Streetsblog Capitol Hill

Last night, President Obama addressed a joint session of Congress to present his new jobs plan, a bill he’s calling the American Jobs Act. He relied on the well-worn appeal to people’s patriotic competitiveness by pointing out that China is improving its infrastructure while the U.S. is sitting idly by. Without mentioning the dollar figure (psst… it’s $50 billion) he said he’d get construction workers back on the job rebuilding transportation infrastructure and schools:

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:

Read more…

At today’s hearing, the Senate Environment and Public Works Committee celebrated the bipartisan consensus it has reached on a new transportation reauthorization – but details of that consensus are still not public. Sen. Barbara Boxer (D-CA) did confirm that dedicated federal funding for bicycle and pedestrian programs remains in the bill. Addressing LA Mayor Antonio Villaraigosa:

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.

Read more…

At a Commerce Committee hearing today, Sens. John Kerry (D-MA) and Kay Bailey Hutchison (R-TX) spoke out in favor of their infrastructure bank proposal, while Frank Lautenberg (D-NJ) and John Rockefeller (D-WV) championed their own legislation. Sen. Barbara Boxer (D-CA), who is a member of the Commerce Committee as well as chair of the Environment and Public Works Committee, also spoke strongly in favor of an infrastructure bank, although the transportation reauthorization outline she released yesterday didn’t say anything specifically about such a bank.

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.

Read more…

Have you seen Fareed Zakaria’s editorial in the Washington Post today? It’s pretty stunning. He begins with some pretty gloomy analysis of the country’s economic trajectory and some bad news about unemployment and growth. And just when it seems like there’s no hope and the country’s going down the tubes, he suggests one shining beacon of hope: a national infrastructure bank, the “simplest way” to help unemployed workers — “and the country.”

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.

As the House and Senate get closer to unveiling their respective transportation proposals, it’s crunch time for figuring out how to pay for infrastructure investment moving forward. Senator Max Baucus (D-MT), who has let slip that he’s in favor of a two-year reauthorization because of current funding constraints, chaired a hearing in the Finance Committee today to examine options for financing. No one panacea emerged, and conservatives on the committee and among the witnesses quickly countered most of the suggestions raised.

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:
Read more…

In February, President Obama released his transportation plan, which included the launch of a national infrastructure bank. The next month, Sens. John Kerry (D-MA), Kay Bailey Hutchison (R-TX) and Mark Warner (D-VA) introduced a bill to create a similar bank, but with some key distinctions. And yesterday, Sens. Jay Rockefeller (D-WV) and Frank Lautenberg (D-NJ), leaders on the Commerce Committee, announced that they’re sponsoring legislation that would do nearly the same thing. So what’s the difference between all these different proposals?

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.

Read more…

Yesterday, anti-rail curmudgeon Ken Orski of Innovation Briefs quoted me in his latest diatribe against the administration’s transportation proposal, in which he explains why the Obama plan is unrealistic. Indeed, I think it’s safe to say the dollar amount of the administration’s bill is a non-starter in today’s political and economic climate, given that it’s about double what’s expected to come from the Highway Trust Fund over the next six years.

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.

Read more…

Sen. John Kerry (D-MA), along with Sen. Kay Bailey Hutchison (R-TX) and Sen. Mark Warner (D-VA) just announced that they’re introducing the BUILD Act today, which would create a national infrastructure bank.

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.

Our report yesterday on transportation financing may have left you with a few more questions. We started with a look at TIFIA, which provides credit assistance for infrastructure projects. Many observers see the program as limited by its position inside the DOT and its opaque decision-making process.

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.

Read more…

TIFIAs and TIGERs and NIBs — oh my! The alphabet soup of infrastructure funding mechanisms can be alienating even to committed transportation advocates. But with the power of the gas tax diminishing and elected officials refusing to raise it, other financing options are taking on increasing importance. If you’re interested in reforming our transportation system for the 21st Century, it pays to know the differences between them.

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?

Read more…