Recent game changing events — notably, the Massachusetts election depriving the Senate Democrats of a filibuster-proof 60-vote majority, and the projected record breaking $1.6 trillion deficit in the FY 2011 budget proposal — have introduced serious uncertainties into the President’s domestic agenda. The federal surface transportation program is no exception.
Even though this program traditionally has enjoyed bipartisan support it, too, is being buffeted by the shifting political winds. What follows is an assessment of the status and prospects of four legislative initiatives that bear directly on the future of the federal transportation program.
The National Infrastructure Bank
The National Infrastructure Bank (NIB) has been receiving a lot of attention lately. It was the subject of a January 20 press conference sponsored by the Building America’s Future coalition. It was endorsed in a Wall Street Journal op-ed by three members of the president’s Economic Recovery Advisory Board. And it was discussed by a panel of experts at a January 25 seminar on "Financing Public Works in Turbulent Times" sponsored by New York University. Responding to the multiple pleas, the White House included a modest $4 billion for the bank in its FY2011 budget request.
The press conference featured a group of prominent long-time NIB advocates — Pennsylvania Gov. Ed Rendell, Senator Chris Dodd (D-CT), Rep. Rosa DeLauro (D-CT), former House Majority Leader Dick Gephardt and Ambassador Felix Rohatyn. Representatives of some 20 interest groups and trade associations provided a supporting cast. The speakers spoke eloquently about the need for greater infrastructure investment in America and how the National Infrastructure Bank could effectively serve that purpose. The Bank, they said, would fulfill three policy objectives: finance projects of regional and national importance, and create jobs and long-term economic growth. It also would serve as a vehicle for making better resource allocation decisions — based on merit rather than on pork barrel politics.
The press conference failed to do, however, was to clarify some of the questions posed by critics of the NIB concept. Reason’s Robert has noted that if the NIB were set up “as a genuine bank, operated on commercial principles“, it would not able to fund a broad range of public infrastructure projects, some of which, such as schools, public housing and mass transit facilities which do not generate a revenue stream that could be used to repay the bank loans. Hence, the NIB would require periodic federal appropriations to cover grants for non-revenue producing projects. In that sense, it might turn out to be more like a foundation than a bank.
There is little likelihood that Congress would be willing to turn the power of decision over large-scale capital projects to a new bureaucratic organization lodged in the Executive Branch. Many lawmakers, including the powerful chairman of the Senate Finance Committee, Sen. Max Baucus (D-MT), believe that Congress must not abdicate its authority over the spending of public capital. As one Senate aide remarked, one cannot "depoliticize" the project selection process, as NIB advocates would urge, because major public infrastructure investment decisions are inherently and fundamentally political in nature.
The High Speed Rail Program
The White House decision (announced on January 28) allocates the $8 billion in high-speed rail grants authorized in the Recovery Act to a total of 30 separate projects in 13 different rail corridors. Principal beneficiaries are the California High-Speed Rail Authority ($2.25 billion), the Florida Rail Enterprise and its 84-mile Tampa-Orlando high-speed line ($1.25 billion) and the Chicago-St. Louis rail corridor ($1.10 billion). The remainder of the money is spread around in amounts ranging from half a billion to as little as a few million dollars among 26 rail improvement projects in 31 states.
Generally, high-speed rail advocates have been disappointed by the Administration’s selections because few of the projects offer the promise of true high-speed service — even the Florida project is not expected to attain European-like average high speeds. In contrast, the Administration’s decision to fund upgrades of rail infrastructure in as many as 13 different rail corridors makes good sense both in terms of politics and cost-effectiveness.
True "high speed" service (as that term is used in Europe and the Far East, i.e. top speeds of 150 mph and higher) would require separating freight and passenger traffic. It would require building entirely new rail infrastructure in dedicated rights-of-way — something that is clearly not within the scope of a $8 billion program. The final price tag for California’s complete high-speed rail system could reach $60 to $80 billion and a recent Government Accountability Office report cites a range of construction costs for high-speed rail between $22 million/mile to $132 million/mile. From that perspective, the $8 billion looks like a drop in the bucket.
In the meantime, with railroads expected to assume an ever growing share of intercity freight transport, upgrading infrastructure in existing rail corridors has become an urgent necessity. Since nearly all of Amtrak’s passenger trains run on rail lines owned by freight railroads, such improvements will also benefit passenger traffic. In most corridors, track and signaling upgrades on existing shared passenger/freight lines would permit raising speeds from today’s 60-80 mph to (0-100 mph, according to railroad experts.
To be sure, a strong case can be made that true high-speed rail service will eventually be necessary between major city-pairs separated by less than 300 miles to relieve unacceptable levels of highway and air traffic congestion. But building a national network of dedicated high-speed rail lines from scratch will require decades of a sustained national commitment, spanning many administrations. There is no assurance that future presidents and future Congresses will share President Obama’s and Transportation Secretary LaHood’s enthusiasm for high-speed rail.
Climate change legislation
Chances of enacting tough greenhouse gas (GHG) emission reductions during this session of congress are remote. Senator Byron L. Dorgan (D-ND), Chairman of the Senate Energy Appropriations Subcommittee, has made it clear that a cap-and-trade bill, such as the giant House-passed Waxman-Markey bill, is "probably dead on arrival." The prospects for a Senate compromise bill authored by Sens. John Kerry (D-MA), Joseph Lieberman (I-CT) and Lindsey Graham (R-SC) are also dubious at best.
There are many factors that have contributed to the fading prospects for climate change legislation including disappointment over the inability of the Copenhagen Summit to reach a binding agreement to reduce carbon emissions. The revelations of ClimateGate, casting doubts on the integrity of some climate scientists’ objectivity as well as more recent disclosures about false claims of melting Himalayan glaciers have undermined the credibility of the UN Intergovernmental Panel on Climate Change (IPCC). Add to this the opposition of 14 Senate Democrats from coal-dependent states who fear that a cap on GHG emissions would raise energy costs and utility rates and growing public skepticism about the “consensus” over global warming and the future for any strong legislation seems murky. Indeed when the President in his the State of the Union address mentioned "the overwhelming scientific evidence" about global warming, it provoked muffled but clearly audible laughter among the assembled lawmakers.
With the hopes of enacting a comprehensive cap-and-trade bill fading, attention is turning to energy initiatives that could launch the nation on the road to energy self-sufficiency and greener energy sources. Those prospects have brightened considerably since President Obama spoke of "building a new generation of safe, clean nuclear power plants" and "opening new offshore areas for oil and gas development" during his State of the Union address. However, the prospects for a more sweeping energy bill during this session of Congress remain in doubt.
The Surface Transportation Reauthorization
Finally, what of the oft-delayed multi-year surface transportation authorization? The responsibility for enacting this measure will very likely fall upon the shoulders of the next Congress. In the meantime, during the remainder of this year, the U.S. Department of Transportation may be expected to continue its series of "listening sessions" on how to reform the program and develop a vision that would merit broad stakeholder and congressional support. The Senate, for its part, is expected to launch its own process of legislative development. Sen. Barbara Boxer, Chairman of the Environment and Public Works Committee, has announced that her committee will begin drafting a multi-year authorization bill in March and will hold hearings later this year.
Finding the revenue to support an ambitious multi-year bill will remain the overarching challenge facing reauthorization drafters in 2011. That new Congress may well be more tax-averse; the state of the economy and the price of oil will determine whether a hefty increase in the price of gas will be feasible. Until the question of funding is resolved, the transportation community will continue to live in a state of uncertainty, improvisation and a limited ability to plan ahead.
Ken Orski has worked professionally in the field of transportation for over 30 years and is publisher of Innovation Briefs