Will Obama’s Plan for Fixing America’s Transportation Infrastructure Be Enough?

Robert Puentes
Robert Puentes Vice President and Director - Brookings Metro

September 9, 2010

President Obama’s plan for fixing America’s badly-worn transportation infrastructure is not, as some critics have asserted, simply throwing more taxpayer money down the rabbit hole.

In fact, if implemented correctly, it could not only help us make up for a lot of lost time re-building a critical component of our economy, make us more competitive in the global marketplace, and serve as economic “game-changer,” a fundamental re-orientation of how we structure long-range industrial policy.

Right now, most people are focused on jobs. U.S. unemployment rose to 9.6 percent in August, and for the construction industry, that figure is 17 percent, nearly double. What’s worse, those numbers may continue upward when the money from the first stimulus package runs out. In short, far too many Americans are not going back to work tomorrow.

Rebuilding our third-rate transportation infrastructure will also help us catch up with established competitors like Germany and up-and-coming players like China, Brazil, and India. Those nations are investing in their economies and their future competitiveness by putting money into modern ports, freight rail, and other infrastructure. Right now, there are serious question about whether U.S. infrastructure can deliver the level of service American businesses need.

Finally, there is the matter of practical policy. The latest extension of our nation’s transportation law runs out at the end of this year. In this toxic political environment, it may be impossible to get a renewal, which could force a shutdown of the program, as was the case earlier this year, and put thousands of existing jobs in jeopardy. Washington must show leadership now.

An effectively-designed infrastructure initiative can stabilize and strengthen our economy beyond the current crisis. Smart investments can generate productive, sustainable and inclusive growth. A strategy of “invest and reform” would ensure that infrastructure investments were driven by market logic, factual evidence, and performance rather than the greatest short-term political reward.

Does President Obama’s plan do all these things?

The good news–there are several key reforms that promise to change the way transportation infrastructure projects are funded and chosen on the federal, state, and metropolitan levels: A merit-driven National Infrastructure Bank could be the vehicle for green-lighting projects that have the highest return on investment, rather than the greatest political reward. Another round of projects that support bottom-up decision-making linking transportation, housing, energy, and environmental concerns. A program for transportation modeled after the Education Department’s Race-To-The-Top initiative that could instill meaningful reforms on the state level, where most decisions are made.

The investments in high-speed rail and next-generation air traffic control are important in that they begin to shift focus away from small-bore spending to the kind of transformational investments the federal government should be focusing on. Linking high speed rail to the rest of the transportation program will help us begin to think of these siloed investments as a holistic system.

Obviously, the big challenge is how to get this done. Effective transportation policy in the U.S. does not lack for good, practical ideas. It lacks funding, or, more accurately, it lacks interest in raising taxes to generate the funding. Most of what the president proposed is traditionally funded by the tax on gasoline. But as driving declines, and as more fuel-efficient cars mean we’re consuming less gas, there’s much less money overall.

President Obama has taken any gas tax increase off the table, proposing instead to repeal the domestic manufacturing deduction for oil and gas production. This may be enough to fund parts of the president’s plan, but it is short of the comprehensive package we need.

We need to hear more about what the administration’s priorities are for the long-term reauthorization of the transportation law. Again, there is no shortage of ideas. There’s a draft bill in the House, and likely to be one in the Senate. Three national commissions have weighed in on this.

We need to know how the program–largely the same framework used to build the interstates a couple of generations ago–will be updated to reflect the realities of 21st century metropolitan America.

Finally, we need a frank conversation about how we’re going to pay for all this, and then to exercise the will to do that. A jump start now is no good if we stall again down the road.