2012: The Year of Transportation Infrastructure

In his State of the Union address, President Obama touched on an important national issue that is near and dear to me: the need to get America back to work building up the nation’s vast road and rail network. In a word: infrastructure. The context for this issue is important for everyone to understand, as all Americans are affected by transportation. Indeed, a strong economy depends on it. My fellow Americans, the state of our infrastructure is not good. But expect lots of action by our elected leaders starting this year to tackle transportation.   

The Good

In his speech to the nation last night President Obama recognized, as he’s done many times before, that transportation infrastructure is in desperate need of repair. The 2009 Recovery Act (the much-maligned “stimulus” bill) helped to reduce the growing backlog of deferred maintenance -- with half or more of the money going to reconstruction, rehabilitation or resurfacing of roads and bridges (pdf of a report by the General Accountability Office here). But that pipeline of investment is now down to a trickle. The president also took the opportunity to hearken back to a time when leaders in both political parties collaborated on the design, finance and building of big projects such as the Golden Gate Bridge.

Obama called for cutting so-called “red tape”, which is unfortunate (more on that later), but he also correctly noted that there’s “never been a better time to build.” This is a point made most forcefully by columnist Ezra Klein who has noted that low interest rates as well as low labor and materials costs due to the economic down turn allow big-time leveraging of taxpayer dollars. This means that now is the time to invest in infrastructure. Where to get the capital for doing so? The president proposed taking half of the savings – about $200 billion according to the National Journal’s Fawn Johnson – from our reduced spending on wars overseas and investing it in “nation-building right here at home.”

1)      As an aside, there is a remarkable connection of dots that some smart reporter should make here, regarding wonderful progress in developing energy security and a saner foreign policy. Our lack of the former has often hamstrung the latter, or as former Secretary of State Condoleezza Rice rightly noted, “I have never seen anything warp diplomacy like high oil prices.”  President Obama and his administration may finally be cutting that Gordian knot thanks to bold work on a several fronts: They are ramping down our military presence in the Middle Eastern nations, saving troops and treasure;  

2)      Oil production has risen fairly dramatically during this presidency; and

3)      The president is ratcheting up vehicle fuel-efficiency standards and supporting options such as pluggable cars and public transportation.

One payoff from these moves is the financial savings Obama references. Another is a remarkable drop in oil imports, which are expected to plummet further in coming decades according to the latest Department of Energy projections (which don’t even include newly proposed standards for 2017-2025, which will squeeze imports much more). Last but not least – and notably separate from import reduction since prices are determined globally regardless of how much oil we import – is the insulation that more fuel-efficiency provides from price volatility.

So what’s wrong with the picture the President paints? Well, it’s not a blank canvas. A smaller transportation bill has already been cobbled together in the Senate, with more work expected on it next week. I’ve written about pieces of the bill already passed out of the relevant committees here and here. Overall, as I’ve written, it’s shaping up to be a pretty decent bill, but it has warts.

The Bad

This Senate bill (S. 1813, Moving Ahead for Progress in the 21st Century or MAP 21) is imperfect, since it includes for example some of the “red tape” cutting the president mentions. This is a concern, as I noted above. You see, at any one time there are hundreds if not thousands of transportation projects underway across the nation. They can take years to build for a variety of reasons, including local controversy. (My community recently opposed – I kid you not – a pedestrian bridge over a rail line nearby; so think of how many feathers a big road or rail project might ruffle.) These are challenges that we face in a democracy with a lot of local control with jurisdictions often facing difficulties lining up capital for construction. So, incentives for better, earlier outreach and collaboration with communities combined with more funding should be a good recipe for Congress to tackle this, right?

Unfortunately the “cutting red tape” is often code for short-circuiting environmental reviews. So the Senate bill has provisions that would jam reviews together and allow more leeway to bypass reviews by deeming projects “categorically excluded” from such scrutiny. The president may have the same thing in mind with his commitment to shortening reviews (let’s hope not). Keep in mind that the stories often told about delays due to reviews are about the two percent of projects subject to the most stringent level of oversight – an environmental impact statement – and that an even smaller subset of those get challenged in some way. Taking a knife to such oversight is overkill, and it’s not even the right target if the idea is to get things done faster.

The Ugly

Ah, and now we come to the truly ugly scheme being floated. As my colleague Rob Perks has written about here and here, House Leadership have decided to staple together two unrelated policies as part of a blatant political ploy: drilling and transportation.

A little background is in order. Years ago, President Reagan recognized the need for investment in transportation and reversed his opposition to gas taxes, dubbing them “user fees” and making his case to the American public. To ensure widespread support, he agreed that one of the five cents of the increase would go to a mass transit account for rail and bus projects of interest to cities. Thus was interest renewed in one of the more useful tools for enhancing revenue for transportation investments: A fee charged to actual users of the system based on gasoline used to drive.  The market-basis of this principle (users pay) remains popular with conservatives to this day.

Now, however, the House Republican Leaders want to break with this principle -- radically so -- by tying funding to royalties from new drilling offshore and in Alaska’s Arctic National Wildlife Refuge. Not only is this dumb in principle, it is fuzzy math. The scheme is likely to bring in only a fraction of the money needed, and there will be a lag time between when the money is needed (now) and when revenues begin to come in (later). And it also destroys the bipartisanship that has historically driven transportation policy. The Senate bill’s traditional cornerstone, for example, is its highway title, a bill drafted by Senators Boxer and Inhofe, who almost never see eye-to-eye on issues. The House Leadership’s approach is so nakedly political that one rumor has it another poison pill could be added fast-tracking approval of the totally unrelated and controversial Keystone XL dirty oil pipeline!

President Obama has signaled that he wants a transportation bill, and so have Senators on both sides of the aisle. In the House, where the tea party inmates appear to be running the asylum, Republican Leaders on the other hand appear hellbent on destroying bipartisan transportation policy.

So while it seems clear that we can expect lots of attention and debate over solving America’s infrastructure crisis, the question remains whether we’ll be able to escape gridlock.