Streetsblog Capitol Hill

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.

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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:

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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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This morning, President Obama announced that he would direct the EPA to back off of new ozone standards that would have saved an estimated 12,000 lives [PDF]. They’ll revisit it in 2013.

Get used to it.

Obama said the action was taken in the interest of “reducing regulatory burdens and regulatory uncertainty, particularly as our economy continues to recover,” but environmental groups slammed the decision as “a huge win for corporate polluters,” in the words of League of Conservation Voters President Gene Karpinski.

NRDC President Frances Beinecke said, “The Clean Air Act clearly requires the Environmental Protection Agency to set protective standards against smog — based on science and the law. The White House now has polluted that process with politics.” Sen. Barbara Boxer, chair of the Environment and Public Works Committee, said she was “disappointed” with the decision.

The decision has a major impact on efforts to reform transportation, NRDC’s Deron Lovaas told Streetsblog.

“It frankly makes our job harder, in terms of reducing pollution from mobile sources,” Lovaas said. “If they had set the standard closer to 60 parts per billion, as opposed to 80, regions and states would have to get really serious about transit, and really serious about smart growth, and really serious about reducing vehicle miles traveled, because the gains couldn’t all be made through better technology.”

Business interests had long lobbied against the tighter standards, and they expressed their pleasure at the president’s announcement. The Chamber of Commerce cheered the move, rationalizing that by waiting for the statutorily-required rule-making in 2013, the EPA “can base its decision on the most recent science, not 2006 science.”

According to the National Review, some Republicans had called the ozone requirements “the single most harmful regulation proposed by the administration” and estimated that the total cost of implementation would have been “at least $1 trillion over a decade and millions of jobs.” House Speaker John Boehner called Obama’s concession to polluters “a good first step” and said he was glad the White House “recognized the job-killing impact of this particular regulation.”

Did we mention it would have saved 12,000 lives?

President Obama exhorted Congress to pass a clean extension of the transportation bill, to keep people, like some of those by his side, at work.

“I’m calling on Congress, as soon as they come back, to pass a clean extension of the surface transportation bill,” President Barack Obama said from the Rose Garden this morning. “This bill provides funding for highway construction, bridge repair, mass transit systems, and other essential projects that keep our people and our commerce moving quickly and safely. And for construction workers and their families across the country, it represents the difference between making ends meet and not making ends meet.”

While his calls for an extension of the current bill are increasingly in line with the growing realization that there is no possible way of passing a new bill before the September 30 extension, Obama did look beyond the immediate fix. “When Congress is back next week, in addition to passing these clean extensions to prevent any halt on existing work, we’re going to have to have a serious conversation in this country about making real, lasting investments in our infrastructure — from better ports to a smarter electric grid, from high-speed internet to high-speed rail.”

Obama didn’t specify how long of an extension he was seeking.

The president’s speech, first announced yesterday, made a push not only to put people back to work, but to “reform the way transportation money is invested, to eliminate waste, to give states more control over the projects that are right for them, and to make sure that we’re getting better results for the money that we spend.”

We need to stop funding projects based on whose districts they’re in and start funding them based on how much good they’re going to be doing for the American people. No more bridges to nowhere, no more projects that are simply funded because of somebody pulling strings. We need to do this all in a way that gets the private sector more involved. That’s how we’re going to put construction workers back to work right now, doing the work that America needs done, not just to boost our economy this year but for the next 20 years.

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As though to prove compromise isn’t as stiff a corpse as it appears, the Obama administration announced on Friday that it had reached a key agreement with an industry proficient at stonewalling government regulation: the automakers. The deal, which meaningfully raises fuel economy standards, was something of a welcome surprise, with the industry putting aside its usual act as regulatory victim and playing the role of committed partner.

The fuel standards championed by environmentalists are still far in the future, but the Obama administration extracted impressive concessions from an industry resistant to change.

President Obama’s claims to the historic nature of the agreement are not overblown. Under the proposal, by 2025, car companies will now be required to reach a 54.5 mpg goal for Corporate Average Fuel Economy (CAFE), meaning that each maker’s fleet of cars or light trucks sold domestically must achieve that mileage per gallon in a particular model year. It’s weighted based on sales, too, so automakers can’t just create a token fuel-sipper and continue to sell nothing but guzzlers.

This is the second time this administration has wrangled higher CAFE standards; in 2009, the near collapse of the industry and bailout allowed it to secure a 35.5 mpg standard for 2016. These achievements—the tremendous environmental and economic benefits of which are outlined well by the Natural Resources Defense Council’s Roland Hwang—follow decades of inaction when successful lobbying stifled progress.

As recently as last week, the industry appeared to be gearing up for an intensified public relations campaign against stricter standards, with its largest lobbying group, the Alliance of Automobile Manufacturers, airing radio ads warning the standards would destroy the economy.

In the end, the automakers were satisfied with what their still-considerable influence in Washington brought them in concessions, including a target mpg lower than the 60-plus supported by leading environmental health groups and diluted standards for so-called light trucks, including SUVs and pickups. Goals for the vehicles that are the most gas-guzzling and polluting—and the most profitable—will be phased in more slowly than goals for cars, with a loophole for big pickups described by Automotive News as a “major plum” for Detroit.

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The House and Senate are getting close to voting on a deal, reached over the weekend, to raise the debt ceiling and cut spending.

President Obama tells reporters about the debt deal. Note VP Joe Biden slumped in the corner, jacketless. The man must be exhausted. Photo: AP

There’s nothing in the legislative text that says anything specifically about transportation or the Highway Trust Fund, but it’s clear that the cuts mandated in the agreement will affect all sectors. This comes after several rounds of budget cutting this spring. Although some key programs, like high-speed rail, were high-profile victims at that time, solid investments like TIGER and other livability initiatives survived. Some of the cuts were really phantom savings, cutting contract authority that was never going to be used anyway. There are no more easy cuts left to be made in transportation.

The weekend’s debt deal trades a $900 billion raise in the debt ceiling (accomplished in two stages) for $917 billion over the next decade in discretionary spending cuts – reducing domestic discretionary spending to the lowest levels since Eisenhower was president – and including $350 billion in defense cuts – the first defense cuts since the 1990s. Later this year, the debt ceiling will be raised by another $1.2 trillion to $1.5 trillion, depending on the deficit reduction recommended by a special new bi-partisan, bi-cameral committee and agreed to by Congress. Alternately, if Congress passes a balanced-budget amendment (the preference of many Republicans), that would satisfy the conditions for raising the debt ceiling.

In the absence of such an amendment, if committee members can’t come to an agreement, or Congress fails to pass their recommendations, across-the-board cuts will automatically be implemented, cutting equally from defense and non-defense spending. Medicare, social security, and some other social safety net programs would be exempted.

After seeing discretionary spending cut time after time with no sacrifices demanded of the defense sector, it’s remarkable that social programs, not defense, were the ones shielded from the painful cuts. Meanwhile, by spreading cuts around to a greater number of agencies, including massive spenders like the Pentagon, each affected agency is affected less.

Still, infrastructure spending is vulnerable. The White House fact sheet on the debt deal, in the section about the automatic cuts triggered by a failure to act on the committee’s recommendations, says:
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In a move to help buoy crisis-stricken cities, the Obama Administration this week introduced a program designed to provide administrative support to help local government officials “cut through the red tape” and access urgent federal assistance.

“Strong Cities, Strong Communities” will offer expert technical support — but not additional funding — in the areas of jobs, housing, transportation, the environment, education and economic development to cities that are suffering the staggering effects of economic displacement or natural disaster.

Memphis, New Orleans, Detroit, Cleveland, Fresno and Chester, Pennsylvania were chosen to pilot the program, which begins immediately.

Pilot cities will receive assistance from a team of mid-career federal administrators from a variety of agencies. The goal is to not only help these cities take better advantage of existing federal programs, but also to secure additional investment from the private sector and wider community.

HUD Secretary Shaun Donovan told the Wall Street Journal that the program was inspired by difficulties experienced in the city of Detroit as it struggles to implement its Detroit Works blueprint for revitalization. Federal officials observed that complicated federal regulations and the difficulty of accessing federal officials were a major stumbling block in the city’s recovery efforts.

“We found they had millions in federal block grants that they either were not using or not using in the best way,” Donovan said.

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Earlier this week, President Obama spoke to reporters at the White House. Fully aware of the growing concern in the country over the “jobless recovery,” Obama led off by talking about jobs – and pushing Congress to pass a transportation reauthorization. But was he using the wrong talking point?

“Right now, Congress could send me a bill that puts construction workers back on the job rebuilding roads and bridges –- not by having government fund and pick every project, but by providing loans to private companies and states and local governments on the basis of merit and not politics,” the president said. “That’s pending in Congress right now.”

The inclusion of the line about merit went over well in transportation reform circles, where people have been pushing for a greater emphasis on performance metrics and less spending by strict formulas regardless of outcome.

Later, in response to a question about whether the debt debate was hamstringing his ability to take action on creating jobs, Obama talked again about transportation.

“I think it’s important for us to look at rebuilding our transportation infrastructure in this country,” he said. “That could put people back to work right now — construction workers back to work right now.”

Obama’s not the only one to try to sell the transportation bill as a jobs package. Sen. Barbara Boxer likes to have her aides hold up 20 poster-sized pictures of the Dallas Cowboys stadium, filled with people, to illustrate the number of construction workers out of work right now. She uses this to show the urgency of passing transportation investment legislation.

But according to Joshua Schank, CEO of the Eno Transportation Foundation, it’s a mistake to focus on construction jobs.

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