Obama Wants to Spend Big On Transportation Now

While most of us enjoyed Labor Day as a rare Monday at home from work, President Obama was in Milwaukee and interrupted our barbecues with, of all things, a speech on transportation! He proposed an ambitious $50 billion infrastructure spending plan he argues “his will not only create jobs immediately, it’s also going to make our economy hum over the long haul.”

If you missed the speech you can read it, though it is a typical political speech–lots of campaign style rhetoric and few details–and the White House “Fact Sheet” doesn’t flesh things out much. But Politico did a good and thorough summary of the President’s proposal, and the Wall Street Journal hit the high points.

I’d summarize his proposal as short run spending of $50 billion on “roads, rail, and runways,” while creating an infrastructure bank to help fund projects and putting high speed rail on a par with highways to get federal funding.

One good thing about this speech is it is the first time I know of that President Obama has seriously addressed transportation. For him to acknowledge the problems of the current system, especially crumbling roads and an outdated air traffic control system should bring some much needed attention to those problems.

We are still left wondering about a lot of details, and hoping the White House gets more specific soon. For example, where is the $50 billion coming from? The plan does not address that. Is this a proposal to spend current federal fuel taxes in a new way? Or to spend new money? If the latter, then are we talking about more deficit spending? Which raises the question of where Congress is on this proposal. They have been pretty uninterested in working on a transportation bill, on more stimulus, or more deficit spending, so it is hard to see them being receptive to Pres. Obama’s plan.

And then there is the infrastructure bank. Is that converting some existing funding into a revolving loan fund? Or a means of loaning out general funds for transportation projects? Or what? “Infrastructure bank” is a very broad term and how it works determines whether it is a good idea or not.

Another thing that bothers me about the plan is why federal funding for so many state and local projects? Local roads, state highways, and local transit project do not provide national benefits in most cases, so why pump federal money into them, when they should be funded locally. Indeed Bob and I have laid out in some detail why we think the federal government should narrow the focus of its transportation spending and that most unmet transportation needs are state and local problems.

So what is going to determine where this $50 billion goes? Oh, yeah, Pres. Obama is quite clear this is all about jobs. So the money will go where politicians say it will create jobs, not where the transportation needs are greatest, or where the projects with the highest value to mobility and economy are. As our 19th Annual Highway Report makes clear, while road conditions overall have improved in recent years, there is a big disparity between the best and worst states–some are doing a far better job with transportation spending than are others. But if the feds dole out $50 billion in order to create jobs, there is nothing in the White House plan to indicate they will favor giving money to the more efficient states. In fact, the less efficient states have more “need” so may well get more of the funding!

Finally, putting high-speed rail on a par with highways for federal transportation funds is an incredibly bad idea. Pres. Obama is proposing a dramatic shift to disinvest in the system that currently carries the vast majority of travel–our highways–to increase investment in a system they hope people will be willing to change their lifestyles in order to use. The U.S. does not have a large number of existing train riders and corridors of multiple dense cities, but does have decent auto and air mobility. The opposite of all that is true in the places where high-speed rail has seen some degree of success. It is just very unlikely to work here and investing money in high speed rail will not be remotely as beneficial as improving the existing transportation system that people already use.

So, while there is not much substance to Pres. Obama’s transportation proposal, what is there is not very encouraging.