issue: Transportation & Infrastructure

The President’s New Gamble

Posted on by The Progressive Policy Institute

President Obama’s call yesterday for $50 billion in new transportation spending is politically risky, given public worries about government spending and debt. But if linked to a strategic and sustained strategy for modernizing the nation’s infrastructure, it could signal the start of America’s economic comeback.

Even more important than the money, however, is an Obama initiative that didn’t get as much media play: a proposed National Infrastructure Bank. It is the key not only to leveraging business capital – U.S. companies are sitting on $2 trillion in potential “private stimulus” money – but also to making sure we invest that money wisely.

The president said he would ask the lame-duck Congress next month to approve the $50 billion measure, which would front-load money that otherwise would be spread over the life of a six-year surface transportation bill.  He left little doubt his immediate goal is to goose the pace of the agonizingly slow economic recovery.

“Nearly one in five construction workers is still unemployed and needs a job. And that makes absolutely no sense when so much of America needs rebuilding,” Obama told reporters at the White House on Memorial Day. Attempting to preempt Republican objections that infrastructure spending is simply stimulus is drag, Obama noted that “Investing in infrastructure is something members of both parties have always supported.”

Maybe so, but it’s worth noting that the word “infrastructure” appears nowhere in the GOP’s 48-page Pledge to America.  What’s more, Republicans are likely to over-interpret likely midterm gains as vindication of their attacks on Obama as a big spender, so good luck getting them to vote for infrastructure in the lame duck.

That’s a shame, because spending on infrastructure is both stimulus and investment.  It could get more Americans working now, but it is also essential to building our country’s long-term capacity to compete in fast growing global markets for high speed rail, civilian nuclear energy, clean cars, intelligent transport systems and renewable fuels.

The federal government, of course, is constrained by enormous deficits and a growing national debt. That’s why we need a National Infrastructure Bank, which would structure public-private deals to fund big capital projects that can generate real economic returns. As noted by an economic analysis the White House released yesterday:

“There is currently very little direct private investment in our nation’s highway and transit systems due to the current method of funding infrastructure, which lacks effective mechanism to attract and repay direct private investment in specific infrastructure projects. … A National Infrastructure Bank would also perform a rigorous analysis that would result in support for projects that yield the greatest returns to society and are most likely to deliver long-run economic benefits that justify the up-front investments.”

An infrastructure bank, along with new public seed capital and a third element of the Obama infrastructure initiative – merging the many stovepiped “modal” transportation funding streams so public dollars can be used strategically – begin at last to push the economic debate in a constructive direction.  The two great challenges America faces now are reviving our economic dynamism and shrinking a massive overhang of public debt. To meet them, the Obama administration needs to fashion an ambitious, “cut and invest” strategy aimed at slowing health care and entitlement spending generally, and using public dollars to leverage massive private investment in productivity-enhancing infrastructure.

That’s why President Obama should press ahead with his infrastructure plan, despite the political fallout from the midterm election. If Republicans want to frame the economic debate as a choice between more tax cuts and rebuilding the common foundations of American prosperity, so much the better. That’s one progressives can win.

Photo credit: Center for Neighborhood Technology

Will This Call For High-Speed Rail Spending Be Ignored?

Posted on by The Progressive Policy Institute

America’s transportation infrastructure is enfeebled, Washington’s transportation policy is broken, and we need to start building fast trains.

While that might be old news to readers of Progressive Fix, what is news is who’s saying it this week: Samuel Skinner, Secretary of Transportation under George H.W. Bush, and Norman Mineta, DOT Secretary under George W. Bush, were co-chairs of a conference at the University of Virginia behind a new report making this case. Mary E. Peters, Mineta’s successor under Bush, and a smattering of ex-DOT undersecretaries filled out the roster of 80 transportation experts.

Describing government spending on transportation as woefully underfunded, the report estimated that between $134 billion and $267 billion more is needed each year from now to 2035 to make U.S. roads, rail, and air transportation competitive with other countries.

The report lamented the “pork and political opportunism” in the current transportation reauthorization act, SAFETEA-LU, and advocated the setting up of core national priorities for transportation such as high-speed rail networks.

“High-speed rail has the potential to provide a fast, efficient and integrated alternative to driving and flying,” the report said. The best approach for genuine high-speed rail would be rights of way separate from existing freight lines – a policy strongly advocated by PPI (see here and here).

A major increase in the federal gas tax, which has remained unchanged at 18.4 cents a gallon since 1993, would help pay the bill for getting America’s transportation systems back to state-of-the-art standards.

Derailing High-Speed Rail

 

The group’s “call for action” comes at a time when Republican leaders have steered the GOP in a completely different direction. Extending the Bush tax cut has become their top national priority. The White House’s plan last month for $50 billion in infrastructure spending on highways and rail was met with open contempt by House Republican Leader John Boehner.

Several state races are shaping up as tests of whether President Obama’s higher-speed rail initiative can survive Republican hostility. In Wisconsin and Ohio, Republican candidates for governor have called federal stimulus money awarded for train improvements a major waste of taxpayer funds.

Scott Walker, the Republican candidate for governor in Wisconsin, has launched a website called notrain.com. He’s ahead in the polls, as is John Kasich, the former House Republican who vows to kill a $400 million federal stimulus project to link Cleveland, Columbus and Cincinnati by rail if elected the next governor of Ohio.

The anti-rail contagion has spread to New Jersey, where Republican Gov. Chris Christie is threatening to scuttle a train tunnel to Manhattan – and forfeit $6 billion in pledged funds from the federal government and the Port Authority of New York and New Jersey – citing concerns of large cost overruns.

Christie yesterday postponed his announcement of whether he will back out of the agreement to build the tunnel – which would create 6,000 long-term construction jobs – in part so that he could campaign for other Republicans in the Midwest.

In California and Florida, where full-scale high-speed train networks have been awarded federal stimulus grants, GOP candidates are suggesting that they would delay or disrupt the projects.

Meg Whitman, running as the Republican candidate in California, says the state cannot afford “at this time” the costs associated with new high-speed rail. Rick Scott, Republican candidate for governor in Florida, has jumped on the same bandwagon, questioning whether the state can afford a rail line between Orlando and Tampa that has been awarded $1.25 billion in federal stimulus money.

Ironically, the current governors of California and Florida, Arnold Schwarzenegger and Charlie Crist, gained office as Republicans and have been big rail supporters. “To say ‘now is not the time’ shows a very narrow vision,” Schwarzenegger’s communications chief told the New York Times in response to Whitman’s tepid support for California’s rail investment.

The Eisenhower Model

“We’re going to have bridges collapse. We’re going to have earthquakes. We need somebody to grab the issue and run with it,” Mineta told reporters on Monday.

His earnest tone, delivered at the Rayburn House Office Building, was at odds with the anti-tax, anti-government vitriol coming from those of the same political stripe occupying nearby offices.

Advocates of infrastructure spending must offer specific data and concrete examples of the damage that continued underfunding of transportation projects could inflict on America’s standard of living and economic security. A starting point would be America’s dangerous overdependence on gasoline coming from unstable or hostile foreign countries. Add to this the lost productivity for U.S. drivers stuck in traffic jams, which the Mineta-Skinner report estimated at $87 billion in 2007, or $750 for every driver.

And consider that our population is expected to grow by 90 million in the next 40 years. These citizens will need to move, and high-speed rail is cheaper to build and causes much less environmental damage than new highways and airports.

A role model for such educational outreach is Dwight Eisenhower. The Republican president launched the Interstate Highway System by articulating a vision of top-quality roads benefiting all citizens and secured bipartisan support in Congress. It was part of his crusade to win the Cold War.

There’s a new battle out there – in the form of competition from emerging economic powerhouses like China, which plans to spend over $1 trillion in the next 10 years on a comprehensive 220-mph train system. While China builds its future, many of our politicians welcome gridlock as a way to wrest short-term partisan gains.

Photo credit: aussiegal

Financing Future Growth: How Do We Pay For New Projects?

Posted on by The Progressive Policy Institute

A National Infrastructure Bank is an idea whose time has come. The politics are tricky, but there is clear recognition from leading public and private sector thinkers that we need to make big investments in infrastructure, and that we need to make those investments in a rational way.

These were the key takeaway points from Friday’s second panel on the question of “Financing Future Growth,” which was part of the Progressive Policy Institute’s Second Annual North American Strategic Leadership Infrastructure Leadership Forum in Washington, DC.

The panelists were: U.S. Representative Rosa L. DeLauro (D-CT), Sponsor of National Infrastructure Development Bank Act of 2009 (H.R. 2521); Chris Bertram, Assistant Secretary for Budget and Programs and C.F.O., U.S. Department of Transportation; Leo Hindery, Jr., Investor, Managing Partner of InterMedia Partners VII; former President and CEO of AT&T Broadband; former President, Tele-Communications, Inc. (TCI); and Everett Ehrlich, Economist, President of ESC Company; former Under Secretary of Commerce for Economic Affairs. PPI President Will Marshall moderated.

Rep. DeLauro set the tone for the panel by underlining the urgency for doing something big. “We need to be serious about a growth strategy,” DeLauro told a packed audience. “This is not stimulus, this is not recovery, this is whether we can grow and create jobs to compete with the economic power centers of the world. China invests nine percent of its GDP in infrastructure. India invests five percent. We invest less than two percent.”

And yet, Rep. DeLauro’s bill to create a National Infrastructure Bank and turn a chaotic ad-hoc infrastructure appropriations process into a rational national strategy has attracted only 60 co-sponsors – and not a single Republican.

“Resistance is internal to Congress,” said Hindery. “They would give up so much grant and earmark authority. Members are hesitant to see that move into an independent entity.”

Hindery argued that the key was leadership, and that the President wasn’t doing enough of it. “It has to be a stated priority,” he said. “It can’t be a proffered idea with tepid support.”

Ehrlich, who wrote a PPI Policy Memo on how an infrastructure bank should operate, was optimistic that this is an idea whose time has come. “This is a remarkable moment in infrastructure,” he said. “We are finally at a place where all the communities know the current programs are brain-dead…Local planners are wondering where the funds are going to come from, private investors are circling around the periphery of the area, looking for a way in.”

Hindery also noted that both the Chamber of Commerce and the Business Roundtable – both of whom have been largely resistant to any form of domestic spending – have come out in favor of an infrastructure bank. However, DeLauro said her Republican colleagues in Congress were not hearing this.

DeLauro highlighted that there is strong public support for making big investments in infrastructure: about 80 percent of Americans say they’d be willing to pay extra for more infrastructure.

Hindery also argued that in order for the proposal to pass, it would need to have a buy-American component, so that they unions would be on board. He also thought that making it explicitly a “jobs bill” would be effective. There was general agreement on this point.

Bertram, speaking for the administration, said that the President was serious about pushing an infrastructure bank. “I think the President is very interested in changing how we talk about these issues.”

DeLauro, who has been introducing legislation to create an infrastructure bank since 1994, was optimistic that the moment for it to pass was rapidly coming.

“We’re facing an economic crisis now, and we’re looking for ways to grow our economy,” said DeLauro. “Infrastructure is one of the pieces that makes sense for national growth. I believe it can be done. It’s not easy, but nothing is easy. And I’ll continue with this for as long as it takes.”

Retooling the American Economy for Jobs, Innovation, and Competitiveness

Posted on by The Progressive Policy Institute

America is adrift and needs leadership to modernize and build a foundation for 21st century competitiveness. And while it’s a long hard to travel, there are at least a few signs of optimism.

Such were the key takeaway points from Friday morning’s panel on the question of “Retooling the American Economy,” which was part of the Progressive Policy Institute’s Second Annual North American Strategic Leadership Infrastructure Leadership Forum in Washington, DC.

The panelists were : Tom Friedman, New York Times Columnist, Pulitzer-Prize Winning Author; Jason Furman, Deputy Director, National Economic Council, White House; Roderick Bennett, Advisor to the General President of the Laborers’ International Union of North America; and John Woolard, CEO, Brightsource Energy. David Wessel, economics editor of the Wall Street Journal moderated.

In general, the panelists agreed that we’re in a difficult spot. We’re falling behind China on infrastructure, on energy, on basic research and development –  just about every measure of investing in a 21st century economy. As Friedman put it, “We can only go so long with a philosophy of dumb as we want to be.”

Part of that dumb-as-we-want-to-be philosophy is an unwillingness on the part of many to admit that government has a key role to play in creating an environment where innovation can thrive, both by making big investments and putting the right incentives in place. The solution to this, of course, is leadership.

“We have an epic lack of faith in government with a capital G, but we have an unchanging love for government at the local level when it means bridge projects and energy projects and broadband projects,” said Furman. “And that’s something you see at the bipartisan level. Some of this means we have a messaging problem, and some of that is bottom-up, pointing out what it all tangibly means.”

“But how you get the snake through the python is a big challenge,” Furman added. “You have to pass the thing through Congress, and the debate will be framed in big government terms.”

Friedman, who was openly critical of the administration’s salesmanship efforts, argued that what was needed was big-picture leadership.

“We need to make it aspirational,” said Friedman.  “That’s what the moon shot was all about. People want nation-building at home. You fly from Shanghai to JFK, and you go from the Jetsons to the Flinstones. People sense that. And the President has never made that the lodestar. He’s never leveraged all that energy.”

Woolard, who heads a large solar energy company, offered a dose of optimism. “We have a lot more projects here in the U.S. than abroad,” he said. “There are good projects, and there’s a lot moving forward.”

“But,” he added, “The thing that scares me most is the longer-term issue. Not enough students are going into engineering. We need to encourage people to go into those disciplines.”

Woolard also described the challenge at hand: In order to stabilize carbon emissions at 450 parts per million by 2050 (a commonly-agreed on target to stem global warming), “we’ve gotta build between 12,000 and 20,000 gigawatts of carbon-free power. That’s a power plant per day. We’ve built gigawatts a week before, but we don’t have the rules yet to get to this objective. We need policy.”

The consensus was that there would need to be a price on carbon. “Capital works itself out with the right rules,” Woolard said. But given the politics of energy, would the political will ever exist?

Here Friedman was an optimist: “We’re absolutely going to have a gas tax and a carbon tax,” he told the audience. “Because we’re going to run out of money, and we will need revenue and when we run into that wall, people will look around and say, what’s the best source? The sad thing is there are 535 members of Congress, and not one will propose this when it is so manifestly in the strategic and economic interest of the country.”

Bennett, whose union represents construction workers, also registered support for a gasoline tax, which he called “the elephant in the room.”

Friedman also offered a “killer app” for economic competitiveness: “An ecosystem of a national renewable standard, a price on carbon, a gasoline tax, higher building efficiency standards,” he said. “Put that ecoystem in place and you get 10,000 green garages trying 10,000 different things. Two of those will be the next green Google and Microsoft. The killer app is the enabling system.”

How to Make an Infrastructure Bank Work

Posted on by The Progressive Policy Institute

When President Obama proposed  a national infrastructure bank on Labor Day, he was short on details. How would such a bank work to give coherence to meeting our infrastructure building needs?

Today, in conjunction with our national conference on infrastructure, PPI is proud to release a new Policy Memo from infrastructure expert Everett Ehlrich about how a national infrastructure bank would work.

In his memo, entitled “A National Infrastructure Bank: A Road Guide to the Destination,” Ehrlich sees five key aspects of a Bank:

  • First, a Bank will evaluate infrastructure needs from an economic, as opposed to an engineering perspective. That is, infrastructure projects must actually be economically sound investments, not bridges to nowhere.
  • Second, a Bank will be able to provide consistent, apples-to-apples comparisons of different infrastructure projects so that policymakers can make more rational decisions about where to allocate infrastructure funds.
  • Third, a Bank will be able to select projects where it can leverage private capital effectively.
  • Fourth, a Bank will provide an alternative to what Ehrlich calls the “Appropriations Merry-Go-Round” – that is, the process by which states and localities put off much-needed repairs in hopes that congressional appropriators will lavish funds on them if only they wait long enough.
  • Fifth, a Bank will encourage localities to think creatively about ways to improve on existing infrastructure use, such as designing traffic optimization algorithms. The bank will be able to support non-structural solutions that can often do just as much for our infrastructure needs as building.

Here’s Ehrlich’s overview for how the bank would work:

Any entity – whether state, local, or federal – would have standing to come to the Bank with a proposal requiring federal assistance.  The Bank would be able to negotiate the level and form of such assistance based on the particulars of each project proposal.  It could offer cash participation or loan guarantees, underwriting or credit subsidies, or financing for a subordinated fund to assure creditors.  Any project requiring federal resources above some dollar threshold (on a credit scoring basis) would have to be approved by the Bank.

Ehrlich will be discussing his memo on Friday at a panel on “Panel: Financing Future Growth: How Do We Pay For New Projects?,” as part of the 2nd Annual North America Strategic Infrastructure Leadership Forum, co-sponsored by the Progressive Policy Institute.

Keeping America on Track: The Future of High-Speed Rail

Posted on by The Progressive Policy Institute

How should we build high-speed rail in the United States? And how should be pay for it? Do we need dedicated lines and dedicated funding? Or can we build a system incrementally? How should we build high-speed rail in the United States? And how should be pay for it? Do we need dedicated lines and dedicated funding? Or can we build a system incrementally?

Yesterday morning, the Progressive Policy Institute brought together some of the leading thinkers on this issue to kick off our Second Annual North American Strategic Leadership Infrastructure Leadership Forum in Washington, DC.

The discussion centered around three questions:

  • Do we need a dedicated right of way for high-speed rail or can it be developed incrementally? (Panelists agreed that a dedicated right of way would be ideal, but generally felt that the politics would be difficult);
  • How can we fund high-speed rail? (Panelists agreed that we need a dedicated source of funding, though again, the politics of establishing such a fund are tricky); and
  • Should private capital be enlisted? (Panelists agreed that definitely, private funding should play an active role, and offered some ideas how).

The event’s panelists were: Pierce Homer, Transportation Director, Moffatt & Nichol; Ken Orski, Editor and Publisher, Innovation Newsbriefs; Mark Reutter, Fellow, Progressive Policy Institute; and Petra Todorovich, Director, America 2050. Michael Riley, managing editor of Bloomberg Government, moderated.

Do We Need a Dedicated Right of Way?

Mark Reutter made the strongest case for a dedicated right of way, arguing that a self-contained track free of interfering traffic was necessary for true high-speed rail.

“New rights of way is the only technologically sound approach to genuine high speed rail,” Reutter said. “Dedicated rights of way provide the necessary platform for greater safety and sustained speed, and eliminate choke points and interfering track. It’s the only way high-speed rail can compete with air traffic.”

Reutter also pointed out that on most corridors, trip times on Amtrak are no faster than they were in 1971 (when Amtrak was created) and in many places slower than they were under private rail in the 1950s.

Other panelists thought that incremental development also had to be part of a strategy.

“I think the answer is both,” Todorovich said. “Some corridors are suitable for dedicated rail systems. Other places need time to build markets, and in those places it makes sense to invest in incremental improvements. Operationally, there’s no question a closed, dedicated system is better. But you have to maintain support.”

Orksi was the most skeptical. “If money were no object, I’d say we can do both,” he said. “But since we live in a world of limited resources, I’d say invest whatever limited resources there are on improving existing freight lines.”

How Do We Fund High-Speed Rail?

 

This week, PPI released a memo written by Reutter arguing that a cleaned-up and repurposed Highway Trust Fund could become a dedicated source of funding for high-speed rail, a proposal that formed the backdrop of the conversation. Panelists agreed that dedicated funding was a good idea, but political feasibility remained an issue.

“I’m attracted to the notion of a trust fund,” said Orski. “But there are great obstacles. First, will there be enough political support in Congress? Or will concerns about deficits oblige them to focus on other more urgent infrastructure projects? Any proposal will raise howls of indignation from highway interests.”

Reutter responded by arguing that, “there have always been special interests, that’s how government works. Groups always want to cling to the allocations they get. All that means is we need leadership. You have to have an overall vision of economic development.”

Homer, meanwhile, argued that they key to funding high-speed rail was to identify economic interests who might benefit from it. “There have to be individuals, organizations, and regions who would see benefit in this and would be willing to pay for it,” he said.

Homer also noted that any funding plan had to think about not just the capital expenditures to cover the building, but also the long term operational and maintenance costs, which are likely to exceed the capital costs. “The larger and more difficult question is how to pay for operations,” he said.

Is Private Funding Necessary?

 

On the question of private funding, there was widespread agreement that it was necessary. The more difficult question is how to attract that investment.

Homer argued that government needed to do more to reduce the risk inherent in such investments. “In the U.S., the biggest obstacle is regulatory risk,” he said.

He added that if there is a market where ridership exists, “private capital is going to find where there is the greatest economic benefit.”

Todorovich agreed. “Private interests are interested because they want revenue streams, and that could come from passenger fares.”

But Reutter added that regardless of private money, government needed to provide a reliable source of government money that “private investors can count on. There needs to be a level of government guarantee, that’s why a surface transit fund is so essential for this.”

Homer also argued that rather than focusing on speed, what might drive the most investment was focusing on reliability. “If I knew it was a two-hour trip from Richmond to Washington, I’d take that any day over I-95,” he said. “As this evolves, I think we should be talking about high-reliability rail.”

The forum continues tomorrow. For a full schedule of PPI-sponsored events, click here.

photo credit: Jim Arkedis

White House National Economic Council to Join PPI at Infrastructure Forum

Posted on by The Progressive Policy Institute

NEWS RELEASE
FOR IMMEDIATE RELEASE
September 28, 2010

PRESS CONTACT:
Steven Chlapecka—schlapecka@ppionline.org, T: 202.525.3931

Deputy Director Jason Furman Joins Roundtable Discussion on Jobs, Innovation and Competitiveness

 

WASHINGTON, D.C. – Jason Furman, deputy director of the White House National Economic Council, will join the Progressive Policy Institute (PPI) for a roundtable discussion at the Washington Hilton at 9 a.m. on Friday, Oct. 1 as part of the 2nd Annual North American Strategic Infrastructure Forum. The discussion will focus on jobs, innovation and retooling the American economy for growth and global competition.

The roundtable will feature panelists New York Times Columnist Tom Friedman, LIUNA General President Terence M. O’Sullivan and BrightSource Energy CEO John Woolard. It will be moderated by Wall Street Journal Economics Editor David Wessel.

“Furman’s participation underlines the forum as the premier showcase of strategic infrastructure investments needed to speed economic recovery and raise America’s game in global competition,” said Will Marshall, president of PPI. “We hope to challenge the nation’s political leaders to embrace a bolder strategy for retooling the American economy through crucial infrastructure projects like high-speed rail, clean cars and next-generation nuclear energy.”

Throughout the three-day conference, the Progressive Policy Institute and CG/LA Infrastructure will bring together leading thinkers from the public and private sectors in order to move North America’s most important projects forward, creating as many as six million new direct jobs.

Other featured speakers include: U.S. Senator Mark Warner, (D-Va.); U.S. Representative Rosa DeLauro, (D-Conn.); Leo Hindery Jr., Managing Partner, InterMedia Partners VII; Joe Boardman, President and CEO, Amtrak; U.S. Representative Dan Lipinski, (D-Ill.); Mark Reagan, Chairman, Global Construction Practice, Marsh Inc.; Chris Bertram, Assistant Secretary for Budget and Programs and Chief Financial Officer, Department of Transportation;Ev Ehrlich, President, ESC Company; and more.

WHERE: Washington Hilton, Columbia Hall 5 & 7, 1919 Connecticut Ave. NW, Washington, DC

WHEN: 9 – 10:30 a.m., Friday, Oct. 1

Download the entire day’s schedule.

How To Pay For High-Speed Rail

Posted on by The Progressive Policy Institute

President Obama has been quite supportive of building high-speed rail. In January he announced an $8 billion down payment. But that was just a start. Building high-speed rail is a major investment, and the big question is: how will we pay for it, especially in a time of increasing federal deficits?

PPI Fellow Mark Reutter has some ideas, and he writes about them in a new policy memo that PPI is releasing today. The memo is called: “A smart way to finance high-speed rail: Restructuring the Highway Trust Fund into a results-driven transportation fund.”

Reutter argues that the money should come out of a cleaned-up Highway Trust Fund, which is currently larded with strategically aimless and costly programs:

Congress could easily allot $5 billion a year for HSR construction – without an increase in the gas tax – by cutting out earmarks and formula-based grants that now soak up billions of dollars, according to the General Accountability Office (GAO). Such fund reallocations could not only jumpstart HSR projects but serve as seed money to public-private partnerships to get the work done.

Although the Highway Trust Fund was once an elegant solution to funding the construction of the Interstate Highway System with gasoline taxes, it has over the years become more and more just a source of political pork.

Reutter thinks it’s time we use the almost $300 billion authorization (over six years) for building up genuine high-speed-rail routes. To that end, he makes seven specific policy recommendations for the next Highway Trust Fund re-authorization replacing the current authorization due to expire at the end of 2010.

  • Change the name of the Highway Trust Fund to the Surface Transportation Trust Fund to better reflect its new mission for the 21st century.
  • Allocate at least $5 billion in Trust Fund money in 2011 to HSR construction, with special emphasis on getting a demonstration high-speed line between Tampa and Orlando completed by 2015. (The Florida line received $1.25 billion in federal stimulus grants, but is still short of its $2.6 billion budget.)
  • Increase HSR expenditures in years 2012-15 (if a five-year spending bill is enacted) to reflect the increased demand for grants as more states develop passenger rail plans.
  • End the bureaucratic separation of highway and rail programs by establishing a team of planners to develop a HSR network in coordination with future highway building and restoration.
  • Direct the U.S. Department of Transportation and state authorities to examine routes where HSR could use Interstate and other publicly owned highway corridors for rights of way. This approach, already being used in the Tampa-Orlando corridor, would greatly lower land acquisition costs for new rail lines.
  • Base federal transportation decisions on clear analytic measures of performance rather than earmarks – and competition between states instead of preset formulas – to produce the greatest return on taxpayer dollars.
  • Ensure that HSR, which uses about 20 percent less energy per passenger mile than automobiles, gets its fair share of any future revenues generated by carbon pricing.

Reutter also explores ways that policymakers can leverage private capital to augment public spending.

One approach is assembling land around potential HSR terminals for sale to private companies either operating or putting up part of the capital costs of HSR building.

Another is to encourage overseas operators with proven track records to invest in U.S. projects, at least initially, to allow U.S. companies to “learn the ropes” of building these highly sophisticated systems.

Ultimately, though, it’s going to take real political leadership. As Reutter concludes:

The Obama administration has repeatedly talked about its commitment to “green” technology and how fast trains could provide job growth and business opportunities to regions hard-hit by the loss of manufacturing. The administration needs to seize the initiative and make the case for HSR funding during the fall election cycle and in the next transportation reauthorization bill.

Reutter will be discussing high-speed rail Wednesday at a panel on “Keeping America on Track: The Future of High-Speed Rail,” which is part of the 2nd Annual North America Strategic Infrastructure Leadership Forum, co-sponsored by PPI.

A Smart Way to Finance High-Speed Rail: Restructuring the Highway Trust Fund into a results-driven transportation fund

Posted on by The Progressive Policy Institute

Since announcing an $8 billion “down payment” for high-speed rail development, the Obama administration has been silent about how to pay for a program as ambitious as the Interstate Highway System.

The interstates cost more than $250 billion in current dollars to build. A fast train network, based on systems being developed worldwide, most noticeably in China, could be equally expensive.

So far, Congress has come up with $2.5 billion in general fund appropriations for high-speed rail (HSR) in 2010, and the administration has asked for $1 billion a year for the 2011-14 budgets. Such allocations are hardly enough to begin detailed engineering for California’s HSR proposal between Los Angeles and San Francisco, let alone the nine other intercity corridors that the White House has envisioned.

On Labor Day, President Obama proposed a $50billion transportation infrastructure program that would include 4,000 miles of rehabbed and new railway track. The proposal calls for integrating HSR projects into the next surface transportation bill, a promising step that would ensure some level of federal commitment to the program over the five- or six-year life of the bill. But again, the president did not specify how he would finance HSR or the larger infrastructure program other than to say that his administration “is committed to working with Congress to fully pay for the plan.”

The president’s reticence raises a legitimate question: Can the nation afford HSR in a time of looming federal deficits?

The answer is yes – financing HSR is entirely feasible, but will only happen if the administration and its congressional allies take bold steps to rebalance our transportation priorities. Fortunately, there is both a funding source and a road map for moving from today’s scattershot federal transportation spending to a results-driven enterprise.

The funding source is the Highway Trust Fund, with approximate funds of $52 billion a year. Allocating a portion of highway funds for rail construction is an equitable way to wean drivers away from auto travel by providing them with a faster, safer, and more environmentally sound alternative.
Congress could easily allot $5 billion a year for HSR construction – without an increase in the gas tax – by cutting out earmarks and formula-based grants that now soak up billions of dollars, according to the General Accountability Office (GAO). Such fund reallocations could not only jumpstart HSR projects but serve as seed money for public-private partnerships to get the work done.

Already, international rail operators have expressed interest in competing for high-speed train contracts in the U.S. But these groups are waiting for the Obama administration to lay out a comprehensive financing plan before structuring bids. The use of a well-established and reliable source of transportation financing could make these deals happen.

Download the entire memo.

A Crash Course in Infrastructure

Posted on by The Progressive Policy Institute

Since we at PPI are focused today on infrastructure in advance of our big infrastructure forum Wednesday through Friday, we wanted to share some of our best posts over the last several months on infrastructure.

These posts also make an excellent crash course on what’s been happening lately in the world of infrastructure and high-speed rail in advance of this week’s conference.

This Week: The Road Forward on Infrastructure

Posted on by The Progressive Policy Institute

This week, Progressive Fix will be focused on infrastructure.

That’s because the Progressive Policy Institute is co-hosting a major infrastructure forum this Wednesday through Friday here in Washington, D.C.

The timing of the forum couldn’t be better.  It comes less than a month after President Obama laid out a plan for $50 billion in U.S. infrastructure investment.

As my colleague Scott Thomasson wrote at the time:

The President is sending a strong message this week that his administration’s thinking has moved beyond another round of scattershot stimulus toward a real plan for sustainable growth.  Today’s speech suggests that the mantra for spending has changed from an obsession with injecting federal spending to thinking rationally about actually investing it.  That’s welcome news, and it’s not a moment too soon.

This week we’ll be gathering leading experts from the private and public sector to talk about how to build on the President’s initiative and about how investing in infrastructure can create jobs and strengthen the American economy for the 21st century.

The forum will feature leading thinkers on infrastructure like Tom Friedman, Leo Hindery Jr., Ev Ehlrich, and PPI Fellow Mark Reutter, as well as political leaders on infrastructure like Congressman Rosa L. DeLauro (D-CT), who has introduced legislation to create an infrastructure bank, and Sen. John Warner (D-VA)

We’ll be sponsoring panels on “High Speed Rail”, “Retooling the American Economy”, and “Financing Future Growth.”

The forum will also highlight the “top 100” strategic infrastructure projects and new PPI proposals for using public dollars to leverage private investment to create jobs and spur economic growth.

You can find a full program for the forum here. All events are at the Washington Hilton and open to the interested public.

To register for “Keeping America on Track: The Future of High-Speed Rail”, click here. For the North America Strategic Infrastructure Leadership Forum, click here.

We will also be unveiling two new policy memos this week, one on high-speed rail and a second on an infrastructure bank.

Finally, check back with the Progressive Fix over the course of the week for full coverage of the panels. I’ll be reporting on all the great ideas that are sure to come out of this incredible collection of leading lights.

So stay tuned as we lay out a vision for a road forward on infrastructure.

Photo credit: Jason

2nd Annual North America Strategic Infrastructure Leadership Forum

Posted on by The Progressive Policy Institute

df

September 29, 2010 / 9:00 – 10:30 am

Panel: Keeping America on Track: The Future of High-Speed Rail

Jefferson West Room, Washington Hilton

Introductory remarks by U.S. Representative Marcy Kaptur (D-OH)

Moderator:

  • Michael Riley, Managing Editor, Bloomberg Government

Panelists

  • Pierce Homer, Transportation Director, Moffatt & Nichol
  • Ken Orski, Editor and Publisher, Innovation Newsbriefs
  • Mark Reutter, Fellow, Progressive Policy Institute
  • Petra Todorovich, Director, America 2050

To register for “Keeping America on Track: The Future of High-Speed Rail”, click here.

gfgf

September 30, 2010 / 9:45 – 10:00 a.m.

Keynote Speech: Competitiveness Through Innovation

IBR East Room, Washington Hilton

Introduction by Will Marshall, President, Progressive Policy Institute

Featured speaker

  • Senator Mark Warner (D-Va.)



October 1, 2010 / 8:45 – 9:00 a.m.

Keynote Speech: Rebuilding America: Can Our Political System Deliver?

Columbia Hall 5 & 7, Washington Hilton

Featured speaker

  • Norman Anderson, CEO, CG/LA Infrastructure
  • Will Marshall, President, Progressive Policy Institute

fgh

October 1, 2010 / 9:00 – 10:30 a.m.

Panel: Retooling the American Economy for Jobs, Innovation, and Competitiveness

Columbia Hall 5 & 7, Washington Hilton

Moderator:

  • David Wessel, Economics Editor, Wall Street Journal

Panelists

  • Tom Friedman, New York Times Columnist, Pulitzer-Prize Winning Author
  • Jason Furman, Deputy Director, National Economic Council, White House
  • Roderick Bennett, Advisor to the General President of the Laborers’ International Union of North America
  • John Woolard, CEO, Brightsource Energy

fg


October 1, 2010 / 10:45 a.m. – 12:15 p.m.

Panel: Financing Future Growth: How Do We Pay For New Projects?

Columbia Hall 5 & 7, Washington Hilton

Moderator:

  • Will Marshall, President, Progressive Policy Institute

Panelists

  • U.S. Representative Rosa L. DeLauro (D-CT), Sponsor of National Infrastructure Development Bank Act of 2009 (H.R. 2521)
  • Chris Bertram, Assistant Secretary for Budget and Programs and C.F.O., U.S. Department of Transportation
  • Leo Hindery, Jr., Investor, Managing Partner of InterMedia Partners VII; former President and CEO of AT&T Broadband; former President, Tele-Communications, Inc. (TCI)
  • Ev Ehrlich, Economist, President of ESC Company; former Under Secretary of Commerce for Economic Affairs

To register for the North America Strategic Infrastructure Leadership Forum, click here.

Freight Railroads Throw a Switch on Obama’s Rail Plans

Posted on by The Progressive Policy Institute

A report in the Wall Street Journal that freight railroads are balking at sharing their tracks with high-speed passenger trains highlights a long-standing dispute that threatens to stall the progress of high-speed rail. It’s an issue that needs to be resolved, and resolved soon.

The railroads fear that the high-speed program will hamstring freight operations at the very time when freight traffic is undergoing a renaissance and track capacity on many mainlines is limited.

While some of the posturing by the railroads has bordered on “public-be-damned” insolence, the bottom line is that they are right. Fast passenger trains are not compatible with slow freight trains on the same track. They have different track dynamics, different acceleration and braking ratios, and different weight characteristics.

What’s more, even if freight trains were banished from some routes, the existing rail plant, with its sharp curves, meandering river routes and tight clearances, is incompatible with high-speed (more than 150 mph) train service.

As PPI pointed out last January, the reality is that if we are going to get serious about high-speed rail, we need new, dedicated lines. We can learn from elsewhere: High-speed lines developed overseas all require a self-contained right of way free from interfering traffic.

Yet only California and Florida have proposed construction of dedicated new lines that would allow true high speeds; the other 31 projects awarded federal stimulus money involve upgrades of existing rail infrastructure.

The freight railroads – which own 99 percent of America’s 140,000 miles of line – are mindful of a potential backlash if they walk away from “stakeholder agreements” negotiated with state transportation officials to facilitate federal stimulus spending. But public promises of cooperation that mask private bickering and lengthy delays are a poor way to get the administration’s ambitious rail program up and running.

Amtrak’s Troubled History

 

This clash should come as no surprise. We already know from 40 years of Amtrak that sharing lines does not work well. Freight railroad executives have complained that passenger trains disrupt operating practices, delay freight traffic, and present safety risks. And from Amtrak’s perspective, a government report found that poor performance by freight railroads, including sidelining passenger trains to let freight trains pass, was a major cause of late-arriving Amtrak trains.

A clash became almost inevitable last May when the Federal Railroad Administration (FRA) issued guidelines that included penalties for railways failing to meet performance standards dependent on improved speeds for future passenger traffic.

Freight rail executives were stunned by what they perceived as federal interference with their private property, according to transportation analyst Ken Orski. Although Secretary of Transportation Ray LaHood tried to paper over the uproar by saying the FRA would be flexible, the die was cast as rail executives reconsidered the worth of cooperating with Washington.

So far, friction between railroad and government has taken place mostly on the state level, where railroads are negotiating the stakeholder agreements with state transportation officials needed to release federal stimulus funds.

But slow progress on these agreements means that FRA has distributed just $597 million of $8 billion in stimulus funds awarded in January to jumpstart the high-speed program, the Journal reported. Even when states and freight railroads have signed agreements, disputes remain over the speeds at which future passenger trains will be allowed to run.

For the most part, the freight rail industry wants upgraded service at no more than 90 mph. That’s less than half the speed trains travel in Europe and China and only marginally faster than the present 79 mph limit.

Seeking a Solution

Surely there’s a better way to untangle this problem. One approach would be for the rail industry to come clean. Through the Association of American Railroads, the industry could announce its support of dedicated passenger lines as a better use of public investment and throw its lobbying clout to achieve that end in Congress.

What’s more, the industry could back up its words by offering capital to facilitate construction of at least a demonstration line. After all, the American railroad wasn’t built by faint-hearted entrepreneurs who followed existing rights of way, which in the 19th century were old Indian trails. It was built by those who lit out for the new territory.

Photo credit:  David Sherret

Schwarzenegger Takes the Asian Express

Posted on by The Progressive Policy Institute

With his own state government deep in the red, Schwarzenegger needs cash to build a $40-billion high-speed railroad between San Diego, Los Angeles, San Francisco and Sacramento. Instead of resigning himself to critics’ attacks that now is not the moment to spend money on rail, the governor went abroad to strengthen California’s ties with overseas train builders and bankers. At a time when folks in Washington are scratching their heads over how to pay for high-speed rail, the Governor’s trip offers an instructive way forward.

On the first leg of his journey, Schwarzenegger cut a deal with the Japan Bank for International Cooperation to loan California funds for the rail project. (The exact amount was not revealed.) In return, the governor dangled the prospect that California would choose Japanese trainsets and a Japanese operator to run the railroad.

With this understanding in hand, the ex-actor marched to Beijing and struck what may be a better deal with the Chinese Rail Ministry. The agency announced that it could offer California a “complete package,” including financing, to build the high-speed railway. “What other nations don’t have, we have,” bragged a ministry spokesman. “What they have, we have better.”

Then it was off to Korea, where the governor rode on Korea’s fastest train, the KTX, with Hyundai executives and met with President Lee Myung-bak. Afterwards, he offered the assessment that Korea and California would “be a terrific partnership” and asked his hosts to be sure to bid on the California project.

Schwarzenegger is on to an old idea. In the 19th century, European governments, as well as private investors, helped finance America’s railroads. Competition was often ferocious between the different syndicates, which kept overall costs down while enriching the Wall Street middlemen who set up the investment tranches.

Schwarzenegger’s strategy of letting experienced rail operators propose financial deals to California in return for potential entry into its market comes in sharp contrast to the approach in Washington.

Ever since it proposed a high-speed rail program in April 2009, the Obama administration has kept foreign rail builders at arm’s length and peddled the notion that American manufacturers can upscale their expertise and produce their own state-of-the-art train systems.

So far, no domestic company has even remotely stepped up to this task. Pullman-Standard, the last U.S. manufacturer to build rail passenger cars, exited the business 25 years ago. General Electric makes world-class locomotives, but these are freight locomotives unsuited for speeds above 90 mph.

Schwarzenegger realizes that having invested tens of billions of dollars in their high-speed-rail industry, governments in Asia and Europe are ready to fight for a chunk of his state’s $40-billion project. Jobs and manufacturing opportunities in California will flow naturally from the demands of the new service – as long as it gets started.

Right now, nobody in Washington seems to know how to pay for high-speed rail. A paralysis is taking shape as the federal debt grows, with no long-range funding set up. Maybe the “governator’s” shrewd negotiations with Asian officials this week will bring some fresh ideas to policymakers.

Photo credit: Hyundai

Voinovich Shows Leadership: Is There More to Come on Infrastructure?

Posted on by The Progressive Policy Institute

The good news out of Congress yesterday is that the Senate actually broke through the infamous 60-vote barrier to move forward on the small-business relief bill.  The bill itself is a good thing, and no doubt good news for small businesses struggling to thrive in this sideways economy.  For me, the even bigger story is the leadership shown by Senator Voinovich (R-OH) in breaking the logjam that the Republican leadership had planned for this bill, and for anything else President Obama hoped to pass before the elections.

This vote was not just a one-shot deal for Voinovich—it can be a potential game-changer for the president’s economic agenda this fall, especially if the administration is serious about acting on its proposal for long overdue investments in our infrastructure.

When he announced his vote last week, Voinovich set an important precedent by acknowledging that the country’s economic needs should be more important this year than short-term campaign strategies.  As he put it, “We don’t have time for messaging. . . . This country is really hurting.”

That’s a huge step in the right direction, because it means there is a faint glimmer for hope that Washington will not remain paralyzed during this extremely critical moment for our economy.  As Bernard Schwartz and David Rothkopf wrote in the Financial Times last week, the next few months will be a pivotal time for us as a nation, and the response from Washington (or lack thereof) may have a profound and long-lasting impact on our economy and the world:

The US faces not one but two economic crises. One is that the current slump could easily take a turn for the worse. The second is even more unsettling: a long-term competitiveness crisis that, if unaddressed, raises questions about the country’s ability to create jobs, attract investment and maintain its international leadership.

For both these reasons, it is critical that America’s political classes set aside partisanship and focus on taking concrete action now – even if it comes when such political courage (which is to say responsible leadership) is most difficult, in the last months of an election cycle.

All of the president’s ideas are solid ones with broad potential benefits. In our view, among these, an infrastructure bank is particularly promising and has been misunderstood in many of the initial responses. It is so central to what the US requires at present that voters and leaders in both parties need to examine it carefully and find a way to bring it to fruition.

Senator Voinovich has not only shown he can answer this call to set aside partisanship, he has also made a similar case for investing in infrastructure now, rightly arguing that the focus on short-term stimulus has “miss[ed] the forest for the trees.”  He’s riding a different horse than the president, advocating for a strong highway bill funded by an increase in the gas tax, rather than the president’s proposal for an infrastructure bank.  However, this is a difference on which the two men should work together to bridge the gap between them.  Given the opportunity to do something meaningful for the economy, there should be plenty of room for Obama and Voinovich to find a common ground.

Senator Voinovich has taken a brave first step toward bipartisanship for the sake of recovery.  Now it is President Obama’s turn.  The president has a lot of bad choices he can make in the coming weeks, and there are other moderate approaches to breaking the impasse on infrastructure spending after the elections.  But chances for leadership like this are fleeting, and he should take advantage of the opportunity Senator Voinovich has given him to make infrastructure investment more than just campaign rhetoric.

Photo credit: Respres

Another Stimulus Bill or a Down Payment on a Bold New Infrastructure Plan?

Posted on by The Progressive Policy Institute

Marking the beginning of an intensive pre-election campaign, President Obama unveiled what he called “a bold new vision to renew and expand America’s investment in transportation infrastructure” — a plan that combines a $50 billion up-front “down payment” on a long-term commitment to improve the nation’s roads, railways and airports, with proposed reform of the federal transportation program. The reforms, as summarized in a White House fact sheet released on September 6 and titled a “Plan to Renew and Expand America’s Roads, Railways and Runways,” mark a break with the past in several respects.

The plan would: (1) abolish modal “silos” by combining roads, transit, railways, airport development and the air traffic control system (NextGen) in a single consolidated transportation infrastructure investment plan; (2) integrate high-speed rail (HSR) into the surface transportation program thus ensuring a sustained commitment to a national HSR program over the next six years; (3) establish an Infrastructure Bank to fund investments of national and regional significance; (4) streamline the surface transportation program by consolidating the many different programs and use analytical measures of performance to identify and prioritize investments of critical importance to the nation’s economy.

As was to be expected, the announcement was greeted with a mixture of praise and skepticism. “A bold course to rebuild America’s infrastructure” said a press release from the Build America’s Future coalition which has been highly influential in shaping the administration’s proposal. Similarly, the Transportation for America (T4 America) coalition applauded the President’s initiative as promising to end “earmark-driven, unaccountable spending of the past.” Not surprisingly,  the proposal also elicited the endorsement of Rep. James Oberstar (D-MN) as “consistent” with his committee’s principles. Mr. Oberstar was reportedly consulted by the Administration in the development of the proposal.  However, many industry associations have remained silent, suggesting that they are ambivalent concerning the proposal.

And barely minutes after the White House released details of the plan, congressional Republicans pronounced the idea “dead on arrival.” Both Senate Republican leader Mitch McConnell (R-KY) and House Republican leader John Boehner dismissed Obama’s announcement as motivated by a desire to score political points. “A last-minute cobbled-together stimulus bill with more than $50 billion in new tax hikes will not reverse the complete lack of confidence Americans have in the Democrats ability to help this economy” commented McConnell. “More of the same failed ‘stimulus’ spending,” echoed Boehner.

Perhaps the strongest and most significant reaction came from Rep. John Mica (R-FL), ranking member of the House Transportation and Infrastructure Committee and the Committee’s future chairman should his party win control of the House in November. “I will not support another tax-and-spend proposal while billions of transportation and infrastructure funds sit idle” Mica said in a September 7 news release. “While proposing to spend more on infrastructure in another stimulus effort may sound like the Administration is doing something about jobs, in fact only 32 percent of the infrastructure funding approved 18 months ago in the first stimulus has been spent. Projects continue to be bogged down by bureaucracy and red tape,” he continued.  Mica’s views are bound to influence heavily uncommitted members of his committee as well as his colleagues in the the House at large.

Plenty of Unanswered Questions

The announcement has raised a host of questions, suggesting that the plan was put together hastily and without much forethought. For example, precisely how will the $50 billion be allocated among “roads, railways and runways” and how and by whom will these decisions be made? Moreover, while the sum of $50 billion sounds like big money, when it is spread out among different modes it will have a marginal impact and produce little change. The highway sector alone could absorb the entire amount and then some, according to an AASHTO press release issued in response to the President’s announcement (”States Stand Ready to Respond…with $80 Billion in Ready-to-Go Projects.”)

Also unclear is how the $50 billion “down payment” using general revenue is to be offset and how will the rest of the six-year program be funded without driving up the deficit? Should we assume that the initial $50 billion will be followed by similar general fund contributions in the out-years? The announcement states that the Administration will work with Congress “to fully pay for the plan” but is vague as to the source of funds other than mentioning the possibility of cutting existing subsidies to the oil and gas industries. Also left unanswered was the source of funding for the proposed Infrastructure Bank. Would it be funded out of the initial $50 billion or through an independent authorization?

Finally, is this primarily a political gesture or a launching of a genuine long-term infrastructure investment strategy? There have been conflicting signals. One Administration official stressed in a conference call with reporters that the infrastructure investment plan “is not a stimulus, an immediate jobs plan” but rather a front-loaded six-year investment strategy. But he was contradicted by the President himself who said in his Labor Day speech in Milwaukee that “This [plan] will not only create jobs immediately (emphasis added), it’s also going to make our economy hum over the long haul.”

A last intriguing question: if the $50 billion is indeed a down payment on a six-year investment strategy, can we assume that the Administration is planning to consolidate “roads, railways and runways” in a single multi-modal infrastructure program? (that would explain the ambivalence of the transportation industry.)

Legislative Prospects

The prospects of rapid congressional action on such an ambitious proposal are uncertain. Resistance among Republicans and certain Democrats to any additional government spending is growing stronger as the election approaches, in the face of the growing federal deficit and disappointing results from the original stimulus plan.

Administration officials declined to make predictions about the timing for the approval of the upfront investment or the full six-year plan. “Full authorization plans take quite a while and we’re mindful of that” commented one senior administration official. As Jeff Davis, editor of Transportation Weekly, points out, all previous Administrations have submitted full legislative proposals (which typically run into several hundred of pages) before Congress took up the reauthorization legislation. This would suggest that action on the long-term plan will be deferred to the new Congress, with the authorizing committees possibly having Republican majorities and headed by Republican chairmen.

And that could mean a brand new ball game.

This item is cross-posted at InfrastructureUSA

Photo credit: izahorsky’s photostream