Sen. Kerry on Transportation Funding: “We’re in a Crazy Place Right Now”

As the House and Senate get closer to unveiling their respective transportation proposals, it’s crunch time for figuring out how to pay for infrastructure investment moving forward. Senator Max Baucus (D-MT), who has let slip that he’s in favor of a two-year reauthorization because of current funding constraints, chaired a hearing in the Finance Committee today to examine options for financing. No one panacea emerged, and conservatives on the committee and among the witnesses quickly countered most of the suggestions raised.

Sen. John Kerry is at the end of his rope with all this budget-cutting. Photo: ##http://www.zimbio.com/pictures/OTnXCbPttBd/Senate+Holds+Hearing+Afghanistan+Al+Qaeda/qi0Yut0CODM/John+Kerry##Chip Somodevilla/Getty Images North America##

Top committee Republican Orrin Hatch of Utah said the president’s push for infrastructure building is just a “Carter-era message of tax-and-spend” that’s been re-branded and spun to be “more palatable to the American people.”

“What used to be called raising taxes is now called shared sacrifice,” Hatch said. “And what used to be called government spending has now been dubbed investments.”

Former Pennsylvania Gov. Ed Rendell took Hatch to task for that. “I respectfully disagree, and I think the American people disagree that spending on infrastructure is not investment,” he said. “They see it as investment; they see it as worthwhile; they see it as providing value to them; they see it as improving the quality of their life, their safety, and our nation’s economic competiveness.”

He sees new construction as a potential jobs program for troops returning from Iraq and Afghanistan, saying infrastructure investment should be looked at as a “new GI bill” to put those vets back to work here. He suggested using money saved by drawing down military efforts in those countries to rebuild this one.

Rendell’s words were a good antidote to Gabriel Roth, a conservative transportation economist from the Independent Institute, whose entire testimony was devoted to the proposition that the federal government shouldn’t be financing any infrastructure whatsoever outside of the revenues of the Highway Trust Fund. “Matters ought to be handled by the smallest, lowest, or least centralized competent authority,” he asserted.

Roth said federal funding leads to a variety of ills: it forces road users to pay for non-road projects, for one. It increases highway costs because those damn feds won’t let states pay slave wages on public works projects. Plus, he said, the federal government favors some states over others, and its money comes with strings attached (like speed limits).

Rendell disagreed. “I think the federal government should, as is done in every other developed nation in the world, have a significant role in infrastructure spending,” he said, adding that the private sector won’t finance projects that aren’t profitable and federal authority is needed for many projects that cross state lines. As for how to pay for them, Rendell had an endless supply of ideas. First and foremost was a change in the way the nation budgets for infrastructure:

We should have a federal capital budget. It’s nuts! There is no corporation in America that doesn’t separate operating and capital costs, and there is no other political subdivision in America – every city, every state, every county – has a capital budget. Building a bridge which has a 40 or 50 year lifespan shouldn’t be paid for like paperclips that have a 40 or 50 day lifespan.

He was pessimistic that Congress would heed his call, however, so he moved on to more low-hanging fruit. He wanted more flexibility for states to toll roads to pay for maintenance, which the federal government currently prohibits. He wanted Congress to take steps to “unleash the private sector.” He wanted Build America Bonds or Transportation and Regional Infrastructure Bonds (as they might be renamed) to help pay for infrastructure projects. He asked Congress to quintuple the TIFIA loan program, which he said should have a CBO score of zero or better since the program actually earns a little bit of money for the government. He wants an infrastructure bank that would find a way to finance projects of national and regional significance.

Roth said an infrastructure bank makes sense but it could be completely private like any other commercial bank. He even recommended Ed Rendell as the man to run it.

Rendell said he never aspired to be a banker, and a public bank will help keep the cost of building infrastructure down, as it will charge far lower interest rates than the private sector would. Roth, meanwhile, expressed his concern that a national infrastructure bank could actually reduce the amount of private involvement because high demand would lead to delays. Plus, he said, the bank would be run by politicians who wouldn’t just be looking for good projects, but they’d have to be fair. He predicted litigation over the rural set-aside in Senator Kerry’s infrastructure bank bill – after all, who’s to decide what’s rural?

Indeed, many have criticized proposals, like the president’s and the Rockefeller/Lautenberg bill, which would create an I-bank within the walls of the Department of Transportation. John Kerry spoke at today’s committee hearing about the need to create an independent bank. It’ll be “privately run by bankers,” he said. “All we do is charter it. It won’t even issue stock. It’s not for profit – unlike Fannie Mae and Freddie Mac – completely different. And $10 billion can leverage maybe $650 billion of private sector investment that comes in to help build America.”

Kerry, normally stiff and professorial (as you may recall from his 2004 presidential campaign), spoke with uncharacteristic passion and candor. “We’re not going to build anything in America right now,” he said. “We’re not building. We’re falling behind almost every other country in the world… There aren’t great building projects in America right now, not many of them.”

Kerry’s frustration was apparent:

Nobody on that side of the aisle will vote for any increase in revenue, no matter where it might come from, apparently. So what are we going to build? Are we going to keep cutting everything? Then Americans are going to turn around and say, why doesn’t this work, why doesn’t my school work, why can’t we fill the potholes? I mean it’s just crazy, honestly. It really is crazy. We’re in a crazy place right now.

Predictably, conservatives went after the non-highway spending in the Highway Trust Fund. Oklahoma Republican Tom Coburn even baited Gov. Rendell into the game by saying, “When you look at the last significant funding bill for the Highway Trust Fund, fully almost a third of that didn’t go to build highways, bridges or mass transit.” (I’ve asked his office to explain that assertion. I’ll let you know if I get a response.) Rendell gave in on that score.

Coburn specifically asked, “Do you think it’s wise that we take and wall off 10 percent* of all the Highway Trust Fund money that has to be spent on enhancements when you have 5,500 bridges [in Pennsylvania] that are in disrepair? And Oklahoma has close to 8,000? Do you think it’s wise that we make things beautiful or we make things safe?”

Rendell: “That’s an area where I would leave it to the states to decide, absolutely.”

Coburn: “So you would agree that we rescind this mandate and let the states decide – and if they want to spend it on beautification and enhancement, they can.”

Rendell: “The mandate, yes.”

Sen. Ben Cardin (D-MD), always a staunch defender of transit and active transportation, jumped in with some necessary relief from all the bashing of transportation options. He got Sen. Hatch to agree that transit is “critically important to this country” and that it saves money, even highway money.

* Again, some fuzzy math here. Transportation enhancements (which fund multi-use trails that people use to get to work – not just “beautification” projects) make up 10 percent of the surface transportation program, which is less than a quarter of the entire federal aid highway program. Enhancements actually make up about two percent of all federal highway aid.

  • Clutch J

    Great report!

     

  • Keith Laughlin

    If Gov. Rendell is going to join Sen. Coburn in support of a “let the states decide” policy that would eliminate federal bike/ped investment in many — if not most — places, maybe it’s time for bike/ped advocates to get creative in promoting our own “let the states decide” policy. For example, we could join up with the Tea Party folks to support the repeal of the current 18.4 cents per gallon federal gasoline tax. Then we could “let the states decide” if they want to replace that revenue with an increase in their own state gasoline taxes.

    I strongly doubt that the highway lobby alone could get such state gas tax increases approved. The product line they’re selling no longer has any appeal to the public. While the support of bike/ped/transit/rail advocates would not ensure the success of efforts to increase state gas taxes, their opposition would make it impossible.

    And what would be the price for bike/ped support for increasing state gasoline taxes? Let’s say that it would be far more than the 1.5 cents per dollar we currently receive from the “mandate” that Sen. Coburn is ranting about. Dedicating a full 10 percent of surface transportation investments to trails, biking and walking sounds like an appropriate and reasonable amount.

    Some bike/ped advocates might consider this “let the states decide” proposal radically irresponsible. After all, we could be putting the entire federal surface transportation program at risk. But when you consider the fact that Sen. Coburn and his party are currently putting the entire US economy at risk over the debt limit increase, this idea is relatively harmless. And if Congress is moving toward a highways-only transportation bill that could best be described as “Drive! Baby, Drive!,” then maybe bike/ped advocates should at least consider adopting some of the nihilistic legislative strategies that are in vogue in Washington today.

  • Jeff

    This $650 billion number is a complete  fantasy.

  • George Viking

    I’m fed up with our leaders in D.C. acting like utter cowards.  It’s time to buck-up America and pay a 10 cent across the board gas tax increase.  Otherwise, we’ll slip into Third-World country status regarding transportation infrastrucutre over the next 20 years.  Do we want to look like Costa Rica?  Mexico?  Poland?  We’re on our way! 

  • Xxxxxx

    SLC city has many gleaming highways recently rebuilt using Federal funds. Hatch is a lying hypocrite. 

  •  Poland will have better infrastructure than us very soon.

  • Nice report Tanya! 
    Just a few years back the Army Core of Engineers gave America’s infrastructure a D. It has not been looked after, bridges are falling (as we saw in Minnesota) and there are upgrades needed across the country. Funding those projects will create jobs now and help the economy in the future.  

  • Ian Dutton

    Volunteering for Sen. Kerry’s re-election in 1990 (I think it was ’90), he sat with a couple of us young volunteers and talked about sustainability and transportation. He lamented that Europe had it right and that if it was up to him, he’d add $1 to every gallon of gas to discourage motor vehicle use and pay for transit. And he said that that would be the end of his political career. Americans get what they vote for. 

  • Marcotico

    I really despise Gabriel Roth.  His big argument against CAFE standards is that it leads to lighter cars, which of course are death traps. I call this the arms race theory of SUV size.  The reasoning goes I need an Escalade to keep little Johnny and Suzie safe, forget the other family that I plow into!

  • People are using high costs an excuse to have the government stop funding transit. If costs were low, they’d instead say that roads are cheap and the government should build more of them. The general reality, both on the matter of transit vs. roads and on the matter of which transit to build, is that high costs affect all modes equally.

  • MMarkosky

    The Democrats has painted themselves (and all of us) into this corner. They pushed for an 800 billion dollar stimulus bill on the premise that it was for “infrastructure”. Politicians stood on deteriorating bridges urging that the public support quick passage of the bill. It ended up that about 3% of that bill went to infrastructure, the rest…?  The public’s had it…

  • Urbanist1100

    “Oklahoma Republican Tom Coburn even baited Gov. Rendell into the game by saying, “When you look at the last significant funding bill for the Highway Trust Fund, fully almost a third of that didn’t go to build highways, bridges or mass transit.””The only way you get to this number is by counting ENGINEERING as a distraction from construction! Hey, let’s just build stuff quickly – if it falls down, we can always rebuild later.

  • ron s

    we got to figure out how to put up millions of new signs each year..and 30 lights for each stop light…even on the wrong side of the road that gives you the green to go the wrong way..i have them put up multiple new signs in the same spot in one year…..the biggest money wasters on the planet

  • ron s

    outsourcing has cost us trillions in taxes that should be here, not in another country

ALSO ON STREETSBLOG

Jay Rockefeller to Retire From Senate in 2015

|
Sen. Jay Rockefeller is expected to announce later today that he won’t run for re-election in 2014. The West Virginia Democrat will have served 30 years in the Senate. He chairs the Senate Commerce Committee, one of the four Senate committees – though probably the least of the four – that crafts the surface transportation […]

Kerry, Hutchison, and Warner Introduce New Infrastructure Bank Bill

|
Sen. John Kerry (D-MA), along with Sen. Kay Bailey Hutchison (R-TX) and Sen. Mark Warner (D-VA) just announced that they’re introducing the BUILD Act today, which would create a national infrastructure bank. They’re proposing to start the bank with $10 billion of seed money that would leverage hundreds of billions of dollars, according to their […]