Inhofe's concerns, raised at the latest in the environment committee's series of hearings aimed at marshaling consensus for a new long-term transport bill, suggest that the increased transit, bike-ped, and urban policy investments envisioned by the House measure could face resistance from rural senators who fear less of a federal emphasis on roads.

"We cannot grow the program in urban areas while ignoring the rural component," Sen. John Barrasso (R-WY) said, describing rail and bike usage as "geographically and climatically prohibitive" in his state, currently the nation's least-populated.

Environment committee chief Barbara Boxer (D-CA) assured Barrasso that "I don't look at writing this bill as rural versus urban." Yet the House legislation offered by transportation committee chairman Jim Oberstar (D-MN) would direct significant funding to urban infrastructure needs through a new metropolitan mobility program, a prospect that appeared to unsettle rural lawmakers.

"I don't feel like transit is a great option in our rural areas," said Oklahoma state senator Bryce Marlatt, an invited witness. After Inhofe questioned the Oberstar framework's emphasis on bike-ped and transit spending, Marlatt warned that the House plan could prevent rural areas from joining "the global economy" by boosting road spending.

Alternative perspectives were offered by John Robert Smith, president of the transit advocacy group Reconnecting America, and Scott Haggerty, a supervisor in California's Alameda County who appeared on behalf of the National Association of Counties (NACo).

Smith told senators that the green-transport and land-use grants offered by the Obama administration's multi-agency sustainability office should be open to cities with populations of 50,000 or below, giving rural areas more of an opportunity to compete for federal aid.

Haggerty, for his part, noted that the "overwhelming majority of congestion comes in metro areas" and advised that any project getting funding from Oberstar's proposed urban mobility program should be able to document its benefits for commuters.

Even as the rural-urban debate unfolded, senators sought to steer the hearing towards the fundamental issue stalling progress on a replacement for the 2005 federal transportation law: how to pay for it.

"In terms of infrastructure, our roads and bridges are not getting any better if we neglect them," Sen. Bernie Sanders (I-VT) said. "We're going to have to address this problem one way or another; we might as well do it and create jobs."

Asked for their thoughts on transportation financing, Haggerty said NACo would back a gas-tax increase -- an option ruled out by the White House for the foreseeable future -- and Smith cited a poll commissioned by Transportation for America that found public support for more infrastructure spending, provided that it was approved in a transparent fashion.

Sen. Claire McCaskill (D-MO) (Photo: William Woods)

McCaskill, known for fiscal hawkishness, asked LaHood to "work with me to put an end to this practice" of earmarking money in long-term federal transportation policy bills, which allot six years' worth of highway trust fund revenue to specific local projects.

McCaskill said the growth in congressional earmarking of transport funds "distorts the operation of the federal-aid highway and transit programs" because lawmaker-directed spending circumvents state and local "planning, review, and selection processes."

That broad characterization of transportation earmarks is true in a large number of cases, but many others benefit projects that have already met with approval from state and local planners.

Grants under the Federal Transit Administration's New Starts program, for example, are historically earmarked by lawmakers eager to see aid flow to local rail and bus systems, but each project has already made it through an extensive vetting process. In other instances, earmarks help cash-strapped transit agencies complete environmental and engineering studies that might not be possible without federal assistance -- such as the $6 million in planning funds that Sen. Dick Durbin (D-IL) directed to Chicago's Circle Line proposal last year.

Earmark reforms adopted by the House transportation committee last year ask lawmakers to document the local benefits and other sources of funding for favored projects.

Check out excerpts from McCaskill's letter to LaHood after the jump.

Dear Mr. Secretary,

I am writing to express my concern about the continuing practice of earmarking in surface transportation reauthorization legislation. Over the last 20 years, we have seen this practice explode, spending billions of dollars on the priorities of individual members, resulting in a loss of funding for individual states and a waste of taxpayer dollars. As the Congress looks to consider a new transportation bill this year, I ask that you work with me to put an end to this practice so that we return to a more equitable and thoughtful distribution of funding transportation projects. ...

When the Congress passed the last transportation reauthorization bill in 2006, 11% of the bill, equaling $22 billion, was earmarked. In comparison, throughout the 1980s, only 1% of transportation funding was earmarked. This growth in member-requested projects is frustrating because earmarks bypass the planning, review, and selection processes of the state and local governments and agencies.

That is not to say that these projects are without merit. Many of them would be worthwhile initiatives; but earmarking distorts the operation of the federal-aid highway and transit programs. It reduces the allocations provided for states' core transportation programs and often funds low-priority, earmarked proposals over the higher-priority, publicly vetted proposals. ...

With our current budgetary situation and the escalating federal debt, we cannot allow the process of earmarking to continue. Determining how to prioritize transportation projects cannot be and should not be decided by individual members of Congress. Our state and local projects, working with federal agencies, are better equipped to know what the priorities should be for addressing our infrastructure needs.

Instead, we should [direct] our efforts towards funding for formula and competitive grant programs as was originally intended by the Congress. This will result in better and more equitable distribution of funding, better use of taxpayer money, and transportation projects that work for everyone. ...

Sen. Sherrod Brown (D-OH) (Photo: Partnership for Success)

Brown's plan aligns with a House bill sponsored by Rep. Russ Carnahan (D-MO) and endorsed by 95 other Democrats. At a press event today announcing the Senate bill, the duo was joined by transit-boosting Rep. Betty Sutton (D-OH) and members of the Transportation Equity Network (TEN), Transportation for America (T4A), and the Amalgamated Transit Union (ATU).

The Brown-Carnahan measure would allow urban areas -- now barred from spending federal money on operating, save for 10 percent of their stimulus allocations -- to use between 30 percent and one-half of their federal transit grants to defray the cost of keeping trains and buses running.

The bill also would free up more funding for urban transit agencies that have demonstrated cuts in carbon emissions after getting anti-pollution stimulus grants and those agencies that can increase the amount of money raised for transit operating using sources other than the farebox.

ATU legislative director Jeff Rosenberg said in an interview that transit groups believe Brown's seat on the Banking Committee, which has jurisdiction over rail and bus networks, will put the bill in a good position as senators prepare to take up their version of long-term federal transport legislation.

Given the current uncertainty surrounding the timing of that bill, Rosenberg added that extra transit operating aid could also move through Congress if the Senate decides to act on the infrastructure-heavy jobs bill that the House passed in December.

"There is a role to play for the federal government to invest in transit systems to keep service going," Rosenberg said.

The ATU and the Community Transportation Association of America, which represents an array local transit agencies, have formed a new coalition aimed at marshaling grassroots support for federal operating aid.

Antonio Villaraigosa is seeking a bridge loan from Washington to speed up L.A.'s 30/10 initiative. (Photo: LAist)

The star witness at the Senate environment committee's hearing was Los Angeles mayor Antonio Villaraigosa, who sought congressional support for federal loans to expedite his city's ambitious 30/10 transit expansion project.

Environment panel chief Barbara Boxer (D-CA) threw her weight behind the 30/10 plan as the mayor pitched his approach -- reliant on voters' approval of higher sales taxes to pay for new infrastructure -- as a model for the rest of the nation.

"This is the third time the Los Angeles electorate has voted to tax itself for a better tomorrow," Villaraigosa said. "As a result, Los Angeles has been been able to make massive investments in public transit and our highway system."

But Villaraigosa's secondary message exposed the ongoing lack of Hill consensus on the way to pay for new investments that both Democrats and Republicans support. "Making sure that large metro areas get the majority of [federal transport] money makes a lot of sense," the mayor said, lamenting language in last year's stimulus law that routed most transportation aid through state capitals.

Sen. Sheldon Whitehouse (D-RI) echoed Villaraigosa, remarking that he could not "see a governmental apparatus" in place to effectively divert transportation funding to pressing local needs.

Whitehouse asked the Angeleno, who currently serves as vice president of the U.S. Conference of Mayors, to work with his colleagues on "a truly transparent local mechanism to say, 'these are the projects we really need,' to get around the concern that this is earmarking, special dealing, but also get around the bureaucracy."

Before the mayor's testimony, U.S. DOT undersecretary Roy Kienitz admitted to senators that he is "not sure" if the Obama administration's planned list of principles for a new long-term transportation bill will include ideas for filling the  nation's massive funding gap. Congress envisions new legislation with a price tag of at least $450 billion over six years, but the federal gas tax is estimated to fall short of that mark by upwards of $200 billion.

Sen. George Voinovich urged Kienitz and fellow White House aides to reconsider their opposition to raising the gas tax during an economic downturn, warning that no amount of innovative new financing mechanisms would be enough to fund a new bill.

Chief among those new financing ideas is the National Infrastructure Innovation and Finance Fund (dubbed the "I-Fund"), which the Obama team believes can use federal funding to attract private investment in new transport projects.

Other options for extending credit to local planners include the Transportation Infrastructure Finance and Innovation Act (TIFIA), which guarantees loans for new projects.

Another witness at today's hearing, Max Inman, a 33-year veteran financing specialist at the Federal Highway Administration, lauded the institutional support provided for local planners who use traditional U.S. DOT-directed programs such as TIFIA. He questioned whether the White House's proposed I-Fund would be able to provide that level of guidance for local sponsors, given that its structure has yet to be fully envisioned.

But Inman also advocated several changes long sought by infrastructure reformers, calling for relaxed limits on tolling interstate highways and a consolidation of the 100-plus categories that currently exist for federal transport spending.  

Senate Banking Committee Chairman Chris Dodd (D-CT) (Photo: The Washington Note)

"I only have about eight to 10 months," he said, according to the Hartford Courant. "My goal is to see the Livable Communities Act become law before I retire."

Dodd, whose panel has jurisdiction over housing and urban development, is working with that 10-month deadline as he anticipates retiring from Congress at year's end. His push to create a long-term foundation for the administration's sustainability effort also could run into resistance from rural lawmakers whose states have tended to benefit from a transportation spending system based on road-mile formulas.

The first stirrings of rural skepticism came on Thursday, when Sen. Mark Begich (D-AK) questioned the administration's move to emphasize "multi-modal" transport projects that would combine roads, transit, and bike-ped access.

Begich asked the U.S. DOT's No. 2, John Porcari, to make sure that rural states are "not lost in the mix." That sentiment was echoed later in the day by Sen. John Thune (R-SD).

"It seems to me that [the Office of Livable Communities] is a program that's going to overwhelmingly focus on urban areas," Thune told Porcari during the latter's appearance before the Senate Commerce Committee, asking if rural states such as his own would "get some assurance or guarantee of funding."

Porcari assured the senators that the administration plans to include rural areas in its sustainability plans, describing the program as an opportunity to restore the "quality of life" once associated with small-town America. Nonetheless, the concerns raised by Begich and Thune could signal more requests for livable communities grants to be distributed among all states, as opposed to the more competitive process the administration has outlined for its first $150 million of funding.

The most significant test of Dodd's ability to marshal support for his bill authorizing the livable communities office may come later this spring, as lawmakers consider the administration's request for about $530 million in 2011 funding for the effort. Congress assented to the White House budget request for $150 million in sustainability grants for 2010.

Sen. Kit Bond (R-MO) (Photo: Politico)

But Transportation Secretary Ray LaHood's visit with Senate appropriators today was anything but humdrum, as Sen. Kit Bond (R-MO) challenged him repeatedly to defend the White House's efforts on sustainable development and high-speed rail.

Bond cited a recent Wall Street Journal editorial by Wendell Cox, a conservative pundit who has penned laudatory literature for road lobbying groups, in accusing the Obama administration of frittering away taxpayers' money on high-speed rail.

LaHood fired back, remarking wryly that Bond's home state sought high-speed rail grants and publicly celebrated its $31 million haul. "I got calls on this every day from senators and governors" clamoring for an opportunity to build inter-city passenger rail, LaHood said.

Answering Bond's charge that the rail funding process was less than transparent, the U.S. DOT chief threw in a bold claim: "I don't know of one lobbyist that darkened our door with an application … that came to our door with the idea they were going to have some edge."

A November investigation by the nonpartisan Center for Public Integrity found that more than 50 government entities and private companies have hired high-speed rail lobbyists, including the AFL-CIO, the Mayo Clinic, and overseas train manufacturers such as Siemens and Bombardier.

The sharpest exchange between Bond and LaHood came on the topic of walkable local development, which the U.S. DOT has worked to promote through $150 million in 2010 grants and an inter-agency partnership with housing and environmental protection officials.

"What is livability?" Bond asked LaHood, minutes after comparing the task of defining the term to defining pornography. (The origins of that reference are explained here.)

"Communities where people have access to many different forms of transportation, and affordable housing ... maybe they don't want a car, so they can walk to work or take mass transit to work," LaHood said, using the newly built-up neighborhood surrounding his office as an example.

Bond's reply summed up the challenge of crafting new federal transportation policy in an era marked by rural-urban-suburban culture clashes. "I've got a lot of constituents for whom livability means having a decent highway," he said. "They've got to drive between one town and another town."

LaHood gamely tried to put Bond's criticism in perspective, noting that highways received the lion's share -- $27 billion -- of the transportation funding in last year's economic stimulus law.

Yet Bond only dug in his heels, arguing that Americans had shown their eagerness to use roads and bridges but would not embrace rail or walkable infrastructure. "When did it become the responsibility of the federal DOT to build sidewalks?" the soon-to-retire senator asked, before LaHood that reminded him Congress set up dedicated funding for pedestrian improvements nearly 20 years ago.

Senate environment committee chairman Barbara Boxer (D-CA), at right, with ranking Republican Jim Inhofe (OK). (Photo: Politico)

Such willingness to consider a new infrastructure bill before the Obama administration's preferred timeframe of next spring could help thaw the frosty relations between Boxer's panel and the House transportation committee, where chairman Jim Oberstar (D-MN) has raged against upper-chamber inaction for months.

But lawmakers and industry lobbies have a long way to go before they can sing from the same hymnal on the next transportation bill. Boxer asked representatives of the four lobbies appearing today -- the American Association of State Highway and Transportation Officials (AASHTO), the American Road and Transportation Builders Association (ARTBA), the National Construction Alliance (NCA) and the Associated General Contractors (AGC) -- to parse Oberstar's bill "literally, with a pen" and let senators know which provisions they favored or disliked.

"We're going to take their bill and work from it," Boxer said of the House, which has proposed a $500 billion plan that streamlines 108 categories of formula-based federal transportation spending into four and includes dedicated funding for metropolitan area priorities.

Neither the transit industry nor transportation reform advocacy groups had a representative at the hearing. The four witnesses largely limited their comments to the economic need for a new long-term federal bill, with former AASHTO president Pete Rahn endorsing the price tag of the House bill but suggesting that he viewed it as overly solicitous to transit.

"We need a balanced bill that increases funding for both highways and transit," said Rahn, who leads the Missouri state DOT.

And though the biggest stumbling block facing the next federal transport bill -- namely, the lack of sufficient gas tax revenue to pay for it -- was lamented widely, few offered concrete solutions that would help Congress move forward more quickly.

"The problem we have in infrastructure is not ways to borrow more money," Rahn replied to a question about Build America Bonds, a successful if occasionally controversial infrastructure financing tool established in last year's stimulus law. "We need to find a way to pay for improvements ... We've now topped out the credit card."

Rahn urged lawmakers to address the declining utility of the gas tax, pointing to a "conflict" between its continued role as Washington's transportation revenue-raiser and the growing acknowledgment that oil consumption needs to decrease for environmental and national security reasons.

Griffith Company president Tom Foss, speaking for the AGC, said that industry groups are open to other options, such as increased tolling or an eventual transition to a vehicle miles traveled (VMT) tax. Still, he added, "the gas tax is still best way to fund" federal transportation law because "we can advertise [it] to the general population."

The hearing took place as the House prepares to vote as soon as tomorrow on a $15 billion jobs bill, already cleared by the Senate, that would extend the 2005 transport law until year's end. Boxer and fellow senators asked the witnesses to underscore the importance of that 10-month extension in conversations with the House, where some Democrats remain reluctant to embrace the upper chamber's jobs package.

Sen. Jim Bunning (R-KY) (Photo: CNN)

The extension passed on a 78-19 vote. Four members of Republican leadership voted with Bunning: Minority Leader Mitch McConnell (KY), GOP Conference Chairman Lamar Alexander (TN), Conference Vice Chairman John Thune (SD), and campaign committee chief John Cornyn (TX).

"This week we saw the shutdown of many important highway and bridge projects, which caused great concern in many of our states," Senate environment committee chairman Barbara Boxer (D-CA) said in a statement after the vote. "Now I look forward to a longer-term transportation extension with the legislation that has already passed the Senate, and which I believe will pass the House this week."

The legislation Boxer referred to, a $15 billion bill that would keep the nation's highway trust fund solvent until 2011, could get a vote in the House this week. But much depends on how Democratic leaders act to ease the objections of members of the Congressional Black Caucus, who want to see more infrastructure spending added to the Senate package, and the Blue Dogs, who have called for more revenue offsets to the bill.

Former House Speaker Dennis Hastert (R-IL), at right, came under fire for profiting from a land deal along the proposed Prairie Parkway. (Image: ABC)

But it's worth delving more deeply into the earmarking that dominated the two disputed grant programs, the Projects of Regional and National Significance (PRNS) and the National Corridor Infrastructure Improvement Program (NCIIP).

The watchdog group Taxpayers for Common Sense (TCS), which first coined the term "Bridge to Nowhere" for Alaska's infamous infrastructure earmark, released a helpful spreadsheet yesterday that shows which state projects claimed the lion's share of the PRNS and NCIIP money in the 2005 federal transport law. TCS also calculated each state's share of the grant programs, levels that would continue this year if the Senate jobs bill passed without future corrections.

TCS' research sheds further light on the objections of Oberstar and other lawmakers who complained that the Senate jobs bill would send more than half the $932 million to four states -- California, Louisiana, Illinois, and Washington. But it also answers the question of why those four states.

From the TCS report:

As one looks at the states that benefited most from these earmarks in the 2005 bill, it’s easy to see the political influence that was at play. These earmarks were distributed based less on the importance of the projects proposed and more on the political influence of the members who were fighting for the earmarks. It is interesting to note that two of the projects ... are not even active, and their funding has been or may be “reprogrammed” for other uses; and that three of the members involved are no longer serving in Congress.

Among the biggest recipients of PRNS and NCIIP earmarks were the so-called Prairie Parkway, a favored project of former House Speaker Dennis Hastert (R-IL) that was abandoned after an investigation found that he profited personally from land deals along the proposed highway; Louisiana's I-49, a priority Gov. Bobby Jindal (R-LA) that still lacks sufficient funding for completion; and the sprawling Bakersfield Beltway road proposal, championed by now-retired Rep. Bill Thomas (R-CA).

The House-Senate deal to open PRNS and NCIIP grants to all states does not mean that projects will be able to compete for the 2010 money, as was originally envisioned in the House jobs bill. Instead, states are set to receive a share of the two grant programs that is in line with existing road funding formulas.

Sen. Jim Bunning (R-KY) was heard quipping "tough s---t" as he began blocking an extension of transportation law. (Photo: CNN)

The shutdown of federal reimbursement for road, bridge, bike-ped, and transit spending is costing states and localities $183 million per day, according to House transportation committee estimates.

Bunning's action has the effect of a classic filibuster, but his official gambit has been ongoing objection to a vote on extending infrastructure, unemployment, and several other programs. That one-month stopgap would cost $10 billion, which Bunning wants to see paid for by taking money from the White House's stimulus law.

Yet he has refused Senate leaders' offer to vote on his proposal to use stimulus money, acknowledging that it lacks the votes to pass. In the meantime, thousands more U.S. DOT employees, including Federal Transit Administration workers, are facing forced furloughs today.

"The timing could not be worse for a lot of reasons," Nevada state DOT director Susan Martinovich said in a statement released by the American Association of State Highway and Transportation Officials (AASHTO). "States need every dollar they can get to improve our aging roads and bridges and put people to work. ... We should be awarding contracts for spring construction right now, but instead many states are forced to delay, and in some cases cancel, projects."

Democrats openly branded Bunning as the face of Senate GOP obstructionism, with several majority-party lawmakers sending him direct cease-and-desist appeals.

"This is completely unacceptable," Senate environment committee chairman Barbara Boxer (D-CA) wrote in a letter to Bunning. "We can’t have an economic recovery if people can’t make ends meet and if transportation projects grind to a halt."

But when Senate Democrats released a new $150 billion jobs plan yesterday that would retroactively extend unemployment benefits until 2011, an extension of federal transportation funding was not part of the package.

The reason for the omission: a re-up of the 2005 transportation law until the end of the year is part of the $15 billion Senate jobs bill that is still awaiting action in the House, where fiscally hawkish Blue Dogs and members of the Congressional Black Caucus remain reluctant to sign off on the legislation.

If the House can muster up the votes to pass the $15 billion Senate measure this week, the U.S. DOT would be able to end its furloughs and spending freezes without the need for Bunning to relent.

Rep. James Clyburn (SC), the House Democrats' No. 3 leader, told reporters yesterday that "no one's got any problem with ... what the [Senate jobs] bill is intended to do." House Democrats are hesitant to endorse the Senate jobs bill, Clyburn said, because of its greater emphasis on tax cuts than on "direct investments." Still, he predicted that House-side questions about the jobs bill could be resolved by today or tomorrow.

In the interim, however, uncertainty reigns for federal transportation rules.

A longtime critic of congressional earmarking, Feingold has proposed legislation that would take back earmarked money at all federal agencies that remained unobligated after a decade. During a Wednesday Senate Budget Committee hearing, Feingold asked Transportation Secretary Ray LaHood if the Obama administration would support the portion of his plan that affects infrastructure.

LaHood gave a hearty affirmative (viewable in the above video), telling Feingold that the U.S. DOT had begun identifying earmarks that were ripe for cancellation due to lack of use.

(Photo: UVA)

Of course, adopting broad standards for federal transportation spending is far easier said than done. At a Bipartisan Policy Center (BPC) event yesterday, current and former members of Congress reckoned with the challenge.

Perhaps the boldest suggestion of the day came from Sen. Tom Carper (D-DE), sponsor of the so-called "CLEAN TEA" proposal to guarantee clean transport a share of revenue from cap-and-trade climate legislation. Carper wondered whether the nation's mounting deficits make the case for replacing the formula-based system of federal transport spending with a set of goals that would determine which projects get funded.

Carper's four proposed goals were congestion relief, safety, air quality, and job creation, a list that resembles the "metrics" offered by the BPC in its June framework for transportation reform.

One of Carper's GOP colleagues, Sen. George Voinovich (OH), pronounced the concept "wonderful" as the BPC audience looked on. Voinovich described the House legislation offered in June by transportation committee chairman Jim Oberstar (D-MN) as a major step towards a more accountable system, though some reform groups have questioned that bill's decision to let states and localities set their own transportation goals -- allowing a lot of wiggle room to develop.

Oberstar's measure does go a long way towards eliminating the political jockeying that often sets the course of federal infrastructure investment, consolidating more than 100 existing formula-based transportation programs into four: one focused on repair, one on air quality, one on safety, and a general pot of money that could be used on roads or transit.

The notion of eliminating formulas outright would almost certainly silence the complaints of states that push every few years for a guaranteed "rate of return" on their federal gas tax payments, and it would appeal to voters who are frustrated with the federal system's often-bloated bureaucracy and pro-road bias.

But regardless of its merits, the concept of ending formula-based spending would have next to no chance of winning approval in a Congress where bringing transportation dollars home can make the difference between re-election and defeat. And it's worth asking whether it would ultimately produce a more efficient American transportation system.

Metrics such as safety and air quality would have to be measured and evaluated in order to determine how much federal money states would win or lose, and lawmakers have yet to entertain the difficult questions of how such a process would work. State DOTs would likely play a central role, despite the pervasive distrust that exists between reformers and many sitting officials.

In many ways, a basic but complex question continues to confront infrastructure policymakers. Former Sen. Slade Gorton (R-WA), an author of the BPC transport framework, summed it up yesterday:

What is the purpose of federal transportation policy, and how do we measure whether that purpose has been accomplished?

Sen. George Voinovich (R-OH) (Photo: CNN)

But viewing Voinovich's move on the jobs bill as a template for breaking the partisan logjam that has paralyzed the Senate would be highly premature -- as the Ohioan explained today.

"I'm taking each of these pieces of legislation and looking at them individually," Voinovich said at an event hosted by the Bipartisan Policy Center. If the White House does not come to the table with specific plan for the next federal transport law, he added, "I may vote against anything" more that comes down the pike on jobs.

Voinovich said he has told President Obama as much personally.

What he wants to hear from the White House is not limited to the substance of a new federal infrastructure plan: "I'd like to hear Ray LaHood say, 'We're going to support [a new bill] and we're willing to look at various sources of revenue to pay for it," starting with an increase in the gas tax.

Though he plans to retire at the end of 2010, Voinovich is one of a handful of Republicans considered open to working with Democrats and resisting partisan pressures to oppose most of the majority's agenda. His extraction of a promise to legislate on transportation this year from Senate Majority Leader Harry Reid (D-NV) -- whom Voinovich says "gets it" and "supports funding" a new bill -- suggests that the White House could gain a reliable GOP ally by diving into the debate this year.

Yet neither Voinovich nor Sen. Tom Carper (D-DE) held out much hope that Washington's widespread political resistance to paying for transportation reform would ease in the short term.

"You need both Congress and the executive branch" to throw their weight behind the issue, Carper said, comparing Obama to George W. Bush in terms of their intractable opposition to raising the gas tax.

Despite the conservative appeal of saying "we're going to improve infrastructure, restrict our carbon footprint, and pay for it," Voinovich said later, lawmakers on both sides are more "worried about how many seats they'll have" after the 2010 midterm elections.

With the White House postponing the consideration of "tough choices" on transportation, as Sen. Kent Conrad (D-ND) put it yesterday, and the House and Senate wracked by disputes over even the small-scale question of how to extend the road-centric transport law, prospects for agreement appear as bleak as ever.

"No member of Congress can see a solution they can accept, so they say, 'We can't talk about policy because we can't deal with the money yet,'" Janet Kavinoky, director of transportation at the U.S. Chamber of Commerce, said today at a separate IBM forum on Capitol Hill.

There is, however, a potential silver lining of the current lean period for transportation. The 10 months that remain before the promised Senate vote on the issue gives Carper, Voinovich, and their House-side allies time to hash out a framework for long-term legislation that has a chance of leapfrogging the capital's typical gridlock.

Illustrating that sentiment, Voinovich turned to Rep. Earl Blumenauer (D-OR) during a break in the action today and suggested that infrastructure-minded lawmakers get to work immediately: "Not to be naive," he said, "but we need to start pre-conferencing the [future transportation] bill right now."

(Chart: Senate Budget Committee)

As he opened a hearing with Transportation Secretary Ray LaHood on the U.S. DOT's proposed 2011 budget, Conrad pointed to "serious highway and transit funding problems going forward."

After an $8 billion transfer in 2008 from the government's general fund to the highway trust fund, followed by another $7 billion transfer this past summer, the newly passed Senate jobs bill would send another $19.5 billion from the Treasury to the federal transportation fund. "This is not my preferred alternative," Conrad said, adding:

On the other hand, in the short-term, what is the alternative? I think we have to be very serious, what is the alternative? Are we really going to raise taxes in the midst of a continuing weak economy – one that is improving, but is still not fully recovered? Are we going to really raise taxes in that circumstance? 

During his speech, Conrad showed a chart (viewable above) depicting the yawning gap to come between gas-tax revenues -- the primary source of money for the highway trust fund, which also pays for transit projects -- and expected federal transportation spending.

"[W]e cannot afford to continue funding our highways and transit out of the general fund," he said, urging LaHood and other lawmakers to start working on a long-term way to pay for future infrastructure investment.

Of course, Conrad's chart makes one significant assumption: that the gas tax is kept at its current, non-inflation-adjusted level of 18.3 cents per gallon. Increasing that tax was one of five transportation financing options that he outlined today.

The others were: levying new charges of vehicle miles traveled (VMT), greater use of tolls, more transfers from the general fund ("which I strongly oppose," he noted), and a revenue-raising option yet to be proposed by Congress.

"Now, let’s be frank," he said. "None of these are popular options. But we have to find a way to close this funding gap. We are going to have to start making tough choices."

Could Conrad's candor signal an openness on his part to voting for any of those tough choices? As ever, congressional inaction on transportation is driven by the perception -- debunked last year in a poll by the advocacy group Building America's Future -- that voters would rebel against any effort to raise new money, not to mention any legislative attempt to price road use more effectively.

House transportation committee chairman Jim Oberstar (D-MN) (Photo: Capitol Chatter)

The Senate language in question would extend two grant programs created by the 2005 federal transport law, often referred to by its acronym of SAFETEA-LU.

Those programs were the Projects of Regional and National Significance (PRNS), which allowed lawmakers to steer funds to multi-year proposals that often had a transit or freight component, and the National Corridor Infrastructure Improvement Program (NCIIP), which focused largely on earmarks for massive road projects (including Alaska's infamous Bridge to Nowhere).

Extending the PRNS and NCIIP grants through the end of 2010 would result in an estimated $932 million of new funding. The House-passed jobs bill would free up that money for a merit-based process, with all 50 states eligible to submit their transport plans, but the Senate-passed jobs bill would keep that money flowing to its 2009 beneficiaries, according to Oberstar's office.

What does that mean in practice? Of the $932 million, 58 percent would automatically go to four states: California, Washington, Louisiana, and Illinois. Nine other states would get between $20 million and $50 million in 2010, and 22 states would "not receiv[e] a penny," as 23 members of Oberstar's committee wrote yesterday in a letter to House Democratic leaders.

Here's a longer excerpt from that 23-lawmaker letter:

This transportation funding proposal [in the Senate jobs bill] is unfair to the taxpayers of 46 states, unresponsive to the whole nation's infrastructure and job creation needs, and unacceptable to the House of Representatives. We request that you work to ensure that any extension of surface transportation programs maintains the discretionary, competitive nature of the [two grant] programs, rather than distributing funds based on fiscal year 2009 earmarks. This is not a new concept. ...

We believe the Department of Transportation is prepared to quickly distribute these funds to needed projects across the nation, either by funding worthy applications to the oversubscribed TIGER program or through existing mechanisms ... Such an approach would ensure broad investment in worthy projects rather than directing large amounts of funding on a non-competitive basis to a few lucky states.

Eight House members from the North Carolina delegation sent a similar, bipartisan letter to both House GOP and Democratic leaders, urging them to make sure that "funds from the two [grant] programs are allocated equitably and that projects of national significance in all parts of the country are given a fair opportunity for funding."

The entire Massachusetts delegation, including Sens. Scott Brown (R) and John Kerry (D), sent a similarly worded letter of their own to Democratic leaders in the House and Senate on Monday.

Oberstar spokesman Jim Berard said in an interview that while the transportation panel chairman has "consistently been for shorter extensions" of the 2005 law "rather than longer ones" -- the House jobs bill has one that lasts until September 30 -- the Senate version's treatment of the PRNS and NCIIP grant programs is a more significant obstacle to winning his support.

Sen. George Voinovich (R-OH) (Photo: UPI)

Voinovich joined four other GOP senators, including newly elected Scott Brown (R-MA), in voting with Democrats to end debate on a $15 billion jobs bill that transfers $20 billion to the nation's highway trust fund, keeping it solvent until the end of 2010.

But in a statement released just after his vote, Voinovich explained that Senate Majority Leader Harry Reid (D-NV) made a commitment in exchange for the Ohioan's support:

I spoke to Majority Leader Reid prior to this vote and he assured me that he understands the importance of a surface transportation reauthorization bill. I reiterated that it is the best way to create jobs, provide an immediate stimulus to the economy, rebuild our nation’s infrastructure and reduce our carbon footprint.

Leader Reid gave me his commitment that he will bring the reauthorization of a multi-year surface transportation bill to the floor for a vote this year. I look forward to working with Senator Reid, [Senate environment committee chairman Barbara] Boxer [D-CA] and others to do so as soon as possible so we can put Americans back to work.

Voinovich's statement -- which he passed out paper copies of to reporters after last night's vote, according to the Huffington Post's Ryan Grim -- tracks with Boxer's comments at a Los Angeles town meeting on Friday, when she vowed to advance her version of a new long-term federal transport bill before the end of the year.

Setting the end of 2010 as the new timetable for a Senate vote on transportation policy would effectively commit Democrats to agreeing on a source of funding that would offset new six-year legislation in the range of $450 billion to $500 billion.

House transportation committee chairman Jim Oberstar (D-MN) has estimated that about $140 billion in new revenue would be needed to close the gap between anticipated federal gas-tax revenue and the price tag of replacing the 2005 transport law with a new bill.

Could the answer to the Democrats' transportation financing conundrum be a post-election session (often dubbed a "lame-duck") after this November's midterms?

In a letter sent this afternoon, 17 Democratic senators urged Reid "to make transportation infrastructure investment a top priority in any jobs package debated in the coming weeks." Senate environment committee chairman Barbara Boxer (D-CA) said yesterday that Reid plans to call up further jobs legislation this spring that would include transport spending, but few details have emerged as to the timing or makeup of any future bills.

The letter -- a full list of senators who signed on is available after the jump -- cited the strong demand on the state and local levels in the stimulus law's competitive TIGER grants, as well as its high-speed rail funding. An excerpt:

As you move forward with legislation to to create jobs, it is critical that any such legislation include significant investment in transportation infrastructure. We can sustain and create hundreds of thousands of jobs by rebuilding our crumbling roads and bridges, expanding access to mass transit, building a comprehensive high-speed rail network, investing in our freight infrastructure, and modernizing our nation's air traffic control system. ...

[A]lthough the funding for transportation infrastructure in the [stimulus law] was a good first step, we must do more. Around the country, transportation projects stand ready to create jobs while repairing and revitalizing our infrastructure -- all they need is a funding boost. ...

Transportation infrastructure investment is one of the most effective and efficient ways to create good-paying jobs and boost our economy. It helps us remain competitive abroad, become energy independent, and reduce greenhouse gas pollution.

Senatorial signers of the Reid letter were: Frank Lautenberg (NJ), Jay Rockefeller (WV), Debbie Stabenow (MI), Patrick Leahy (VT), Mary Landrieu (LA), Ron Wyden (OR), Sheldon Whitehouse (RI), John Kerry (MA), Bernie Sanders (VT), Robert Byrd (WV), Kirsten Gillibrand (NY), Jeff Merkley (OR), Tom Udall (NM) Jack Reed (RI), Sherrod Brown (OH), Mark Begich (AK), and Robert Menendez (NJ).

Senate environment committee chairman Barbara Boxer (D-CA) (Photo: AP)

Faced with the prospects of a GOP filibuster, Senate Democrats have taken up a pared-down jobs bill that features a $20 billion rescue of the nation's cash-strapped highway trust fund and an expansion of Build America Bonds, a popular infrastructure financing program.

"Ensuring these are included in the very first jobs package is so essential," Boxer told reporters today. "We just don't have time to wait for an extension of the highway trust fund."

That fund, which provides money for bicycle and pedestrian projects as well as roads, is operating under a stopgap re-upping of the 2005 federal transportation law that is set to expire at the end of the month. Without a $20 billion transfer to keep the fund in the black until 2011, Boxer said, its coffers would run dry sometime in the summer.

John Horsley, executive director of the American Association of State Highway and Transportation Officials (AASHTO), and William Millar, chief of the American Public Transportation Association (APTA), joined Boxer in touting the need for a highway trust fund extension -- which would effectively postpone debate on a new long-term federal transport bill until after the 2010 midterm elections, dealing a blow to House efforts to spur action this year.

"Failing an extension of the authorization bill," Millar said, transit agencies "would not be able to invest the money" Congress already has appropriated for his sector.

Despite support from road and transit interests, as well as bipartisan agreement on the need to keep the highway trust fund solvent, Senate Majority Leader Harry Reid (D-NV) is far from assured of winning 60 votes for his first jobs bill. If the initial measure can squeak through next week, Boxer said senators could soon take up a second jobs bill that includes more infrastructure spending -- potentially in line with the House's $37.3 billion in new investment.

Senate Finance Committee chief Max Baucus (D-MT), at left, with GOP ally Chuck Grassley (IA) at right. (Photo: Baucus Press)

The bill also would reverse last year's cancellation of $8.7 billion in contract authority for road programs, including bike-ped-centric Transportation Enhancements funding.

No official budgetary impact would be tallied from the trust fund rescue, because the transfer would be counted as a restoration of interest that the Treasury has held onto for 12 years. (For more on that historical footnote, check out this post.)

Notably absent from the Baucus-Grassley measure is any new infrastructure spending, such as the $37.3 billion plan approved by the House in December. Senate Democrats have suggested such funding might come up as part of a forthcoming jobs package, but without offsets elsewhere in the budget for such an idea, GOP opposition is almost assured.

An expansion of the merit-based grants known as TIGER (short for Transportation Investments Generating Economic Recovery) was also left out of the Finance Committee's proposal, despite strong support from the White House for extra funding for the popular program.

Baucus and Grassley did make room in their bill, with a total price tag estimated at $84 billion, for a provision allowing the conversion of tax-credit bonds for school construction and energy projects to Build America Bonds (BABs), which offer government-subsidized interest. BABs have become a favorite tool for local and state government seeking to finance new transit and road projects, but the jobs bill's conversion language does not appear to apply to transportation.

Late Update: Reid threw cold water on Baucus and Grassley's plan this afternoon, telling reporters that he would move forward with a slimmed-down bill during the week of February 22, after Congress returns from a Presidents' Day recess.

"We're going to do a bill that has four things in it," Reid said this afternoon. In addition to a payroll tax credit aimed at boosting hiring and a small business tax credit, he said, the new Democratic legislation would include "Build America bonds, which has been so dramatically successful [and] the highway bill extension for one year, which will save a million jobs."

A full summary of the Finance Committee's plan follows after the jump.

Job Creation Provisions

Schumer-Hatch Jobs Payroll Tax Exemption.  This provision would offer an exemption from social security payroll taxes for every worker hired in 2010 that has been unemployed for at least 60 days.  The maximum value would be equal to 6.2% of wages up to the FICA wage cap ($106,800).  There would also be an additional $1,000 income tax credit for every new employee retained for 52 weeks to be taken on the employer’s 2011 income tax return.  This proposal is estimated to cost $13 billion over ten years.

Extension of Section 179 Expensing.  This provision would extend 2008 and 2009 section 179 expensing thresholds so that taxpayers may elect to write-off up to $250,000 of certain capital expenditures (subject to a phase-out once expenditures exceed $800,000) in 2010 in lieu of depreciating those costs over time.  This proposal is estimated to cost $35 million over ten years.

Election to Convert Tax Credit Bonds to Build America Bonds.  Under current law, Congress provided tax credit bonds to qualifying issuers for certain school and energy projects.  Tax credit bonds provide the bond holder a federal tax credit in lieu of interest.  Build America Bonds provide qualifying issuers a direct payment from the Treasury for a portion of the interest paid on the bond for government works projects.  This provision would allow qualifying issuers of tax credit bonds the option of issuing tax credit bonds under current law, or utilizing the direct subsidy Build America Bond structure for bonds issued after the date of enactment.  The federal subsidy would equal 45 percent of the borrowing cost (65 percent for qualifying small issuers).  The proposal is estimated to cost approximately $2 billion over ten years.

Highway Trust Fund.  This provision would extend highway and transit programs through calendar year 2010, and transfers from the General Fund to the Highway Trust Fund $19.5 billion in interest foregone since 1998.  It would also halt annual payments the Highway Trust Fund makes to the General Fund as reimbursement for tax-exempt users of the highway program (e.g. state/local fleets and transit providers).  This provision also repeals an $8.7 billion rescission of unobligated balances of contract authority, a provision which passed in the 2005 SAFETEA-LU legislation. This proposal has no revenue effect.

Extension of Expiring Tax Provisions

The draft HIRE Act would also extend several tax provisions that expired at the end of 2009, providing much needed tax relief for individuals and businesses.  These provisions include the research and development credit, the 15-year recovery period for leasehold, restaurant, and retail improvements, the new markets tax credit, the active finance exception under Subpart F, and the CFC look-through rules. The draft HIRE Act would also extend several energy tax provisions, including credits for home efficiency and alternative fuel vehicles, as well as for biodiesel, renewable diesel and other alternative fuels.  The draft bill also includes several disaster relief provisions.  The total cost of the extenders provisions is about $31 billion over ten years.

Pension Funding Relief

The provision would provide temporary, targeted funding relief for single employer and multiemployer pension plans that suffered significant losses in asset value due to the steep market slide in 2008.  The pension funding provisions raise about $6 billion over ten years.

Economic Safety Net Provisions

Unemployment Insurance Extension.  This provision would extend current law, including increased unemployment benefits, through May 31, 2010. Under current law, an unemployed worker may receive up to 26 weeks of unemployment benefits provided by the state in which they were employed.  After the state-provided benefits are exhausted, the worker may qualify for 34 more weeks of benefits provided by the federal government.  If that person is unemployed in a state with an unemployment rate above 6 percent, they qualify for an additional 13 weeks of benefits also provided by the federal government.  Unemployed workers in states with an unemployment level over 8.5 percent qualify for an additional six weeks of benefits also provided by the federal government.  In addition, the Federal government pays 100 percent of the cost of state Extended Benefits programs which provide up to 13 additional weeks of benefits for unemployed workers who have exhausted regular state benefits or Emergency Unemployment Compensation.  Last year’s economic recovery bill increased weekly unemployment benefits by an additional $25 per week. Without extension, these provisions will expire on February 28, 2010.  This proposal is estimated to cost $22 billion over ten years. 

Extension of COBRA Premium Assistance. This provision would extend the 65-percent COBRA premium subsidy for terminated workers through May 31, 2010. This provision also includes technical clarifications to the program. The proposal is estimated to cost $3 billion over ten years.

Extension of Expiring Health Care Provisions. 

The draft HIRE Act also extends health provisions, a number of which expired at the end of 2009.  These provisions include a seven-month extension of the sustainable growth rate update formula.  Without this fix, physicians participating in Medicare face a 21 percent reduction in payments.  The bill also extends the exceptions process for Medicare therapy caps and extends payment provisions for mental health providers, ambulance services, physicians in areas where the work geographic practice cost index (GPCI) is below 1.0, certain physician pathology services, the rural hospital flexibility (Flex) program, improved payments for outpatient services in hospitals in rural areas, direct billing for Indian health service providers, Medicare hospital wage index reclassifications under the section 508 program, provisions concerning long-term acute care hospital services, and certain Medicare Advantage plans, including special needs plans, cost plans and senior housing programs. The draft bill would also provide an accreditation exemption for certain pharmacies that furnish durable medical equipment and would clarify eligibility for physician health information technology incentive payments. And finally, the draft bill would keep the 2009 federal poverty guidelines to protect people in means-tested programs from losing benefits and includes a provision to disregard refundable tax credits and refunds as income for twelve months from receipt. The total cost of the health extenders provisions is about $10 billion over ten years.

Other Provisions

The draft bill contains five provisions outside the jurisdiction of the Finance Committee.  These include short-term extensions of two expiring authorities under the Patriot Act, the national flood insurance program, and certain SBA loan provisions.  In addition, the draft bill includes an estimated $1.5 billion in agriculture disaster assistance and a five-year reauthorization of satellite home viewer legislation.  These provisions are estimated to cost $3 billion over ten years.

Offsets

Foreign Account Tax Compliance. These provisions include a comprehensive set of measures to reduce offshore noncompliance by giving the IRS new administrative tools to detect, deter and discourage offshore tax abuses. The proposals include 30% withholding on U.S. source payments to foreign financial institutions, foreign trusts, and foreign corporations that do not agree to disclose their U.S. account holders and owners to the IRS; requiring taxpayers to disclose their foreign accounts on their U.S. tax returns; increasing the statute of limitations to 6 years for failure to report certain offshore transactions and income; clarifying when a foreign trust is considered to have a U.S. beneficiary;  and treating substitute dividend and dividend equivalent payments to foreign persons as dividends for purposes of U.S. withholding.  This proposal is estimated to raise $9 billion over ten years.

Cellulosic Biofuels Loophole. The provision would modify the $1.01 per gallon cellulosic biofuel producer credit to exclude fuels with significant water, sediment, or ash content, such as black liquor.  The provision would exclude from the definition of cellulosic biofuel any fuels that (1) are more than four percent (according to weight) water and sediment in any combination, or (2) have an ash content of more than one percent (according to weight).  The provision would be effective for fuel sold or used after date of enactment.  This proposal is estimated to raise $24 billion over ten years. 

Clarification of the Economic Substance Doctrine and Penalty for Underpayments Attributable to Transactions Lacking Economic Substance.  This provision would clarify the application of the economic substance doctrine which has been used by courts to deny tax benefits for transactions lacking economic substance.  The provision would also impose a 40% strict liability penalty on underpayments attributable to a transaction lacking economic substance (unless the transaction was disclosed, in which case the penalty is 20%). The proposal is estimated to raise $5 billion over ten years. 

Reduction in the Medicare Improvement Fund.  The Medicare Improvement Fund (MIF) contains funds that are available to the Secretary to make improvements to the original fee-for-service program under Parts A and B of Medicare.  Under current law, approximately $20 billion is available for services furnished during FY2014.  This provision would reduce the funding available in the MIF by $8 billion.  This proposal is estimated to save $8 billion over ten years.

Senate Majority Leader Harry Reid (D-NV) (Photo: LV City Life)

Harry Reid (D-NV), the upper chamber's majority leader, told reporters that he was "hopeful" a bipartisan jobs bill could be ready for public view within the next day or two, followed by a first vote on Monday. "If not," he added, "[Democrats] will lay one down ourselves."

The Obama administration has called for the Senate to add more funding for TIGER (Transportation Investment Generating Economic Recovery), the stimulus law's $1.5 billion merit-based grant program, to its jobs plan. Reid indicated on Tuesday that his party was receptive to more TIGER aid.

Another infrastructure-centric provision attracting broad interest is an extension of Build America Bonds (BABs), which allow local governments to finance transportation projects more easily by offering a 35 percent federal subsidy. New York City's transit authority is one of many local agencies turning to BABs to make debt offerings more attractive to private investors.

Finally, the politically tricky status of the highway trust fund remains on Congress' plate, with the House and Senate still at odds over how to keep it funded nearly five months after the first expiration of the nation's 2005 federal transportation law.

Reid said earlier this week that a one-year extension of the trust fund likely would be added to the Senate's jobs bill. But with Senate Democrats aiming to coax Republicans on board by breaking up their economic-recovery agenda into smaller pieces, it remains to be seen whether the trust fund, BABs, or TIGER will make it into the legislation set for votes on Monday.

Also left unanswered is how much, if any, spending the Senate would direct at ready-to-go transportation projects. An initial jobs-bill outline circulated last week suggested that $14 billion for roads and $7.5 billion for transit could make it into the legislation, but Democrats offered no hint of whether those numbers were still in the mix.

The office of Senate environment committee chairman Barbara Boxer (D-CA), who has taken the lead on the infrastructure elements of her party's jobs program, did not immediately return a request for clarification of the timing for transportation spending.

If Senate Democrats were sure of anything this morning, however, it was the need for speedy consideration of the yet-to-emerge jobs provisions. "Let's put these on the floor and move on them with a sense of urgency," Majority Whip Dick Durbin (D-IL) said.

Late Update: Illustrating the pitfalls of the Democratic hopefulness that the still-to-come jobs plan could win GOP support is the following quote, which Politico attributes to a spokesman for Minority Leader Mitch McConnell (R-KY):

I watched the Democrat leadership's press conference just now and what I learned is that there will be a vote Monday on 'a bill.' But that they don’t know what’s in the bill or how many jobs they expect it to 'save or create,' or when anyone beyond the Beltway will see it, or how much it will cost. They did have a nice sign, though, and a pretty handout, so they obviously gave this some thought.