Senators Collins, left, and McCaskill at their press conference. Image: STLtoday

Last week, McCaskill and Collins introduced the ambitiously-named Bipartisan Jobs Creation Act. The bill begins with the payroll tax cut and wraps it in additional tax cuts, deregulation measures, and a $35.8 billion infrastructure investment program. The whole thing would be paid for by eliminating some subsidies for oil companies and by instituting a surtax on millionaires’ income—though exceptions will be made for small business owner-operator “job creators.”

The two senators are generally touting this bill as a tax relief bill first, and a pay-your-fair-share bill second—infrastructure gets third-stringed at best, but the provisions are still worth looking into.

The McCaskill-Collins infrastructure plan [PDF] includes $10 billion to capitalize state infrastructure banks and $25 billion for highways and bridges—just highways and bridges. Out of $25 billion—about half an average year’s transportation spending by the federal government—not a dime goes to transit.

By promoting state infrastructure banks, McCaskill and Collins are throwing their weight behind the Republican vision for infrastructure spending and against the President’s. The President and a number of other prominent figures have advocated to no avail for the creation of a National Infrastructure Bank, and Politico reports that they’ll try again next year—to the familiar tune of $10 billion. Meanwhile, House Transportation Committee Chair John Mica has included support for state infrastructure banks—not a national one—in his reauthorization bill. The senators opted for state I-banks in this case because they are an existing program that could be expanded, while “there is no consensus yet on how to address a National Infrastructure Bank,” according to Senator McCaskill’s press secretary, John LaBombard.

Furthermore, the bill summary states that the $25 billion for highways and bridges is for “rebuild and repair” projects, but LaBombard clarified that they can also be used for expansion of existing roads and new construction. They can’t, however, be used for transit.

McCaskill-Collins is the latest in a growing list of bills that attach infrastructure spending to various other issues, all in the name of job creation. First there was the “drilling-for-infrastructure” proposal, touted as the House Republicans’ major jobs bill. Then there was Rep. Nick Rahall’s Buy America bill (“regulation-for-protectionism”), and now the vote on Boehner’s Keystone XL bill.

With Congress staying in session until a deal is struck on the payroll tax cut, and the pressure high to get it done by Friday, McCaskill and Collins could be poised to present a true bipartisan alternative and break the deadlock. If their bill passes, and the infrastructure portion remained intact, we can only speculate as to the effect it would have on the Senate reauthorization bill come February.

Bills to put unemployed construction workers back on the job keep going down in Congress.

Given Republican opposition to what they consider a repeat of a failed stimulus – and to an infrastructure bank they say is unnecessary at best and politicized at worst — the failure of the bill is no surprise. The bill garnered a slim majority — 51-49 — but not enough to overcome the threat of a GOP filibuster.

Meanwhile, the Republican proposal would have pushed back many health, safety, and environmental regulations that corporations consider onerous. Defeated in a 47-53 vote, the bill also would have extended SAFETEA-LU for two more years — nearly matching the length and spending levels in the bipartisan EPW proposal — without funding the shortfall such spending would cause to the Highway Trust Fund. The bill wouldn’t have been a “clean” extension of current law, though, since it eliminated the “set-aside” for bike and pedestrian infrastructure, making it the fourth attempt in less than two months by Senate Republicans to eliminate or weaken TE — and the fourth failure.

Sen. Hatch makes yet another attempt to "give states the authority" to kill bike/ped spending.

The Rebuild America Jobs Act is a piece of President Obama’s jobs bill that was broken off in hopes that it could pass on its own. It would invest $50 billion on infrastructure projects and another $10 billion in seed money for an infrastructure bank, to be paid for with a 0.7 percent surtax on incomes over $1 million.

Taxing the rich and increasing government spending — now there’s a recipe for some partisan rancor.

So far Democratic Leader Harry Reid and Republican Leader Mitch McConnell have traded barbs that each is just engaged in election-year sloganeering. Reid said 76 percent of the American people approve of the plan to tax the “top two-tenths of one percent.” But McConnell said those 76 percent might change their minds if they knew that “four out of five of those high-income individuals are actually business owners.” They haven’t talked much about the merits of infrastructure investment.

Note that not all of the big players who lined up behind increased investment and an infrastructure bank favor this bill. Bruce Josten of the U.S. Chamber of Commerce, for instance, said yesterday in a letter to senators [PDF] that the Rebuild America Jobs Act “fails to provide the multi-year funding certainty and fails to establish the policy and program reforms sorely needed to create jobs and support economic growth” and “only continues to delay and frustrate the serious and much needed debate on the sustained long-term investment required to address America’s infrastructure crisis.”

Of course, it’s worth noting that Josten represents the two-tenths of one percent that would be paying higher taxes to fund the I-Bank under this proposal. But he makes a good point  – reformers, too, shouldn’t take their eyes off the ball of a serious revamping of policy, not just short-term funding injections without better guidance on how to spend it.

Meanwhile, Sen. Orrin Hatch (R-UT) is pushing his oddly named Long-Term Surface Transportation Extension Act. But Congress passed a transportation extension until March, you might say — and you’d be right. Hatch’s bill isn’t an extension of the transportation bill — it’s an attempt at deregulation. “This legislation seeks only to put rational decision-making into the foundation of our regulatory and rule-making processes that are too often driven by the special interests of largely unaccountable and fully unelected regulatory bureaucrats wishing to impose their preferences on America’s job creators,” Hatch said on the floor.

He went after environmental reviews, a favorite punching bag of the GOP — and an increasingly common target of Democrats – for the delays they can cause on infrastructure projects.

Hatch also mentioned that Democrats often refer to the World Economic Forum’s Global Competitiveness Report (ranking U.S. infrastructure #23 in the world) to justify the creation of an infrastructure bank to fund “specially chosen and favored risky projects.” Meanwhile, Hatch said, the same report finds that the most “problematic factors for doing business in America” are tax rates, inefficient government bureaucracy, access to financing, and tax regulations — not inadequate infrastructure.

And for those keeping score on Senate Republicans’ attempts to kill bike/ped funding, Hatch said his bill also “calls for elimination of dedicated funding for transportation enhancements and gives states the authority to decide whether to spend resources on bike paths and other such add-ons.”

The Staten Island Ferry has gotten some TIFIA funding. Some say an expanded TIFIA would do everything an infrastructure bank would do, but others say it wouldn't allow for large-scale community planning. Photo: SI Ferry

The TIFIA program has been around since 1998 but money pressures have led to a steep uptick in applications over the past few years. Some have criticized it for its lack of transparency in decision-making and suggested that it might be more effective housed outside of USDOT and functioning independently.

“Is TIFIA the first perfect federal program?”

Nevertheless, Congressional Republicans have thrown their full support behind the program, mainly as a counterweight to the president’s proposed infrastructure bank. Consistent with their desire to limit the growth of the federal bureaucracy, they resist the idea of creating an entirely new entity, even though the bank would be independent from the government, a la the Export-Import Bank.

There are two competing infrastructure bank bills in the Senate and a new one introduced earlier this week in the House. The Senate is planning to vote next week on a bill to spend $50 billion on infrastructure with another $10 billion in seed money for a bank – pieces of President Obama’s jobs bill, which has been dismembered for separate votes. Next week’s bill isn’t expected to pass. Indeed, many members think TIFIA is the way to go.

At a House Transportation Committee hearing earlier this month, nearly every Republican present spoke out in favor of expanding TIFIA instead of creating a new bank. Chair John Mica asked why a bank was needed when “we have a successful example” in TIFIA.

One of the things that the infrastructure bank can do is enter into long-term relationships with people who have decade-plus-long plans. They’re trying to finance a plan. What Washington knows how to do is finance a segment of a project. The current TIFIA process does not allow us to do that.

- Roy Kienitz

Highways and Transit Subcommittee Chair John Duncan (R-TN) went as far as to ask, “Is TIFIA the first perfect federal program?” He noted, “Everyone has had glowing comments about TIFIA, and it’s a program that I support as well.”

Geoffrey Yarema of Nossaman LLP (a law firm specializing in public-private partnerships for infrastructure projects) told Duncan TIFIA wasn’t perfect but that it did have 12 years of solid experience. He suggested it be “right-sized” by adding staff and he wants to “change it from a discretionary decision-making process that has the potential for being politicized – and some would say the reality of being politicized – to a first-come-first-served program.”

That change, however, would eliminate the part of TIFIA reformers like most: The fact that it has the power to encourage innovation and goal-oriented, performance-based strategic transportation planning.

Yarema also noted that the Treasury “has actually made money off the TIFIA program,” as opposed to many other federal programs that end up costing taxpayers. He’s all in favor of casting off the idea of an infrastructure bank. “We already have a national infrastructure bank for transportation,” he said. “It’s called TIFIA.”

One thing he and other transportation advocates like about TIFIA is that it’s only for transportation. While the Rockefeller-Lautenberg infrastructure bank proposal in the Senate is transportation-only (at least at first), the dominant I-bank proposal is the Kerry-Hutchison version, which would include other forms of infrastructure like energy and water treatment. Yarema admitted that some may see the breadth of scope as a strength of the bank concept, but he was concerned that “transportation would be in there competing for loans, not just with other transportation projects, but with dams and levees and ports and all kinds of infrastructure.”

Democrats support infrastructure bank — reluctantly

Democrats agreed that TIFIA should be expanded but said that it should be a complement, not a replacement, for the I-bank. Democratic support for the bank was sometimes tepid, though. Even Senate EPW Chair Barbara Boxer has been known to support expanding TIFIA instead of an infrastructure bank. At the hearing this month, Rep. Peter DeFazio, top Democrat on the Highways and Transit Subcommittee, confessed:

Before Wall Street destroyed the economy, I had said, well, I really don’t see why we need an infrastructure bank. Most of the states have good credit and they can go out and borrow on their own at very good rates.

But that isn’t the case anymore. The states need guarantees. They need help. Many are against their borrowing limits. And most of the banks, who were generously bailed out by Congress, aren’t lending. And credit bond markets are tight. So an infrastructure bank could be more useful for the states in that circumstance.

DeFazio did note, however, that an infrastructure bank is, in the end, a bank that “expects to be re-paid.” So he wasn’t optimistic that it would help with state of good repair or new investments for transit systems or for rail – some of his biggest priorities.

Sen. Mark Warner, an original (but often-unnamed) co-sponsor of what’s most commonly known as the Kerry-Hutchison infrastructure bank proposal, admits that’s a weakness of the infrastructure bank proposal. But he said at a recent event that even with a public funding source, an I-bank could be a helpful financing tool to drive interest rates down and lower the costs of a transit project.

Scott Thomasson of the Progressive Policy Institute testified at the transportation committee hearing that an infrastructure bank was needed, in part, because TIFIA is understaffed and outsources much of its work to people with greater expertise. The first step toward creating an effective infrastructure bank would be “hiring the financial professionals that TIFIA lacks,” he said.

That could help, but it’s not the strongest argument for creating a brand new entity. After all, if TIFIA just “beefed up” as many recommend, it could have that expertise in-house.

The clincher

A more persuasive argument for the necessity of an I-bank came this month from USDOT Under Secretary for Policy Roy Kienitz, who said at an infrastructure forum sponsored by the Washington Post that one problem with TIFIA funding – aside from the fact that it’s far too low – is that it’s released six weeks at a time, making it hard to do long-term planning.

But that’s not all. Kienitz’s answer to why TIFIA isn’t a substitute for an infrastructure bank was so dead-on and coherent it’s worth printing in its entirety.

One of the advantages of some more infrastructure-bank-like system is that some of the places that are innovating, at least some of them, are places like Denver, Salt Lake, LA, Seattle. In the transit world, what the federal government does is it says “show me the minimum operable segment for the transit line which you are currently considering.” And what communities want to do is say, “I have a future 25 years from now that looks very different than today and here’s all the pieces and parts. Here’s what I want to do with my freeways, here’s my HOT lanes, here’s my light rail, here’s my streetcar, here’s my traffic flow improvements. It all works together. I want to raise an amount of money to do this plan; who do I talk to in Washington?”

And the answer is, blecch, we don’t know how to do that. We’re sliced up into our own little slices.

One of the things that the infrastructure bank, or something like the infrastructure bank, can do is enter into long-term relationships with people who have decade-plus-long plans, about the pieces and the parts of that plan. They’re trying to finance a plan. What Washington knows how to do is finance a segment of a project. And that’s a conversation that needs to change.

The current TIFIA process does not allow us to do that. With more money, we could do more segments of more projects, and that would be a good thing. But I don’t think that’s the ultimate goal.

The debate over an infrastructure bank will continue. John Mica has declared the proposal “dead on arrival” but President Obama and Congressional Democrats aren’t letting up easy. Even if next week’s Senate vote fails to get majority support for an infrastructure bank, they’ll continue to push for it.

Rep. John Mica won't be specific about where additional transportation funding could come from. Photo: 13 News

Mica told an audience at a Washington Post-sponsored forum on transportation that passing yet another extension of the surface transportation reauthorization persuaded leadership that there would not be consensus on a long-term bill until the spending levels were raised. “There wont be a gas tax increase,” Mica said, “but our leadership has asked us to look for other sources of revenue, and we’re on that mission now.”

“Speaker Boehner has really opened the door to us to look for any responsible means” to fund the bill, Mica said, adding that a gas tax increase is still off the table. “There’s also the possibility of doing away with it; adopting something else.” He wouldn’t specify what the replacement fee could be.

Nor would he say what he thinks of a Republican proposal to fund the bill with revenues from new oil drilling except to say, “We’re looking at it. We have some scoring issues. And then we have to make sure we have the votes.”

Mica said he was confident that a long-term bill would pass in March. “Don’t let anybody talk about a two-year transportation bill; that’s criminal,” he said. His counterpart in the Senate, Barbara Boxer, has proposed a two-year bill, but could be willing to go along with a longer-term bill if funding levels were raised.

Mica also reiterated his support for state infrastructure banks, saying he prefers them to a national bank. He said the way Washington works is: “the biggest gorillas get the most bananas.” Instead of having big guys compete for big loans from a big national bank, he said, “the best way to prioritize projects is to have them evolve from local level, get local and state participation, and then assist them.”

Transportation Secretary Ray LaHood also addressed the Washington Post gathering. He said he was confident that, despite current gridlock, there was enough pressure on Congress to create jobs that they’ll pass some form of transportation bill this year.

Still, he hinted that Republicans in Congress might be trying to sabotage Obama’s presidency at the expense of the unemployed. He said Congress was polling lower than it ever has among the public “because they haven’t done anything.”

“Maybe that’s deliberate,” LaHood said. “I hope it’s not.”

He said the most recent class in Congress came in, not with a mission to find solutions, but determined to obstruct movement.

Infrastructure bills used to be bipartisan and easy to pass, LaHood said, but “some people don’t want Obama to be successful.” The result? Aside from 9.1 percent official unemployment, “infrastructure is in terrible shape,” he said. “America is one big pothole right now.”

In comments to reporters after his remarks, LaHood said he believed that, despite recent attacks, transportation enhancements (the major way the federal government funds bicycle and pedestrian facilities) would remain.

“These enhancements have always been a part of the transportation program, and I anticipate that they will be in the future,” he said. As for assertions by Sens. Rand Paul and Tom Coburn that bike paths aren’t “real” transportation, he said, “That’s why we have debates in Congress,” but repeated, “I feel pretty confident that these programs will continue.”

LaHood let it slip yesterday that he was planning to leave after Obama’s first term, whether or not the president is re-elected. “My wife has plans for me to do something more monetarily pleasing to her,” he said in an attempt to answer what he might do next.

While some bicycling advocates might hope the president would nominate someone of similarly bike-friendly proclivities, LaHood made it clear that wasn’t why he was nominated. “I wouldn’t have this job if I wasn’t a Republican,” he said. “If I was anything else, I wouldn’t be here today.”

He did say he agreed with the president on transportation, including the importance of getting high-speed rail moving. He said the $10 billion the administration has invested in high-speed rail was “10 billion times more than has ever been invested before” and would make the U.S. the envy of the world again, as Asia and Europe’s rail systems are now.

He countered skepticism about the slow speed and reticence in Congress to fund the program by saying that when he was growing up in Peoria, and the interstate system was being built, “I remember seeing stretches of cement that went nowhere.” But what started as little, disconnected segments eventually came together into one nationwide network.

LaHood also put in a plug for the TIGER program, calling it was a good way to connect projects with the federal government without having to go through governors and that had very little red tape for a federal program. He also highlighted the importance of keeping roads, bridges and transit systems in a state of good repair.

Sen. Schumer's plan to salvage the jobs bill wouldn't resuscitate plans for $50 billion in transportation spending. Photo: AP

New York Sen. Chuck Schumer has proposed narrowing the bill down to two parts – one favored by Democrats, the other by Republicans. Under the plan, an infrastructure bank would be created in the model endorsed by the president and the Kerry-Hutchison BUILD Act. In exchange, there would be a tax holiday for corporations to bring back to the U.S. profits they made overseas.

Obama’s bill had also called for a $50 billion investment in transportation infrastructure, and that appears to be dead as the Senate pursues Schumer’s plan. The House had dismissed the transportation component long ago, with Republican leadership saying they might hold a vote on the pieces of the bill that appeal to them (surprise — stimulus spending isn’t one of them). Meanwhile, some insiders say that Republicans in the House are getting serious about passing a transportation reauthorization before March 31 so that they can show that they, too, are serious about job creation.

Of course, the path they seem to be setting out on involves paying for a higher level of transportation spending with oil drilling, a proposal that’s sure to run up against massive Democratic opposition and possibly even a presidential veto.

And many think that not much is going to happen on any of this until the super committee comes back with its proposals for deficit reduction before Thanksgiving.

Back to the Schumer jobs plan: We’ve written a lot, and will be writing more, about the pros and cons of an infrastructure bank. But what about this idea of repatriating overseas profits?

The plan would allow corporations to stash their profits made outside the country in U.S. banks without paying the 35 percent corporate tax rate they’d normally have to pay. There’s no guarantee that just because that money would now be sitting in U.S. banks that it would be used to create U.S. jobs, though – in fact, a similar repatriation plan in 2004 failed miserably on that front.

Dan DiMicco, CEO of the Nucor steel company, said last week that he’d be in favor of a repatriation holiday where the companies invested part of their repatriated profits in an infrastructure bank. However, Schumer’s thinking doesn’t go that far. The tax earnings from the lower tax rate imposed on the repatriated profits would go into the Treasury, plain and simple.

As for the prospects of the Schumer bill, in the GOP’s estimation , even this scaled-back plan bears Obama’s mark since it is the offspring of his jobs bill, and therefore Republicans are reluctant to vote for it. Even Lindsey Graham, co-sponsor of the BUILD Act for an infrastructure bank, will only commit to “considering” the new proposal.

Meanwhile, Senate Majority Leader Harry Reid would rather pay for the infrastructure bank with a surtax on millionaires – a proposal Republicans persist in calling “class warfare.”

Mark Alderman of the Obama-Biden transition team, former U.S. Senator Evan Bayh, and Howard Schweitzer, former vice president of the Export-Import Bank co-wrote an op-ed for the Washington Post saying that the Export-Import Bank was already authorized and organized to do exactly what an infrastructure bank is supposed to do:

Is this what you had in mind, I-bank proponents? It's the Export-Import Bank -- but some experts believe it could serve the same function as a national infrastructure bank. Photo: GSA

Many of those pushing for an infrastructure bank say that public-private partnerships are part of the solution. This basic concept combines private capital with some form of public support to finance large projects. That is the Export-Import Bank’s bread and butter. Put another way, the United States already has a bank that knows how to balance investor return with lender (i.e., taxpayer) protection — often a major stumbling block to public-private deals.

They go on to say, “A newly expanded Export-Import Bank could facilitate private-sector investment in projects such as repairing roads and bridges, modernizing the energy grid, and maintaining our dams and levees — creating jobs while rebuilding the country.”

It’s a compelling argument, especially in the face of skepticism about creating a new quasi-government entity, especially in a political environment suspicious of Big Government. Some fear an I-bank will be too much like Fannie Mae and Freddie Mac; some would rather just stick with the TIFIA loan program; others want to encourage state infrastructure banks instead of a big national one. If making a few tweaks to an existing structure could yield the same benefits as a national infrastructure bank, isn’t that easier?

The Ex-Im bank has a similar financial model to the Kerry-Hutchison I-bank proposal (which the president has adopted) and a similar governing structure – an independent, though government-owned, corporation. Even better, the Ex-Im Bank makes money for the U.S., depositing money into the Treasury, not taking it.

“The Ex-Im bank already has some of that staff in place and an established history of success, fiscal responsibility, and a low risk to taxpayers,” said bank expert Scott Thomasson of the Progressive Policy Institute. “And there actually is a window to expand the mandate of the Ex-Im Bank if there is political support to do that.”

There’s not a lot of interest on Capitol Hill yet about this idea, but it could become the compromise that saves the whole I-bank concept. For now, some say, politicians that have been on the forefront of the bank idea would rather stick with their own idea (which they can then take credit for).

Rep. Rosa Delauro (D-CT) has been the primary Congressional champion of an infrastructure bank for the past 17 years. At an event yesterday sponsored by PPI, Delauro admitted that while the Ex-Im Bank was an interesting model, “Yes, I am wedded to an infrastructure bank.”

Sen. Mark Warner, an original cosponsor of the Kerry-Hutchison BUILD Act, gave a similarly cautious welcome to the Ex-Im Bank proposal. “I’ve not given that enough thought, but I think it’s something that ought to be examined,” he said yesterday. He did say that he and his cohorts have always thought of the Ex-Im Bank as a far closer model for the infrastructure bank than Fannie and Freddie.

Delauro also said simply expanding TIFIA or strengthening state infrastructure banks wouldn’t “meet the aims” of a national infrastructure bank. And she “applauded” the Kerry-Hutchison proposal but said hers would issue bonds and be capitalized at $20 billion, not $10 billion. “Without the enhanced finance capacity we may not be able to get to a scale that we need to properly address the jobs crisis that we face in this country and meet a bank’s potential to be able reduce our infrastructure investment deficit and enhance our global competitiveness,” Delauro said. “It’s good, it’s great, but it’s not where we could go with this concept.”

Whatever form it takes, Delauro insisted that the U.S. must not go on as “one of the only leading nations without a national plan for public-private partnerships for infrastructure projects or a national infrastructure bank to finance large scale projects and to leverage private capital.”

And indeed, there’s plenty of private capital out there ready to invest in infrastructure. Ed Smith of Ullico, Inc., a union insurance company, said his company wants to invest pension funds in a national infrastructure bank. It would create jobs for union members and have a long-term, safe and stable payout that works well with pensions. And as a member of the labor movement, he said “People have to get out of the habit of saying we need to create jobs today through infrastructure. We need to create jobs over the next ten years – and infrastructure can do it.”

“You talk about infrastructure, you don’t talk about short-term stimulus. You talk about a stimulus that’s being put in place for five, 10 years,” Smith said. “Short-term infrastructure is an oxymoron.”

That’s why job creation should focus on repair, said Gene Sperling, director of the White House National Economic Council. He told the PPI gathering yesterday that the president’s jobs bill won’t just focus on big capital projects.

“If you’re having to have a quick impact on the economy, there aren’t that many large projects that are ready to go,” Sperling said. “Like at a home – if somebody told you you could build a new room, not everybody is ready to do that. Everybody is ready to fix something in their kitchen or their stairs.”

Sperling tried to shrug off questioning about why the president was caught blindsided by skepticism of the plan from within his own party. “There aren’t many times, in my experience, where you send up a bill and they just take it exactly as it is,” he said. “I think that there is overwhelming Democratic support in the House and the Senate, and I think you’ll see overwhelming support when Senator Reid takes this to a vote.”

“The debate about how we fund it is something we should get by rather quickly so we don’t continue to fall behind and send the signal that there are better places to invest than America,” said Daryl Dulaney of Siemens. “That’s a sad reality that we’re facing.”

Eric Cantor still thinks tax cuts create more jobs than, you know, job creation. Photo: Chip Somodevilla/Getty Images

It’s pretty clear which elements Cantor approves of. He expressed his preferences soon after the president unveiled his $447 billion job-creation proposal, which includes $50 billion for infrastructure investment — something Obama’s been pushing for (though not always pushing very hard) since Labor Day of last year.

“Over half, I think, of the total dollar amount is so-called stimulus spending,” Cantor told reporter Brian Beutler soon after Obama announced his jobs plan. “We’ve been there, done that. The country cannot afford more spending like the stimulus bill.”

The Washington Monthly’s Steve Benen responded:

A little more than half of the American Jobs Act is made up of tax cuts. Cantor, at least today, didn’t reflexively rule out these provisions.

Instead, what Cantor disapproves of are the parts of the proposal most likely to create jobs — infrastructure investments, job training, unemployment aid, and assistance to states to prevent public-sector layoffs. It’s as if the oft-confused Majority Leader looked at the plan, found the measures that would have the great[est] impact to improve the economy, and immediately rejected them.

A Republican version of the jobs bill would almost certainly eliminate the infrastructure bank, which Obama proposed as part of the jobs bill. House Transportation Committee Chair John Mica immediately repudiated this idea, saying, “Unfortunately, a National Infrastructure Bank run by Washington bureaucrats requiring Washington approval and Washington red tape is moving in the wrong direction.” He preferred his own plan of encouraging states to set up their own banks.

Given their anti-stimulus rhetoric, Republicans would also likely strip out the $50 billion for transportation infrastructure.

The president has signaled his growing impatience with the slow pace of Congress to take up the jobs bill. More than three weeks after he announced it, the bill has yet to be introduced in either chamber.

“We still have to have congressional action,” Obama said today at the start of a Cabinet meeting. “It’s been several weeks now since I sent up the American Jobs Act and, as I’ve been saying on the road, I want it back. I’m ready to sign it.”

Obama says he expects the jobs bill to be ratified by both houses and on his desk by the end of the month.

President Obama invited Republicans to negotiate, ”If there are aspects of the bill that they don’t like they should tell us what it is they are not willing to go for,” he said. “They should tell us what it is they are prepared to see move forward.”

He sounded a similar note in his radio address this weekend, saying Republicans should be clear exactly what in the bill they’d go along with, and what in the bill they oppose. “And if they’re opposed to this jobs bill, I’d like to know what exactly they’re against,” Obama said. “Are they against putting teachers and police officers and firefighters back on the job? Are they against hiring construction workers to rebuild our roads and bridges and schools?”

But it’s not just Republicans who are preventing the bill from being voted on. Democrats say they don’t yet have the votes to pass the jobs bill, even in the Senate, where they have a majority. Majority Leader Cantor taunted the president about that, saying, “the president has some whipping to do on his own side of the aisle.”

President Obama said he won't accept spending cuts without tax increases. Photo: Chip Somodevilla/Getty Images

In a speech last Thursday, Boehner ruled out any form of tax increase as the deficit reduction “super committee” decides how to meet its mandate. “When it comes to producing savings to reach its $1.5 trillion deficit reduction target, the Joint Select Committee has only one option,” he said, “spending cuts and entitlement reform.”

President Obama went to the mat this morning for a different approach to cutting the deficit. He presented his own plan, which includes some spending cuts and policy changes to Medicare and Medicaid, in addition to other programs. But the centerpiece is the elimination of corporate tax loopholes and of tax cuts for the wealthy.

“I will veto any bill that changes benefits for those who rely on Medicare but does not raise serious revenues by asking the wealthiest Americans or biggest corporations to pay their fair share,” Obama said. “We are not going to have a one-sided deal that hurts the folks that are most vulnerable.”

There are many plans on the table right now, both to increase spending and to cut it. The president released his deficit reduction plan, in part, to explain how to pay for his job creation bill, which includes $50 billion for transportation infrastructure and $10 to capitalize a national infrastructure bank.

But the House has already passed about half the appropriations bills for next year, spelling out dramatic budget cuts in line with Rep. Paul Ryan’s proposals from the spring. There have also been a few spending-cut agreements, including the ones last April that saved the government from an imminent shutdown. And at the end of July, there was another round that saved the country from imminent default, as our debt limit neared expiration. The “super committee” (aka “Joint Select Committee”) formed by that agreement is tasked with another round of work to reduce the deficit. That’s the committee which Boehner is forbidding to raise taxes, and which Obama is now forbidding not to.

We’ve been saying for a long time that spending cuts won’t lay the tracks for a 21st century, sustainable transportation system. Any real solution to the dwindling Highway Trust Fund will have to include new revenues – specifically, a higher gas tax indexed to inflation, or even better, a vehicle-miles-traveled fee.

After a barrage of spending cuts since the Republicans gained control of the House — and the threat of more cuts from the super committee, the House Transportation Committee’s six-year reauthorization proposal, and the 2012 budget – it’s good to see the president using some political capital to say that he’s not willing to cut essential programs to the bone.

More information when we get it.

And to make sure the money is properly spent, we’re building on reforms we’ve already put in place. No more earmarks. No more boondoggles. No more Bridges to Nowhere. We’re cutting the red tape that prevents some of these projects from getting started as quickly as possible. And we’ll set up an independent fund to attract private dollars and issue loans based on two criteria: how badly a construction project is needed and how much good it will do for the economy.

And without ever saying the words “infrastructure bank,” he made his push for one:

This idea came from a bill written by a Texas Republican [Kay Bailey Hutchison] and a Massachusetts Democrat [John Kerry]. The idea for a big boost in construction is supported by America’s largest business organization and America’s largest labor organization. It’s the kind of proposal that’s been supported in the past by Democrats and Republicans alike. You should pass it right away.

He would capitalize the bank with an initial $10 billion, just as Sens. Kerry and Hutchison had proposed. Obama’s own earlier proposal called for a $30 billion investment.

Obama’s written plan also pledges investments in TIGER and TIFIA – good news, since the 2012 transportation budget passed by a House subcommittee yesterday zeroed out TIGER entirely. It also builds on his instruction to agency heads to identify projects that deserve federal help – if not funds – for streamlining the process.

Transportation reform advocates praised the bill, with James Corless of Transportation for America calling it “both ambitious and pragmatic.”

House Transportation Committee ranking Democrat Nick Rahall sat next to Chair John Mica during the speech, and afterward, Rahall said, “We may have walked out of the chamber with different views on the President’s proposals, but I remain committed to working together in a bipartisan fashion.”

We’ll see if they can find anything they both agree to work on. The statement Mica issued after the speech was a quick repudiation of everything the president had asked for:

While the President reconfirmed that our highways are clogged and our skies are congested, his well delivered address provided only one specific recommendation for building our nation’s infrastructure.

Unfortunately, a National Infrastructure Bank run by Washington bureaucrats requiring Washington approval and Washington red tape is moving in the wrong direction. A better plan to improve infrastructure is to empower our states, 33 of which already have state infrastructure banks.

Key interests who have supported the general notion of infrastructure investment in the past won’t necessarily fight for Obama’s specific proposal. The U.S. Chamber of Commerce issued a statement saying that infrastructure spending – even paired with all the tax cuts Obama proposed – wasn’t enough if it didn’t include de-regulation or a commitment to free enterprise instead of bigger government.

Democrats lined up in Obama’s defense. EPW Committee Chair Barbara Boxer called the president’s plan “both inspirational and specific” and pledged to work “on a bipartisan basis to pass the American Jobs Act.” House Minority Leader Nancy Pelosi, meanwhile, called on all House Committee ranking members to urge their chairmen to schedule immediate hearings and action on the legislation proposed by the president.

One of the first things Obama said in his speech is that “everything in this bill will be paid for; everything.” But again he’s leaving the details to Congress.

When the President unveiled his ambitious $556 billion transportation agenda last February, he let his Transportation Secretary twist in the wind as Congress demanded to know how the thing was going to be paid for. All LaHood would say, for months, was that he looked forward to working with Congress on it.

This time, Obama’s leaving the funding question to the bipartisan “super committee” formed as part of the debt ceiling/deficit reduction deal this summer, which just started work and is already beginning to fracture. That committee is already tasked with finding $1.5 trillion in cuts, which was a tall order for a group that can’t seem to agree on what to order for lunch. Now Obama’s asking them to find more.

A full bike rack outside the Senate building where today's EPW hearing was held. Photo: Tanya Snyder.

You’ve worked with us on Safe Routes to Schools, because that’s so crucial, and we kept it, and bike paths, and we kept it, and recreational trails, and we kept it. Tough debates, giving here, taking there. But that has remained in the bill.

The reauthorization negotiations have been largely overshadowed by the ongoing talks over the debt ceiling. For a long time it appeared that if the debt talks had any impact on the transportation program, it would be to institutionalize the 33 percent cuts mandated by House Budget Committee Chair Paul Ryan’s budget. However, as Boxer mentioned a few times during today’s hearing, the outlook is looking brighter.

The bipartisan Gang of Six has a plan to cut the deficit and raise the debt ceiling. That plan calls for very little spending – but the one area they did see fit to spend on was infrastructure. The Gang of Six plan calls for the following:

Tax reform must be estimated to provide $1 trillion in additional revenue to meet plan targets and generate an additional $133 billion by 2021, without raising the federal gas tax, to ensure improved solvency for the Highway Trust Fund.

According to our sources, that additional revenue would stabilize the trust fund for the next 10 years.

The vote of confidence by the Gang of Six is encouraging and should be a shot in the arm to the Senate. If that debt plan passes, it could even give House Transportation Committee Chair John Mica enough political cover to raise the total price tag of his bill.

EPW was able to get bipartisan buy-in, even from one of the most conservative Republicans in the Senate, James Inhofe (R-OK). Despite his conservatism on nearly every issue, though, Inhofe says he’s a “big spender” when it comes to two things: national defense and infrastructure.

Many senators mentioned the oft-repeated number $2.2 trillion: the amount the U.S. would have to spend over the next five years just to get the nation’s infrastructure to “passable” condition, according to the American Society of Civil Engineers. That’s eight times more than the Senate bill foresees.

Still, the Senate bill remains larger than the House bill and for a shorter duration, and it remains to be seen how the two chambers will reconcile their competing visions. Terry O’Sullivan of the Laborers’ union said the House proposal “locks in failure for six years” and “gives up on America.”

O’Sullivan and nearly everyone else who spoke mentioned the massive job loss that would be caused by the low funding levels in the House bill – 630,000 jobs, according to Sen. Boxer. “We’re inviting unemployment,” she said.

Boxer said she’d visited a job re-training program that was teaching people to become chefs. Several of the participations had been construction workers who had “given up” on finding work in their field, she said.

Boxer pleaded with transportation advocates to keep contacting their senators – including her – to encourage them to move the reauthorization bill.

“We need the people to communicate with those on the Finance Committee on both sides of the aisle, and this committee, that you really need us to do this,” she said. “A lot of you said it took courage for us to come together. We need to have you in the background, with a loud voice.”

She said she felt that the public support was behind her in going forward with the bill, but advocates need to keep it up, especially with the Finance Committee which is still searching for $12 billion to close the funding gap. “They have to feel that this is a priority,” Boxer said. “If they don’t sense that America wants this, it’s going to be very difficult.”

Sen. Max Baucus, who chairs the Finance Committee and also leads the EPW Subcommittee on Transportation and Infrastructure, said he’s “fairly confident” and “optimistic” that they’ll find the money.

Baucus was the first lawmaker to publicly call for a two-year bill, but at the hearing admitted it wasn’t ideal. “Chairman Boxer held out for six-year bill as long as possible,” he said. “But the issue is funding.”

At the end of the hearing, Boxer expressed frustration that President Obama hasn’t been more present in these negotiations – except for his recent mentions of an infrastructure bank. “We have to convince the administration to please weigh in, now,” she said. “Yes, we want an infrastructure bank; we love it, it’s great, but it’s not the core program.”

Deron Lovaas of NRDC said the administration has been “AWOL.” He said he’s disappointed the only administration bill that’s been made public was a leaked, “pre-final” version that had major sections that don’t reflect actual administration positions. He said President George W. Bush released an administration draft.

“The previous administration actually did a better job of managing their approach to this bill than the current administration,” Lovaas said, “which is disappointing, given how much skill Sec. LaHood and his team have.”

Boxer reiterated her desire to get the bill out of committee before the Senate leaves for August recess.

Steve Bruno of the Brotherhood of Locomotive Engineers and Trainmen cautioned against over-reliance on the private sector when building public infrastructure.

“Isn’t it wonderful to see the bipartisanship behind the infrastructure bank?” Boxer said. “Count me in. I think it’s a wonderful thing.”

She and other senators affirmed that raising the gas tax, or switching to a VMT fee, is off the table. Still, she criticized House Transportation Committee Chair John Mica for “walking away” from the Highway Trust Fund since it’s coming up short. “It’s a 36 percent cut in our basic program,” she said. “That’s a loss of 630,000 jobs.”

In the absence of new revenues, it becomes more important to leverage the scarce public dollars that are available, so the committee hearing focused on financing tools – specifically, an infrastructure bank.

Kerry and Hutchison have put forward a bipartisan bill to create an infrastructure bank with $10 billion in seed money that would fund not only transportation but energy and water projects as well. It would only make loans, not grants.

A somewhat more idealistic proposal is the Lautenberg/Rockefeller bill, which focuses exclusively on transportation. They also propose $10 billion, but over just two years, with $600 million a year for grants. Another major difference is that it would be housed within USDOT, whereas Kerry’s proposal was to create a completely independent entity. The Lautenberg/Rockefeller plan hews more closely to the administration proposal than Kerry’s does.

“I think our bill is the answer,” said Sen. Hutichson today. Addressing Sen. Rockefeller, who chairs the committee, she said, “I would love for this committee to pass our bill, and I bet you probably want your bill to be passed. So maybe we can work together or maybe we can report both of them.”

“Well, we usually work together,” Rockefeller said, and indeed, all subsequent comments from all the bill sponsors included messages of “marrying” the two bills.

Several witnesses, from USDOT and the private sector, applauded the concept, saying an infrastructure bank will release private money and create jobs without exposing the taxpayer to risk. But Steve Bruno, vice president of the Brotherhood of Locomotive Engineers and Trainmen, had some questions he wanted answered before government goes too far with this love affair with private enterprise:

Who maintains control of the infrastructure? Who is liable if private entities encounter financial difficulty or withdraw if the rate of return is lower than expected? What are the long term costs to government? When does the public’s needs superede the private investor’s agenda? And where will the resources be applied?

Many of these are the same questions U.S. PIRG put forth this week in its report, “High-Speed Rail: Public Private or Both?”

“Some projects are never going to produce a profit,” Bruno went on to assert. “Bridges, highways, passenger rail and public transportation facilities are intended to provide for the public good, not corporate profit. The people of the United States should be the primary beneficiaries of any infrastructure legislation, not the corporate shareholders.”

J. Perry Offutt, who works on infrastructure financing for Morgan Stanley, agreed that “It is important to demonstrate that a project is commercially and financially viable, and has political support. Because of certain return expectations and the desire for stable cash flows, some projects might not typically lend themselves to P3’s such as many transit projects.” He said availability payments were a way to bring transit projects into the fold by protecting the private investors from risk – though that option then recalls Bruno’s question about whether the public sector bears the financial risk for a private institution’s profit.

Freshman Senator Kelly Ayotte (R-NH) had a similar critique from a conservative perspective. “The people of this country are very tired of bailouts,” she said. “How can we assure taxpayers that this doesn’t just become another government entity that ends up bailing out bad projects and that we end up privatizing the profits while socializing the losses?”

These warnings are important to keep in mind as the infrastructure bank idea moves forward, but it does appear to be moving forward, at least in the Senate. The House proposal – at least, the outline we’ve seen so far – doesn’t include an infrastructure bank. But then, neither did yesterday’s Senate bill outline, and it seems that we may hear more from EPW at tomorrow’s hearing about the possibility of including such an entity in its final bill.

Boxer’s priority has been the expansion of the TIFIA loan program, and the House and Senate have both agreed to massively expand it to $1 billion. Advocates urge caution to ensure that both TIFIA and the infrastructure bank examine not just a project’s credit-worthiness but performance measures. Whether a project is funded by formula, by infrastructure bank, or by TIFIA, with so little public money around, it’s of primary importance to make sure that every project meet major national goals of economic growth, connectivity, safety, and the reduction of fuel consumption.

Not only that, he makes a strong case for Republicans and even tea-partiers to embrace the concept:

House Majority Leader Eric Cantor has played down this proposal as just more stimulus, but if Republicans set aside ideology they would see it is actually an opportunity to push for two of their favorite ideas: privatization and the elimination of earmarks.

The United States builds infrastructure in a remarkably socialist manner; the government funds, builds and operates almost all American infrastructure. In many countries in Europe and Asia, the private sector plays a large role in financing and operation of roads, highways, railroads and airports, as well as other public resources. An infrastructure bank would create a mechanism by which such private-sector participation would become possible here as well. Yes, some public money would be involved, mostly through issuing bonds, but with interest rates at historic lows, this is the time to rebuild. Such projects, with huge long-term payoffs, could genuinely be called investments, not expenditures.

A national infrastructure bank would also address a legitimate complaint of the Tea Party — earmarks. One of the reasons federal spending has been inefficient is that Congress wants to spread money around in ways that make political sense but are economically inefficient. An infrastructure bank would make these decisions using cost-benefit analysis, in a meritocratic system, rather than basing decisions on patronage and whimsy.

He makes it clear that such a bank is no panacea, but it’s a good start toward a national jobs plan he thinks President Obama should propose. Of course, the president has proposed an infrastructure bank — one focused exclusively on transportation, no less. While he might need a push to start talking about it again, Zakaria is smart to direct his remarks to conservatives who have opposed such an idea, in hopes that the bank will make it into the House transportation bill.

Sen. John Kerry is at the end of his rope with all this budget-cutting. Photo: Chip Somodevilla/Getty Images North America

Top committee Republican Orrin Hatch of Utah said the president’s push for infrastructure building is just a “Carter-era message of tax-and-spend” that’s been re-branded and spun to be “more palatable to the American people.”

“What used to be called raising taxes is now called shared sacrifice,” Hatch said. “And what used to be called government spending has now been dubbed investments.”

Former Pennsylvania Gov. Ed Rendell took Hatch to task for that. “I respectfully disagree, and I think the American people disagree that spending on infrastructure is not investment,” he said. “They see it as investment; they see it as worthwhile; they see it as providing value to them; they see it as improving the quality of their life, their safety, and our nation’s economic competiveness.”

He sees new construction as a potential jobs program for troops returning from Iraq and Afghanistan, saying infrastructure investment should be looked at as a “new GI bill” to put those vets back to work here. He suggested using money saved by drawing down military efforts in those countries to rebuild this one.

Rendell’s words were a good antidote to Gabriel Roth, a conservative transportation economist from the Independent Institute, whose entire testimony was devoted to the proposition that the federal government shouldn’t be financing any infrastructure whatsoever outside of the revenues of the Highway Trust Fund. “Matters ought to be handled by the smallest, lowest, or least centralized competent authority,” he asserted.

Roth said federal funding leads to a variety of ills: it forces road users to pay for non-road projects, for one. It increases highway costs because those damn feds won’t let states pay slave wages on public works projects. Plus, he said, the federal government favors some states over others, and its money comes with strings attached (like speed limits).

Rendell disagreed. “I think the federal government should, as is done in every other developed nation in the world, have a significant role in infrastructure spending,” he said, adding that the private sector won’t finance projects that aren’t profitable and federal authority is needed for many projects that cross state lines. As for how to pay for them, Rendell had an endless supply of ideas. First and foremost was a change in the way the nation budgets for infrastructure:

We should have a federal capital budget. It’s nuts! There is no corporation in America that doesn’t separate operating and capital costs, and there is no other political subdivision in America – every city, every state, every county – has a capital budget. Building a bridge which has a 40 or 50 year lifespan shouldn’t be paid for like paperclips that have a 40 or 50 day lifespan.

He was pessimistic that Congress would heed his call, however, so he moved on to more low-hanging fruit. He wanted more flexibility for states to toll roads to pay for maintenance, which the federal government currently prohibits. He wanted Congress to take steps to “unleash the private sector.” He wanted Build America Bonds or Transportation and Regional Infrastructure Bonds (as they might be renamed) to help pay for infrastructure projects. He asked Congress to quintuple the TIFIA loan program, which he said should have a CBO score of zero or better since the program actually earns a little bit of money for the government. He wants an infrastructure bank that would find a way to finance projects of national and regional significance.

Roth said an infrastructure bank makes sense but it could be completely private like any other commercial bank. He even recommended Ed Rendell as the man to run it.

Rendell said he never aspired to be a banker, and a public bank will help keep the cost of building infrastructure down, as it will charge far lower interest rates than the private sector would. Roth, meanwhile, expressed his concern that a national infrastructure bank could actually reduce the amount of private involvement because high demand would lead to delays. Plus, he said, the bank would be run by politicians who wouldn’t just be looking for good projects, but they’d have to be fair. He predicted litigation over the rural set-aside in Senator Kerry’s infrastructure bank bill – after all, who’s to decide what’s rural?

Indeed, many have criticized proposals, like the president’s and the Rockefeller/Lautenberg bill, which would create an I-bank within the walls of the Department of Transportation. John Kerry spoke at today’s committee hearing about the need to create an independent bank. It’ll be “privately run by bankers,” he said. “All we do is charter it. It won’t even issue stock. It’s not for profit – unlike Fannie Mae and Freddie Mac – completely different. And $10 billion can leverage maybe $650 billion of private sector investment that comes in to help build America.”

Kerry, normally stiff and professorial (as you may recall from his 2004 presidential campaign), spoke with uncharacteristic passion and candor. “We’re not going to build anything in America right now,” he said. “We’re not building. We’re falling behind almost every other country in the world… There aren’t great building projects in America right now, not many of them.”

Kerry’s frustration was apparent:

Nobody on that side of the aisle will vote for any increase in revenue, no matter where it might come from, apparently. So what are we going to build? Are we going to keep cutting everything? Then Americans are going to turn around and say, why doesn’t this work, why doesn’t my school work, why can’t we fill the potholes? I mean it’s just crazy, honestly. It really is crazy. We’re in a crazy place right now.

Predictably, conservatives went after the non-highway spending in the Highway Trust Fund. Oklahoma Republican Tom Coburn even baited Gov. Rendell into the game by saying, “When you look at the last significant funding bill for the Highway Trust Fund, fully almost a third of that didn’t go to build highways, bridges or mass transit.” (I’ve asked his office to explain that assertion. I’ll let you know if I get a response.) Rendell gave in on that score.

Coburn specifically asked, “Do you think it’s wise that we take and wall off 10 percent* of all the Highway Trust Fund money that has to be spent on enhancements when you have 5,500 bridges [in Pennsylvania] that are in disrepair? And Oklahoma has close to 8,000? Do you think it’s wise that we make things beautiful or we make things safe?”

Rendell: “That’s an area where I would leave it to the states to decide, absolutely.”

Coburn: “So you would agree that we rescind this mandate and let the states decide – and if they want to spend it on beautification and enhancement, they can.”

Rendell: “The mandate, yes.”

Sen. Ben Cardin (D-MD), always a staunch defender of transit and active transportation, jumped in with some necessary relief from all the bashing of transportation options. He got Sen. Hatch to agree that transit is “critically important to this country” and that it saves money, even highway money.

* Again, some fuzzy math here. Transportation enhancements (which fund multi-use trails that people use to get to work – not just “beautification” projects) make up 10 percent of the surface transportation program, which is less than a quarter of the entire federal aid highway program. Enhancements actually make up about two percent of all federal highway aid.

Is John Kerry slapping Jay Rockefeller or is he about to kiss him? Meanwhile, Frank Lautenberg (second from left) talks to Delaware Sen. Ted Kaufmann. Photo: NY Daily News

Yesterday’s Rockefeller/Lautenberg proposal closely mirrors the administration plan, with one key difference: Obama’s plan would authorize $5 billion a year for the next six years for an infrastructure bank. The Senators keep the same yearly dollar amount but cap their plan for a new infrastructure investment fund – which they avoid calling a bank – at two years, shrewdly sunsetting the bill soon after Obama’s first term ends, just in case he’s not re-elected.

After all, their version of the bill, like the president’s, would house this infrastructure “fund” within USDOT. Reformers in favor of an I-bank had wanted to see it independent of the administration, as Kerry’s proposal would have it.

Scott Thomasson, an expert on the infrastructure bank proposals at the Progressive Policy Institute, said one of the key elements of a national infrastructure bank is political independence in project selection.

[The Rockefeller/Lautenberg proposal] turns the idea of an independent bank upside-down, and would simply shift the discretion for those infamous ‘earmark’ projects from Congress to the executive branch. Senators Rockefeller and Lautenberg may think that’s a good idea now, while they like the people running DOT, but they may not like the results as much under another administration. Perhaps that’s why they only authorize funding for two years.

Sen. Kerry’s proposal also differs from the president’s by eliminating the grant program, holding the new bank exclusively to loans and loan guarantees. Kerry’s bill authorizes only $10 billion as seed money and then the bank self-sustains with loan repayment and interest. Meanwhile, the Lautenberg/Rockefeller proposal allocates $600 million a year for grants.

There’s a lot to be said for grantmaking authority, of course. Not all worthy transportation projects can be counted on to yield monetary returns on investment. Some good projects pay for themselves in environmental impact or equity for low-income people or public health. Try using that to repay a bank loan.

But, in the current fiscal environment, Sen. Kerry was probably wise to dial back the plan. He was able to get a Republican co-sponsor for his (which Rockefeller and Lautenberg don’t appear to have achieved) and is pitching his bill as a fiscally sane way to use $10 billion to leverage an estimated $600 billion in private investment.

In addition, the Lautenberg/Rockefeller bill would allow the federal government to fund up to 70 percent of a project, with just a 30 percent match that the locality comes up with through private investment. In the case of grants, it’s up to an 80 percent match. And for feasibility studies and planning, the federal government will foot the entire bill. (The Kerry bill caps out at a 50 percent match.)

“A lower cap forces developers to exhaust other avenues of financing before applying for loans or grants,” Thomasson said, “which applies a powerful market test to projects before the application is even submitted.”

Again, not all worthwhile projects can withstand a market test, so we’re sympathetic to the goals of the Obama/Rockefeller/Lautenberg line of reasoning. But if you’re looking for a bill to sell to Republicans these days, look to Kerry’s version.

The new bill leaves open the possibility of the fund expanding its scope to include other kinds of infrastructure projects, such as telecommunications, energy, and water projects in the future. That’s one place it agrees with Kerry, who also proposed that the bank have a broad scope, and against Obama, whose I-bank plan is strictly for transportation.

Still, it’s hard not to see this bill as a competitor to Kerry’s. Sure, it’s possible to set up Kerry’s infrastructure bank and Lautenberg/Rockefeller’s infrastructure fund and they co-exist peacefully. But that kind of redundancy just doesn’t make sense. Meanwhile, what of Sen. Boxer’s pleas for a stronger TIFIA, and the president’s desire to see TIGER expanded?

For now, all sides are playing nice, but Kerry spokesperson Jodi Seth, in a statement to Streetsblog, made it clear that Kerry’s going to fight for his idea:

Obviously we welcome this new bill which underscores the growing consensus that existing infrastructure funding mechanisms aren’t sufficient. Both funding and Republican support are incredibly difficult to find in today’s budget atmosphere, which is one reason the Kerry-Hutchison approach creating an infrastructure bank with minimal federal funding has built momentum. We’ve drawn strong support from the Chamber of Commerce and conservative senators like Senators Graham. We’ve been coordinating closely with the White House, and believe we have the best odds of getting across the finish line this year in a very difficult legislative climate.

But there’s still a lot to be said for the president coming out with guns blazing and setting a high bar for smart infrastructure investment. And while the overall scale of the president’s proposal doesn’t stand much of a chance, several aspects of its policy reforms are still alive and kicking around the Capitol.

President Obama, with other transportation leaders, called for a six-year infrastructure plan last October. Reuters

The Senate and House versions of a multi-year transportation bill are due to be released soon, so Orski’s post serves as a good opportunity to take a step back, consider where things stand, and go over how the president’s plan fits into the reauthorization process.

First, let me reiterate that the draft bill that’s been circulating has been disavowed by administration officials as an early draft that does not reflect what will be in the final White House proposal. So, at this point, we’re still working off a lot of assumptions as to what the president will ultimately support.

What we do know is what the White House laid out in February as its goals for a new transportation reauthorization – a bigger share for transit, an infrastructure bank, the consolidation and simplification of program structure within USDOT, a strengthening of TIFIA and TIGER, priority for livability and sustainability work, and an infusion of cash for high-speed rail – all rolled into one $556 billion, six-year bill.

Obama’s vigorous support for these programs is a huge shot in the arm to those pursuing transportation reform goals, but advocates’ excitement about the president’s outline was quickly tempered by the sobering realization that if the administration had a plan for funding such a far-reaching proposal, they weren’t letting anybody else in on it. The president himself rejected the idea of a gas tax, and yesterday’s brief flicker of hope that he might be considering a switch to a vehicle-miles-traveled fee was quickly extinguished.

Transportation Secretary Ray LaHood’s constant refrain that he is “looking forward to working with Congress” on a funding mechanism continues to ring hollow in the absence of any attempt to get down to specifics. We at Streetsblog have wondered if there’s a strategy behind all that — or if the president’s full agenda was doomed to failure.

Many factors are aligned against such an ambitious agenda. As I mentioned (and Orski repeated), “a still-struggling economy, high gas prices, and a deficit-obsessed Congress” all make it a harder reach. If the president wanted to defend the feasibility of his proposal, he would have addressed those issues. Orski seems to believe the only path forward is to cave to the demands of House GOP leadership to pass a bill half the size of what the president wanted. But Obama could have put his weight behind a new revenue stream that would fund the whole proposal. He could have found money elsewhere in the budget. Or he could have tried to justify a pretty hefty chunk of deficit spending.

Those are his three options. In the absence of Obama’s support for any of these politically difficult choices, he’s forced Congress to pick one, and it looks like they’re just not going to do it on their own. At least not to the extent that would make passage of the full Obama plan feasible.

That doesn’t mean the president has a bad plan. It just means he’s not fighting for it with enough conviction. So, what’s next?

Democrats and Republicans, business and labor have come together of late to push for new infrastructure financing mechanisms. Photo: Kitty Felde/KPCC

The Senate Environment and Public Works Committee and the House Transportation and Infrastructure Committee have both indicated they’re getting very close to announcing their bills. The House plan will probably stick firmly to projected revenues from the Highway Trust Fund (which we’re looking forward to calling the Transportation Trust Fund). The Senate plan will probably include some deficit spending and will use the shortfall to make a strong case for an expanded TIFIA loan program and infrastructure bank, both of which leverage limited funds with private investment to complete projects that would be impossible with only public money.

The loan programs are both aspects of President Obama’s bill that are made more realistic by the funding shortfall. There are several others that have a greater likelihood of becoming law than Orski would lead you to believe.

House Republicans have already said in their response to the president’s proposal that they support TIFIA expansion and the efficient consolidation of programs. Orski’s argument that the infrastructure bank is a long shot is diminished by the bipartisan introduction in March of a bill to create such a bank. That bill hasn’t progressed far in either chamber, but that’s no surprise – all transportation and infrastructure bills passed in the past two years have been “marker bills” expecting to be rolled into the reauthorization, not passed by themselves.

Orski also claimed Obama’s livability program was unlikely to make it into the final bill, saying the whole concept is “ill-defined” (which says to me that he just doesn’t get all the fuss about giving people the choice to get around without a car). The fact that livability programs largely survived the carnage of the FY2011 budget brawl bodes well for their place in a final reauthorization bill. The interagency Partnership for Sustainable Communities lives on. TIGER got the merest trim. Clearly, someone is standing up for these programs. And just yesterday, a Complete Streets bill was introduced in the House — with bipartisan support.

Another administration priority that should find a home in the new bill is increased attention for performance measures. Many witnesses at House and Senate hearings helping craft the bill mentioned the need for greater performance metrics. Everyone seems to agree that in times of tight budgets, the country can no longer afford to throw money away on wasteful projects. A greater focus on performance can only help advance transportation reforms. There’s a strong argument to be made that highway expansion, at $39 million a mile in urban areas, is a poor investment.

To pass a bill as ambitious as the Obama plan, political leaders would have to stand up not just for increased infrastructure investment – even some of the most conservative members of Congress are for that – but for a way to pay for it. Even lacking that, however, some of the administration’s good ideas will end up in the final bill.

Senator John Kerry.

They’re proposing to start the bank with $10 billion of seed money that would leverage hundreds of billions of dollars, according to their projections. “Private capital is sitting on the sidelines,” Kerry said. These senators, and many more who are expected to co-sponsor the bill, want to see those private funds put to work.

The BUILD Act will not include any grants and will only fund revenue-generating projects that can repay a loan. The White House had proposed a $30 billion infrastructure bank that includes grants, but Kerry says that given the current climate, they preferred to stick only with projects that will generate revenue, and they’ve pared it down to a size they think lawmakers on both sides of the aisle can accept.

Sen. Barbara Boxer (D-CA) has indicated she’d rather see the TIFIA loan program be strengthened, rather than create a new entity that some fear will invoke echoes of Fannie Mae and Freddie Mac (a charge Kerry vigorously denies). Kerry says Boxer is on board with this proposal, as is the White House, the Senate Budget Committee Chair, and members of the House.

Kerry’s proposal would also make the bank an independent entity, whereas the administration proposal located the bank inside of the Department of Transportation. Some advocates have spoken out in favor of an independent infrastructure bank, rather than one “buried” inside the DOT bureaucracy.

Stay tuned for more details.

Bike facilities that pay returns in better health and environmental impacts might not be candidates for funding from the NIB, which demands returns in cold hard cash. Photo: One More Cyclist

But what about a National Infrastructure Bank, you ask? Transportation reformers are pushing — along with President Obama — for one to be established. Would such a bank be a more effective way to finance infrastructure projects than the TIFIA program? And would it lead the country to build better, more sustainable transportation systems?

Unburying Infrastructure Financing

In his testimony before Congress in May, Robert Puentes of the Brookings Institution’s Metropolitan Policy Program said a National Infrastructure Bank would lead to:

• A better selection process with fewer federal dollars going to wasteful projects
• More accountability for funding recipients
• A focus on maintenance and fix-it-first for highway projects
• Better delivery of infrastructure projects

But when asked why the choice of financing mechanism has an impact on outcomes, he admitted that, mainly, “it matters because of the ability to move the stupid bill through.”

He also said two factors would help a National Infrastructure Bank achieve better outcomes.

First, Puentes says a NIB should be independent, instead of being “buried” within the DOT. He recommends a semi-autonomous structure like the Tennessee Valley Authority or the Export-Import Bank.

Second, it should be more transparent, combining the development policy goals of the federal government with the focus on good investment returns of a bank.

Return on Investment

A singular focus on a high rate of return, however, could weaken the impact of a National Infrastructure Bank. Rep. Rosa DeLauro (D-CT) has advocated for a NIB with grantmaking authority to cover projects that won’t necessarily make sufficient revenue to be able to pay down a loan.

A proposal, not yet released but expected to be introduced in Congress next year, would establish a bank with no grantmaking authority, removing one of the best aspects of a potential bank.

“Not every project of regional and national significance is going to generate a return that justifies a financially rational loan for the bank to make,” says Scott Thomasson, an expert in infrastructure finance from the Progressive Policy Institute. “There are projects that are worth doing as a nation where the benefits aren’t going to be repaid financially. They’re going to be enjoyed in other forms” like improving public health, easing traffic congestion, or reducing emissions.

Thomasson worries that a narrowly structured bank, following a traditional bank model, won’t address compelling projects that can’t capture user fees or other financing streams.

Another negative of the current NIB proposal is that returns on the investments go back into the general fund and need to be re-appropriated by Congress each year, making it subject to Congressional whims. But the proposal in the works for next year, however, corrects this problem. It proposes a system more like a traditional bank – or the highway trust fund – where returns go back directly to the bank.

One for Good Luck

Which brings us to one last solution out there for infrastructure financing: strengthening the highway trust fund. This is the proposal of Mark Reutter, former editor of Railroad History and author of the book Making Steel. Reutter is a fellow at the Progressive Policy Institute, but even co-worker Thomasson says the idea “doesn’t have a lot of political legs to it.”

After all, the principal way to strengthen the trust fund is to raise the gas tax or impose a fee on vehicle miles traveled – and we’ve seen where those proposals have gone in this political climate.

A $50.5 million TIFIA loan helped finance the largest public works project ever undertaken in Northern Nevada, the Reno Transportation Rail Access Corridor. Image courtesy of the city of Reno

Robert Puentes of the Brookings Institution’s Metropolitan Policy Program says the current system is “both broke and broken,” meaning dramatic changes to the financing system are essential to get the kind of transportation system we want. “Minor tweaks are just not going to be enough,” he said. “You could triple the bike program and that’s great, but it’s not going to solve the major challenges we’re facing as a nation. It’s all got to be run through an economic lens.”

Puentes favors a National Infrastructure Bank, promoted by President Obama in his Labor Day speech, as a way to channel transportation investments strategically.

One person who will have a large role in shaping an infrastructure bank is California Senator Barbara Boxer, chair of the Senate Committee on Environment and Public Works. In a hearing this fall, Boxer challenged the idea of a National Infrastructure Bank, saying she’d prefer to see current financing programs strengthened. The program that Boxer wanted to see strengthened, instead of establishing a NIB, is known as TIFIA (Transportation Infrastructure Finance & Innovation Act).

So, you’re probably wondering whether using TIFIA or a NIB to pay for infrastructure makes a difference. Is one mechanism better suited to building a safer, more efficient, and sustainable transportation system than the other?

TIFIA

TIFIA is a program of the Federal Highway Administration that provides credit assistance – not grants – for infrastructure projects. It doesn’t substitute for public spending or private investment – it’s a way to encourage private investment by providing loan security.

TIFIA has been around since 1998 but it’s come into greater use since the recession started eating away at state budgets. “They didn’t need it [before the recession] the same way they need it today,” says Puentes. “It’s oversubscribed, and so we need to figure out a way to choose TIFIA projects based on their merits.”

It’s not clear how the TIFIA program chooses projects to support, now that applications outnumber availability by a factor of more than eight to one. That’s one critique of the program: that it’s not transparent enough in its decision-making.

The U.S. DOT has a proposal for TIFIA reform [PDF], but it refers to technicalities like repayment schedules and wage laws. Reformers say more dramatic, substantive reform would need to happen to make TIFIA a lever for change.

And many doubt that TIFIA can be as strong as it needs to be as long as it’s housed in the Department of Transportation. “Once something is created in DOT or in Treasury or anywhere else, it becomes part of someone’s jurisdiction, someone’s fiefdom,” says Scott Thomasson, an expert in infrastructure finance at the Progressive Policy Institute. “And there are people who want control of it and are going to fight if you try to change it too much.”

But could TIFIA be made into an independent entity? “That’s an institutional political fight you’re going to lose,” says Thomasson, “if you try to take away somebody’s baby.”

In our next post, we’ll investigate the proposal to establish a National Infrastructure Bank, how it compares to TIFIA, and evaluate its pros and cons.