Putting the Cart Before the Horse (Newsweek)
Could a transportation-based jobs stimulus stymie infrastructure reform?
When the Interstate 35 bridge between Minneapolis and St. Paul collapsed nearly two and a half years ago, killing 13 people, the unsexy issue of infrastructure maintenance seemed ready to have its political moment. The nation’s crumbling road system needed an infusion of federal dollars and perhaps an overhaul of its troubled funding system, and here, it seemed, was the perfect political moment to fundamentally improve the way we get around. Fast forward to December 2009: a long-term transport bill is stalled on Capitol Hill, months after the expiration of the previous law. Meanwhile, lawmakers are working on a stimulus bill that would spend tens of billions of dollars on infrastructure but do little to remake a flawed financing and planning system.
That’s a missed opportunity, according to some observers, who are concerned that a stimulus, while better than nothing, would fall short of its potential by ignoring the issues that the surface transport bill aims to address. An inventory of “shovel-ready” projects released this week by the American Association of State Highway and Transportation Officials offered no specifics, raising concerns that money could go to adding miles of asphalt to the nation’s highway system while failing to address decaying roads and bridges like the one in Minnesota. More important, by spending money on immediate projects, the nation could miss out on opportunities for longer-term job creation.
On Tuesday, President Obama announced a job-creation bill that will fund transportation and communications infrastructure nationwide, taking over where the February stimulus bill left off. “We’re going to see even more work—and workers—on Recovery projects in the next six months than we saw in the last six months,” he said. The speech follows on work by House and Senate Democrats, who in recent weeks unveiled plans that would spend as much as $100 billion by funding infrastructure projects that are ready to begin work. Legislators hope to finish the jobs bill by early 2010, before Congress reauthorizes a revamped surface transport bill—the law by which Congress sets the gasoline tax and the formulas for where that revenue goes toward construction and maintenance of roads and mass transit. The previous transport law, known as Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, or SAFETEA-LU, has already been extended twice since expiring in September.
“For the last two years, there has been this drumbeat about reform,” says Robert Puentes, senior fellow at the Brookings Institution’s Metropolitan Policy Program. But now, he says, frantic efforts to deal with 10.2 percent unemployment have stopped the momentum. “There’s a frustration that we don’t have to have these conversations separately. We don’t have to have the reform conversation on one side and have to put that away for a conversation about reducing Americans’ unemployment rate, but unfortunately they have been separate.”
Infrastructure projects create lots of jobs because dollars go to manufacturers of equipment and supplies in addition to construction workers. But once big highway projects, long the mainstay of federal transportation spending, are built, the work is over. That’s true of maintenance, too, but it’s less capital intensive—when a project is repairing rather than starting from zero, there is a greater proportion of spending dedicated to wages. When states and cities invest in light-rail systems or expanded bus service, it encourages permanent economic growth by creating access to jobs and services. “Someone’s got to drive the bus or drive the train, and those jobs tend to be pretty good—they’re heavily unionized and have good benefits,” says Ethan Pollack, a policy analyst at the Economic Policy Institute.
Fixing roads and prioritizing mass transit is also more environmentally sustainable than building new highways. Mass transit and existing roads serve denser, older communities, while new roads tend to encourage suburban sprawl and more car traffic. Transportation accounts for 29 percent of American greenhouse-gas emissions, according to the Environmental Protection Agency.
The people who stand to receive the infusions of cash—construction contractors—have reservations, too. As they see it, any quick stimulus would be too short term to provide enough stability to the battered construction industry. “Shovel-ready projects are essential because they’re quick and effective, but what we’re seeing is that contractors are saying they’re not going to hire or buy equipment next year because states are not able to make long-term funding decisions,” says Jeff Solsby, spokesman for the American Road and Transportation Builders Association, an industry group. Solsby points to a November survey by the Transportation Construction Coalition that found that although almost 70 percent of respondents had received funding in the first stimulus, passed in February, 63 percent had to lay off permanent employees, and just 5 percent expected to add new employees. The coalition launched an advertising campaign, timed to coincide with Obama’s jobs summit Dec. 3, that calls for the reauthorization of SAFETEA-LU.
The worry is that by pumping large sums into infrastructure this spring, Congress might kill any appetite for a meaningful overhaul of surface transportation funding any time soon. “We’re very concerned about that,” says James Corless, director of Transportation for America, a coalition calling for a more environmentally and financially sustainable transit system. “We worry greatly that putting tens of billions of dollars into these existing stovepipes is not going to have the intended outcome: not just to create jobs but to put us on the pathway to a more sustainable 21st-century infrastructure.”
Progress on transit reauthorization is now stalled by disagreements between the different players in Washington. Rep. Jim Oberstar, a Minnesota Democrat and head of the House Transportation and Infrastructure Committee, favors a multiyear extension, while the White House and Department of Transportation are pushing for an 18-month patch before delving into the bill. Senate leaders had backed the White House, but recently came out in favor of a six-month extension. Oberstar says he’s willing to back a jobs stimulus now to prevent job loss but wants the bill to be accompanied by “a good faith, sincere agreement that [the Senate] would make specific steps within a specific framework” to renew SAFETEA-LU.
Even if Oberstar were able to extract such a promise, lawmakers would have to find a way to pay for the reauthorization. Despite widespread bailout fatigue and mounting concern about deficits, a jobs stimulus seems to have support because it’s targeted more directly at unemployed Americans. To sweeten the deal, key Democrats—including Sen. Barbara Boxer of California and Rep. Earl Blumenauer of Oregon—have called for the bill to be funded with repaid or unspent TARP (Troubled Asset Relief Program) funds. Rep. Peter DeFazio, who heads the House Subcommittee on Highways and Transit, lashed out at top White House economic advisers Larry Summers and Tim Geithner last month for opposing moving TARP funds to transportation projects. Beyond its support for a SAFETEA-LU extension, the administration has said little on the issue, but it appears to be in the driver’s seat on policy now—the Department of Transportation referred questions there. Blumenauer says he understands that the White House and Senate are dealing with many difficult issues, but he would still like to see some muscle behind SAFETEA-LU. “If the administration wanted to weigh in tomorrow, [then] in two to four weeks it’s good to go,” he says.
Meanwhile, jobs continue to slowly bleed out of the economy, raising the question of whether the stimulus should focus on simply keeping current jobs through supporting transit-system-operating funds rather than trying to create temporary new ones. At a hearing before Oberstar’s committee, Beverly Scott, the CEO of the Metropolitan Atlanta Rapid Transit Authority, told lawmakers that she might be forced to cut jobs, despite federal money pouring into her coffers, because the dollars were earmarked for capital, not for operations. As a result she had to let drivers go, even as ridership soared. The continued delays frustrate prospective employers. “They’ve known for five years that this deadline was coming” says Solsby. “The problem is entirely of Congress’s own making.”
By David A. Graham | Newsweek Web Exclusive
Dec 9, 2009