8:37pm - Good evening and welcome to Streetsblog Capitol Hill’s live-blogging coverage of President Obama’s State of the Union address. Previews of the speech indicate that transportation policy won’t be much of a centerpiece, but we’ll be here to pick up on any passages that might be of special interest to our readers. Scroll down to the bottom to see the latest updates.
Feel free to join the conversation in the comments or on twitter.
Place your bets! The State of the Union address is on Tuesday, and Transportation Nation has put together an interactive chart that displays how many times Obama has used words like “trains,” “roads,” and “bridges” in his speeches over the last year.
Image: Transportation Nation
In last year’s State of the Union, you may recall, Obama announced his intentions to give 80 percent of Americans access to high-speed rail within 25 years. (You may also recall that at that time very few people had heard of the debt ceiling.) Since then, his speeches have focused more on repairing damaged infrastructure in order to generate jobs, devoting many more words to roads and bridges than to transit.
There was a flurry of activity in September and October, when Obama was stumping for his jobs bill. There’s also a noticeable blip in April, when Obama was asking for a long-term surface transportation bill that bolstered America’s “roadways, runways, and railways.” So far, Congress has given him neither.
Transportation Nation helpfully provides a link to the underlying data so you can make your own chart.
Tuesday night, the Senate blocked a vote on the president’s jobs plan. As had been forecast, Republicans voted unanimously against the plan, and they weren’t alone: Two Democrats joined them – Sens. Jon Tester of Montana and Ben Nelson of Nebraska. Now it’s on to Plan B, which involves breaking up the bill into pieces to be voted on separately.
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?
President Obama has proposed a plan to pay for the American Jobs Act, the $447 billion bill to create 1.9 million jobs, including $50 billion for infrastructure. His “pay-for” plan includes limitations on itemized deductions for the wealthy and the elimination of some tax loopholes for oil and gas companies.
Republicans have never met a problem that couldn't be solved with a little more of this.
Republicans have a different idea, though: oil drilling. Several GOP representatives have introduced bills to expand fossil fuel extraction and use the proceeds to fund transportation infrastructure.
Somehow, whatever the problem is in Washington, Democrats want to solve it by raising taxes on the wealthy, and Republicans want to solve it with oil drilling.
When it comes to funding a quick jolt to the economy, it’s pretty clear that oil drilling won’t really cut it. “Any royalties from any new energy development wouldn’t start flowing to the Treasury for years,” said Erich Zimmermann of Taxpayers for Common Sense. “Essentially this would be like spending money now to be paid for with revenues that may or may not be realized at some future time. Sounds like a recipe for a doubling down on our current deficit mess.”
Some speculate that a GOP oil drilling plan would explain the recent news that House transportation leader John Mica, with permission from his party’s leadership, is looking to raise transportation funding levels by an extra $15 billion a year in his proposed six-year reauthorization bill. After all, they’ve said that raising the gas tax is off the table.
A plan to pay for transportation and infrastructure through oil drilling would erode the entire basis of the transportation funding system, which historically rests with the Highway Trust Fund, paid for with fuel taxes and a smattering of other fees on driving and vehicles. In fact, Congress requires that at least 90 percent of what the Highway Trust Fund spends must be generated from taxes “related to the purposes for which such outlays are or will be made.”
“Generating additional revenues from an increase in energy production, therefore, would likely violate this requirement and at the very least result in an override of the Budget Act,” Zimmermann said, “but would also call into some question the importance of the ‘user pays’ principle itself as it relates to paying for the transportation system.”
Whether or not Mica is planning on paying for his transportation bill with oil drilling is a matter of speculation at this point. But several other Republicans have already introduced bills to that effect.
USDOT has made public the breakdown of President Obama’s $50 billion plan to create jobs through transportation infrastructure investment. The administration says: “It will put people to work upgrading 150,000 miles of road, laying/maintaining 4,000 miles of train tracks, restoring 150 miles of runways, and putting in place a next-generation air-traffic control system that will reduce travel time and delays.”
Obama announcing the American Jobs Act. Photo: SHRM
Specifically, they lay out the numbers:
It’s encouraging to see the words “upgrading” and “rebuilding” when it comes to roads, indicating that the administration might be adhering to a fix-it-first approach to transportation spending. But, as we mentioned last week, the bridge Obama highlighted recently as a prime target for jobs-bill money isn’t actually in need of repair — transportation officials just want to widen it to allow more traffic to go through faster.
Certainly, the administration has shown a desire to attack the maintenance backlog in the country, but that doesn’t guarantee that highway expansions and sprawl projects won’t get a slice of the “rebuilding” pie.
That said, it’s good to see the plan includes $5 billion for projects funded through a competitive grant program (think TIGER). And it also hits a somewhat more equitable balance between rail/transit and roads than Congressional transportation bills generally do.
The president’s plan also includes an infrastructure bank, funded with $10 billion seed money. The administration says projects will be evaluated on the basis of how badly they’re needed and how much they would help the economy.
Some have said over the last couple of weeks that the I-bank concept is in trouble after the GOP pounced on the Solyndra loan story, in which a solar company filed for bankruptcy soon after receiving half a billion dollars in government-backed loans. Experts say the infrastructure bank proposal would vet projects well and protect taxpayers from risk.
President Obama stands in enemy territory to push for his jobs bill. Photo: Pablo Martinez Monsivais / AP
President Obama chose the home turf of two of his principal political opponents to highlight the need for more infrastructure investment in the U.S. Standing beneath the Brent Spence Bridge, which connects Cincinnati (the home city of House Speaker John Boehner) with Kentucky (the home state of Senate Republican Leader Mitch McConnell), Obama made his demand of Congress: “Rebuild this bridge!”
The president was making a push for his $447 billion jobs bill, which could create an estimated 1.9 million jobs.
The Brent Spence Bridge is considered “functionally obsolete.” “It’s safe to drive on, but it was not designed to accommodate today’s traffic, which can stretch for a mile,” Obama said.
Many transportation reformers would rather see transportation agencies attend to “structurally deficient” infrastructure — which is not safe to drive on, despite the fact that thousands of people do it every day — instead of widening safe, existing roads. This particular bridge project, which local smart growth advocates have been warning about for years, would add more lanes and induce sprawl.
In a Rose Garden speech this morning, President Obama soundly rejected Republicans’ push to address the deficit exclusively through spending cuts with no tax increases. He was responding to House Speaker John Boehner, who said last week that tax increases were “off the table.” The outcome of the current deficit-cutting fight could have significant implications for transportation-related proposals like the national infrastructure bank, which Obama included in his recently-unveiled American Jobs Act.
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.
This morning brought some useful indicators about the outlook for President Obama’s jobs bill. Good news first: Mark Zandi, chief economist at Moody’s Analytics, says President Obama’s job creation plan will likely add 1.9 million jobs, cut the unemployment rate by a percentage point, and grow the economy by 2 percent.
Mark Zandi of Moody’s Analytics said Obama's plan will create jobs and grow the economy. Photo: Brendan McDermid / Reuters
The plan includes $50 billion for infrastructure, with an emphasis on transportation and schools, and the creation of an infrastructure bank capitalized at $10 billion.
House Speaker John Boehner said Obama’s ideas “merit consideration” but Senate Republican leader Mitch McConnell was less magnanimous. “If government spending were the answer, we`d be in the middle of a boom right now,” McConnell told reporters. “We`ve been on a spending spree over the last two years.”
Republican candidates for president didn’t hesitate to slam Obama’s plan. Rep. Michele Bachmann said everything in the speech had “already been tried and failed before.” Gov. Rick Perry said the true path to jobs was “smaller government, less spending.” And Gov. Jon Huntsman, once an Obama appointee himself, called the speech a “list of regurgitated half-measures [that] demonstrates that President Obama fundamentally doesn’t understand how to turn our economy around.”
Which brings us to the bad news. Despite Moody’s upbeat analysis of the president’s proposal, stocks tumbled this morning. According to Bloomberg, the gloom wasn’t about the merits of the plan but the likelihood of Congressional passage. ”Even as President Obama made an effort to put that plan together,” said James Dunigan, chief investment officer in Philadelphia for PNC Wealth Management, “there’s not a whole lot of confidence that Congress will pass [it].”
I guess it’s not enough for an independent financial institution like Moody’s saying it’s a good plan. As long as a Democratic president proposes it, it’s dead in the water to Congressional Republicans.
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:
Tomorrow night, President Obama will unveil his jobs plan before a skeptical Congress. It’s unclear how much of the $300 billion proposal will go to infrastructure, but the president has said that will be a centerpiece of the proposal. An infrastructure bank and a new version of the expired Build America Bonds program could also be on the agenda.
How about this for your next transportation stimulus, Mr. President? Image: Austin Strategic Mobility Plan
Given the GOP strategy of obstructing any stated goal of the administration, it’ll be a tough sell. Some Republicans have already made it clear they would rather see a $640 billion, 12-month payroll tax holiday. That would increase the deficit by more than twice what Obama’s plan would, but deficits don’t seem to matter as long as taxes are getting cut.
So it’s no surprise that the president is also looking for ways that he can spur infrastructure job creation without Congress’s approval. Last week, Obama pleaded with Congress to pass a clean extension of the transportation bill (a plea which some Republicans are gleefully denying). At the same time, he announced that he was directing some agencies to each identify three infrastructure projects that could use a little federal help in speeding up the process. Here’s what he said:
In keeping with a recommendation from my Jobs Council, today I’m directing certain federal agencies to identify high-priority infrastructure projects that can put people back to work. And these projects — these are projects that are already funded, and with some focused attention, we could expedite the permitting decisions and reviews necessary to get construction underway more quickly while still protecting safety, public health, and the environment.
He specifically called on the departments of agriculture, commerce, housing and urban development, interior and transportation to highlight three projects each. We were wondering whether this process will end up falling into some of the same traps as the stimulus, which emphasized shovel-readiness to the detriment of other evaluation criteria for new projects, like whether the money would be well-spent.
Though Obama didn’t use the phrase “shovel-ready” last week, he called for projects that are already funded and have state and local permits, which implies nearly the same thing. Without a new stimulus, which the Republicans have already promised to oppose, there is no money to fund new projects, making it imperative to find those that are already funded. Still, the president admitted last year that “there’s no such thing as shovel-ready projects.”
And despite the administration’s general friendliness toward transit and understanding of the limitations of the private automobile, 60 percent of transportation dollars in the stimulus went to highways, with just 20 percent to transit. (Most of the rest went to freight rail, with a little bit for aviation and maritime projects.)
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