly needed rehab and maintenance? What about federal and state locks and dams? Some reports state that there are many locks and dams that have outlived their lifetime and are in need of rehab. I have seen very little reporting on energy infrastructure. With brownouts becoming more often, what actions are needed to maintain the national energy infrastructure. Lastly, what about reported maintenance and rehab backlogs of federal agencies such as the park service? Old programs such as the CCC should be dusted off and examined in terms of their public works and national economic benefit. Moreover, CQ and other national media needs to expand their reporting to cover these other types of infrastructure as well.
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