Building a Head of Steam for Transportation Investment: Today's Meeting at the White House
Traveling to the beach on Virginia's eastern shore to visit my sister over the long Columbus Day weekend offered no respite from public debates over infrastructure taking place across the nation. A proposed light rail line is the issue here. Meanwhile, further up the coast in New Jersey a major tunnel project has been put on hold due to a lack of state funds, a move the Economist says is questionable.
Kudos to the President and his Secretary of Transportation Ray LaHood for responding to the need for more infrastructure investemnt by gathering an impressive array of public officials at the White House this morning. Among those gathering are Governor Rendell of Pennsylvania, co-leader of Building America's Future. Also present will be L.A. Mayor Antonio Villaraigosa, whose city has provided a model for accelerating investment by proposing to build a dozen key transit project in a decade rather than thirty years as projected, with citizens backing it up by agreeing to tax themselves to get it done. NRDC, and in particular Santa Monica office colleagues Adrian Martinez and Damon Nagami have long supported this initiative which has attracted a lot of local support.
Two former Transportation Secretaries from Republican Administrations -- Norm Mineta and Samuel Skinner -- will also be there this morning, in the wake of the rollout of an impressive report about the proceedings at a transportation conference last year at the University of Virginia's Miller Center for Public Affairs (Full disclosure: I was one of the eighty participants in the conference). This publication, "Well Within Reach," is well-worth a read especially for it's tightly-crafted set of nine policy recommendations spanning the gamut of concerns from financing to governance to data collection and can be found here.
The group will be discussing ways of moving forward with a national agenda, something the President pressed for in an impressive Labor Day speech as I wrote about here. An economic rationale was proffered by a new Treasury Department report released just a couple of hours ago. The report addresses demand- and supply-side considerations. On the demand side, it points out that there is widespread public support for new infrastructure investments doubtless driven in part by concerns over crumbling roads and bridges and evidenced by remarkably successful election results in recent years for transportation ballot initiatives (such as the one providing new revenue for the 30/10 program in L.A.) and national surveys. The analysis also strikes an ominous tone regarding our nation's competitiveness globally, finding that we invest a mere two percent of GDP on infrastructure, which is half the level in 1960 and small compared to China's investment of 9 percent and Europe's of five percent (in the case of China this can be in part justified because that nation is at an earlier stage of development and investing more to "catch up" but no such reasoning appies to Europe).
As for supply-side considerations, the report makes the astute observation that "now is a particularly opportune time to invest in infrastructure, because the availability of underutilized resources (especially labor) implies that the opportunity cost of infrastructure investment is currently well below its normal level." This refers mainly to the appallingly high unemployment level in the construction industry, which was at 17 percent in August, nearly double the general rate. The general state of affairs in construction -- lower asking prices for labor and materials, for example -- means that infrastructure investments, as the Washington Post's Ezra Klein notes in a recent column, are a phenomenal bargain right now. This is why recovery act investments have covered many more projects than anticipated, as the new analysis notes: "Overall, the Department of Transportation estimates that more than 2,000 additional airport, highway, bridge and transit projects were funded because of low bids, or projects being completed under budget."
The analysis is also noteworthy -- as are the Miller Center report and Mayor Villaraigosa's initiative -- for the smart, balanced portfolio of investments it covers. Not just road construction and maintenance -- which are important -- but also public transportation such as rail. And it's clear that new policy tools -- such as a national infrastructure bank -- must be used to ensure that investments moving forward offer the biggest bang for the buck in economic, social energy-saving and environmental terms. As the Treasury analysis describes, a new bank would
"develop a framework to analytically examine potential infrastructure projects using cost-benefit analysis, and would evaluate the distributional impact of both the costs and benefits of each project. Of course, not all costs and benefits from infrastructure projects can be quantified, but an effort should be made to quantify those that can be quantified and to take account of any additional benefits and costs to society. A rigorous analytic process would result in support for projects that yield the greatest returns to society, and would avoid investing taxpayer dollars in projects where total costs exceed total societal benefits. A National Infrastructure Bank would select projects along a sliding scale of support that most effectively utilizes the bank’s limited resources, targeting the most effective and efficient investments."
The President and his Transportation and Treasury Departments deserve praise for pulling together this event and a new examination of the strong case for new infrastructure investment. Hopefully today's meeting is one of many to come, as we build a head of steam for overhauling and expanding our outdated, creaky national transportation program.