NIB Strikes Back
This past Colombus Day, President Obama broached the idea of an NIB (National Infrastructure Bank) again.
What’s interesting is that, in addition to the typical framing of the issue in terms of sustainability, green investment, and smart growth, the announcement came out first with an economic reasoning behind increasing infrastructure expenditures.
And these reports confirm what any American can already tell you: our infrastructure is woefully inefficient and it is outdated. For years, we have deferred tough decisions, and today, our aging system of highways and byways, air routes and rail lines hinder our economic growth. Today, the average American household is forced to spend more on transportation each year than food. Our roads, clogged with traffic, cost us $80 billion a year in lost productivity and wasted fuel. Our airports, choked with passengers, cost nearly $10 billion a year in productivity losses from flight delays. And in some cases, our crumbling infrastructure costs American lives. It should not take another collapsing bridge or failing levee to shock us into action.
While part of this may be an attempt to frame government spending in a positive light prior to the midterm elections, this language may also symbolize a greater effort to establish an NIB. Obama then proceeded to remark that any NIB would be paid for and not increase the deficit.
Yonah Freemark of TransportPolitic isn’t so sure:
The problem is that despite all the hoopla over the President’s new transportation agenda, he has yet to promote a sustainable funding plan for the investments that he has claimed will “pay for themselves” somehow without requiring the increase of any taxes. It’s a fantasy.
There is no secret plan being developed by the Administration: It is clear that the first $50 billion, if approved, would come from general revenues and once again be used simply to shore up the transportation program to ensure that the states are able to continue their work on essential roads and transit projects. Mr. Obama’s appeal to the public about the importance of transportation is undoubtedly actually a plea to members of the House and Senate, who he wants to take the fall and propose tax increases to pay for the project.
The issue’s come up a few times before, and each time Freeman hasn’t been entirely clear on how it’s going to be funded.
The Brookings Institute is also a little murky on the matter, though they have their own suggestions:
- One is looming conversation about the federal debt. The President’s National Commission on Fiscal Responsibility and Reform (the deficit commission) and the Bipartisan Policy Center’s Debt Reduction Task Force will both release their reports in the coming weeks. A gasoline tax increase that would partly fund deficit reduction (as it has in the past) and partly fund the transportation program may be part of those recommendations.
- Another is the debate over the Bush tax cuts, which are slated to expire on December 31. That would be the opportunity to repeal the domestic manufacturing deduction for oil and gas production. Such a repeal may be enough to only fund parts of the president’s plan – say, $5 billion per year – but that could be used, for example, to capitalize the national infrastructure bank.
- And then there’s the transportation legislation itself. The current law, known as SAFETEA-LU, was slated to expire on September 30, 2009. To avoid a shutdown of the program Congress has extended the law five times, most recently through to the end of this year. Few doubt that there will be a “clean” extension that merely continues the current program as is. But with stimulus dollars running out and 37 “governors elect” in cut cut cut mode, Congress can step up and use the extension as a way to address the anticipated shortfall.
So there are funding opportunities available, they may just have to be framed differently than simply funding a NIB. Infrastructure investments aren’t just building a rail line, they’re also a means of employing people and spurring industry into action. Upgrading existing infrastructure and constructing new systems would help employ one of the hardest hit sectors of the economy and be a start on the trillions of dollars that the American Society of Civil Engineers says are needed to bring U.S infrastructure up to par.