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Breaking the Impasse

Posted by Ken Orski on Monday, September 13th, 2010

This commentary originally appeared as part of a discussion on the National Journal Transportation Expert Blog, “Assessing Obama’s Infrastructure Plan”

Writing in last week’s Innovation NewsBrief we wondered if the intent behind the White House September 6 proposal to invest an extra $50 billion in transportation infrastructure was primarily a political gesture — to give the economy a short-term pre-election boost — or whether it was a belated but genuine change of heart about the need to act, and act convincingly, on a multi-year surface transportation program (www.infrastructureUSA.org). In conversations we held during the past week, we sensed that the transportation community, including senior officials of U.S. DOT, would clearly prefer the $50 billion to be part of a long-term reauthorization effort.

However, it’s not clear if the White House shares this feeling. President Obama’s promise that the money would create jobs “immediately” and his inclusion of airports and NextGen air traffic control systems (which have never been part of the surface transportation program but which are good job generators), would suggest that he meant the $50 billion to be used primarily as a short-term measure to stimulate the economy. The White House may try to seek congressional approval for the money in a stand-alone supplemental appropriation during the current congressional session. Whether Congress could be persuaded to go along is another matter. The bill would be perceived as a “stimulus” however it is portrayed, and would likely be opposed by a sizeable number of Democrats as well as Republicans. What is more, the proposed offset for the bill– eliminating existing incentives for the oil and gas industry and taxing firms on overseas profits– would almost certainly generate spirited opposition and a filibuster in the Senate.

Should the $50 billion be made an integral part of a multi-year transportation bill, the outlook becomes more promising. While little can be done to advance a long-term bill in the few weeks left before Congress adjourns for elections, the matter could be taken up in a lame duck session. Still, the odds of passing a complex piece of legislation in a lame duck session are small. Instead, Congress is likely to pass another six- or eight-month program extension (the current program authority expires on December 31). This time, however, there will be no need to vote more money since the Highway Trust Fund is projected to end FY 2010 with a healthy balance of $31.4 billion according to the latest Congressional Budget Office estimate. Indeed, the Trust Fund is projected to remain solvent for another two years, ending Fiscal Year 2012 with an estimated balance of $13.3 billion.

What will happen in the next Congress can only be a matter of conjecture. Should the Republicans take control of the House—something that most political analysts and pollsters seem to take almost for granted— the pressure to reduce the budget deficit and reduce spending will increase. But with active support from the White House, a bipartisan agreement on a scaled-down program during the next session of Congress is conceivable. To be sure, a bill “front-loaded ” with an extra $50 billion — i.e. funded at $110.8 billion in FY 2011, which includes $60.8 billion in requested regular program funding — is out of the question. (“Anyone who thinks that is a credible sum of money must be smoking something,” one congressional source, who requested anonymity, told us.) A $500 billion six-year bill ($83 billion/year) as proposed by Rep. Jim Oberstar, may be equally unrealistic. But a more modest four-year bill, funded at an annual level of  $60 billion/year (i.e. roughly, the level requested by the Administration for FY 2011) would cost a more manageable sum of $240 billion. With FY 2011-2014 tax revenues and interest expected to generate approximately $160 billion (CBO estimate), the annual shortfall would require a general revenue appropriation of only $20 billion/year.

Substantively, a bill reported out of  a Rep.John Mica (D-FL)-led committee would look very different from the bill that was authored by Rep. James Oberstar (D-MN) earlier this year.  But many of the reforms suggested by the Administration in its September 6 announcement — such as program consolidation, performance-driven investment decisions, an infrastructure bank, even inclusion of passenger rail — are not ideologically motivated and could find their way into a bipartisan bill.

For U.S. DOT’s executive staff, the White House September 6 announcement has been undoubtedly a big morale booster and a reason to redouble their efforts to prepare a detailed  legislative proposal in time for late spring or early summer submission to Congress. As Jeff Davis, editor of the Transportation Weekly has pointed out, all previous Administrations have submitted full legislative proposals before Congress took up the reauthorization legislation. This time should be no exception. It would be just the first step, but an important one in putting us firmly on the road to breaking the impasse over the future of the federal surface transportation program.

Kenneth Orski, Editor/Publisher


C. Kenneth Orski is a public policy consultant and former principal of the Urban Mobility Corporation. He has worked professionally in the field of transportation for over 30 years, in both the public and private sector. He is editor and publisher of Innovation NewsBriefs, now in its 21st year of publication.


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