President calls for Transportation Bill, while some Advisors call for 2nd Stimulus

Posted by Content Coordinator on Tuesday, August 16th, 2011


Written by: Larry Ehl

Last week President Obama announced he is “going to be putting out more proposals, week by week, that will help businesses hire and put people back to work.” He addressed transportation specifically:

“Tell Congress to get past their differences and send me a road construction bill so that companies can put tens of thousands of people to work right now building our roads and bridges and airports and seaports. I mean, think about it. America used to have the best stuff — best roads, best airports, best seaports. We’re slipping behind because we’re not investing in it, because of politics and gridlock. Do you want to put people to work right now rebuilding America? You’ve got to send that message to Congress. ”

Also, some White House advisers favor pursuing a second stimulus plan that could include a focus on infrastructure. But they’re in the minority and it doesn’t appear they’ll succeed:

“A wide range of economists say the administration should call for a new round of stimulus spending, as prescribed by mainstream economic theory, to create jobs and promote growth. It is clear that the House would never pass such a plan.

But Christina Romer, who stepped down last year as the chairwoman of the president’s Council of Economic Advisers, said Mr. Obama should fight for short-term spending in combination with long-term deficit reduction. . . .But there is little support for such an approach inside the administration. A series of departures has left few economists among Mr. Obama’s senior advisers. Several of his political advisers are skeptical about the merits of stimulus spending, and they are certain about the politics: voters do not like it (White House Debates Fight on Economy, NYT).”

The Heritage Foundation also doesn’t like stimulus spending. (Morning Bell: President Obama Sticks to Stimulus Script). And Paul Krugman agrees the internal White House debate seems to be “between those who want to do very little on jobs and those who want to do nothing at all.”

Outside of the White House, count Ed Rendell, former Pennsylvania Democratic Governor, and Scott Smith, Republican Mayor of Mesa Arizona and Vice Chairman of the U.S. Conference of Mayors among those who want DC to act bolder.

“During this time of economic uncertainty and record federal deficits, many question why America should invest aggressively in infrastructure. The answer is simple: Whether it involves highways, railways, ports, aviation or any other sector, infrastructure is an economic driver that is essential for the long-term creation of quality American jobs. . . .It is also time we create new infrastructure financing options, including a National Infrastructure Bank. Many of these new programs, using Build America Bonds, for instance, can be paid for with a minimal impact on the federal deficit (“Transportation Spending Is the Right Stimulus,” WSJ subscription).”

Rendell and Smith note that the U.S. investment in infrastructure lags far behind China and Brazil. I’m not sure that argument carries much weight; U.S. infrastructure is well advanced, and those two countries should be spending more to catch up to U.S. infrastructure. A perhaps more compelling argument from Rendell and Smith is that the U.S. Canada: only 1.7% of U.S. gross domestic product is spent on transportation infrastructure while Canada spends 4%. Canada’s investment in freight mobility could very well increase its ports’ competitiveness for Asian freight at the expense of western U.S. ports.

Peter Orszag, vice chairman of global banking at Citigroup, also believes government investment in infrastructure will help the U.S. economy:

“We need to invest more in roads, bridges, railroads and the like, and the best way to do this would be to scrap the present pork-barrel system and create a new infrastructure bank. We should also expand tolling and variable-rate pricing for transportation and water. This would allow us to use the infrastructure we have more efficiently and also raise money to invest in new projects (Four Ways Congress Can Upgrade Our Credit Rating, Bloomberg).” [Orszag is also a former director of the Office of Management and Budget in the Obama administration.]

Transportation stakeholders are doing a good job of keeping the spotlight on the needs and benefits of investing in infrastructure. But we’ll be lucky to get a two year transportation bill, much less a six-year bill and/or an infrastructure stimulus.

Read the full version ( President calls for Transportation Bill, while some Advisors call for 2nd Stimulus

About TransportationIssuesDaily
“I’m Larry Ehl, founder and publisher of Transportation Issues Daily (TID). Let me tell you why I decided to launch TID, and why I believe it will be an invaluable tool for transportation stakeholders.

After more than two decades as a government-affairs and transportation professional – for much of the past 8 years as Federal Relations Manager for the Washington State Department of Transportation (WSDOT) – in 2009 I started what became a nationally recognized blog on federal transportation issues.

My goal was to keep interested parties up to date on the sometimes-chaotic, mystifying, and always-changing state of affairs around federal transportation issues and funding.”

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