Monthly Archives: October 2010
The three co-chairs of Building America’s Future — CA Governor Schwarzenegger, PA Governor Rendell, and New York City Mayor Bloomberg — published their thoughts on improving our nation’s infrastructure in the most recent Politico. The three leaders commented on the newly-released report by the Treasury Department and Council of Economic Advisers on the economic benefits of transportation investments.
Whenever we travel to other nations to promote U.S. industry and enterprise – like Gov. Schwarzenegger’s recent trip to Asia – we see the tremendous progress being made overseas. We worry that our nation could fall behind the rest of the world if we don’t start doing more to invest in our future.
We owe it to our children – and our country – to build infrastructure that could allow us to remain the world’s economic superpower in the 21st century. Equally important, large infrastructure projects would put many Americans to work during this time of high unemployment.
The post ends with an urging to continue with discussions around a National Infrastructure Bank (NIB), which was the focus of yesterday’s Crossroads post. The NIB would provide the necessary dedicated funding for our country’s infrastructure (and would provide the means to fund new, much needed public transit projects — such as high-speed rail).
To learn more about how federal transportation policy affects local regions such as the Lehigh Valley, visit our Sustainable Transportation Initiative web page.
New York Times spotlights high-speed rail (HSR) in their most recent Room for Debate section — and Rob Puentes gives a very thoughtful answer in his response. (Some of you may remember that Puentes was the keynote speaker at RenewLV’s Regional Rail forum back in 2007. That’s right — we get all the rock stars to our events.)
Puentes stresses that federal funds should go to specific transportation investments —
What is different is that this is not a legacy program that has languished in the bureaucratic halls of the federal transportation department or one that is earmarked to death by Congress. Rather these funds are awarded on a competitive basis. With the support of their governors, states send in requests for the grants and those applications are evaluated based on quantitative metrics including economic, social, and sustainability benefits.
Projects also have to be far enough along in their development, take advantage of innovative technology, and promote a range of public and private partnerships. This is nothing short of a sea change for how Washington thinks about infrastructure investments.
This has been an important part of actually getting many of these projects up and running and spending the funds as quickly as possible. Efficiency is the key, especially for the stimulus funds.
Now it will be important to see if the federal government could dedicate some funding toward planning for new transportation projects. Say for the third largest metro area in PA? Yes.
For more information on RenewLV’s work on transportation and rail, visit our Sustainable Transportation Initiative page.
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.
Well, maybe not the ENTIRE key, but surely some solutions to our energy and transportation needs will come out of Silicon Valley in the next decade. Many entrepreneurs are flocking to the region seeking funding from venture capital companies. NPR reports:
“We think EVs [electric vehicles] offer so many advantages in terms of environment, economy and security that we thought we should put some of our investor dollars into those kinds of companies,” says Dan Reicher, the director of Google’s climate change and energy initiatives.
Google has EV charging docks on its sprawling campus in Mountain View, Calif.
“We’ve built a fleet of plug-in cars,” Reicher says. “These are Toyota Priuses and we converted them after market.”
Google has essentially turned the hybrid Prius into a plug-in so that employees can charge their cars at work. It’s this kind of garage-startup mentality that has given Silicon Valley its innovator reputation.
Sustainable transportation and energy solutions should bring an entirely new economy to the United States, one that will allow the nation to compete better in the global economy. Maybe we can bring some of this to the Lehigh Valley.
Last week’s news that New Jersey Governor Chris Christie was killing the ARC Tunnel rail project made the sustainable transportation blogosphere collectively boo and hiss — so much that US Transportation Secretary Ray LaHood hopped on the next train to Trenton to meet with the Guv. Sec. LaHood was quoted in the Record on October 8th:
“Governor Christie and I had a good discussion this afternoon, during which I presented a number of options for continuing the ARC tunnel project,” LaHood said in a statement issued after that meeting.
“We agreed to put together a small working group from the U.S. Department of Transportation and the office of NJ Transit Executive Director Jim Weinstein that will review these options and provide a report to Governor Christie within two weeks.”
If you live in New Jersey, I urge you to contact the Governor and let him know that this project is a much-needed connection.
Sure enough, NJ Governor Christie canceled the ARC project yesterday and economist Paul Krugman has some strong thoughts on this:
It was a destructive and incredibly foolish decision on multiple levels. But it shouldn’t have been all that surprising. We are no longer the nation that used to amaze the world with its visionary projects. We have become, instead, a nation whose politicians seem to compete over who can show the least vision, the least concern about the future and the greatest willingness to pander to short-term, narrow-minded selfishness.
It certainly is disappointing. With only one, very old tunnel connecting the two states, commuters can’t catch a break here. We can’t all drive into the city.
So, the blogs have been covering New Jersey Governor’s Christie goal to shut down the ARC tunnel project. As many of you know — and as has been covered before on this blog — the ARC tunnel would have provided another much needed connection between New Jersey and New York .
I think we can all understand the stressful situation that states are in regarding fiscal affairs. But is this a cut that is worth making? Andrew Samwick doesn’t think so:
There are plenty of ways to waste money through public investment. This just doesn’t happen to be one of those instances. It was to avoid the temptation to waste money in the name of a perceived need to stimulate the economy that I wrote this and followed it up with this. In the latter, I suggested that we establish a prioritized list of capital projects, so that we were ready to implement them as slack appeared in the economy. Careful planning is the defense against waste, regardless of what you buy with the money.
I strongly suggest on reading the full article, as it links to a great Economist piece and other blogs.
So, is this a justified cut?
While October hasn’t seen much discussion about the possibility of a National Infrastructure Bank — and with November being so close there probably won’t be much in the news besides than character attacks — why not take this time to consider at the issue?
Obama broached the idea of a NIB in September, though the idea had been introduced in the House by Rep. DeLauro and in the Senate by Senators Dodd and Hagel several years prior. The question is, how would such a bank function?
Yonah Freemark of TransportPolitic writes of his own view of the NIB:
Imagine the federal government began offering a bank savings account package to young people and seniors with a very favorable rate of return, run through private banks in exchange for, say, their participation in the FDIC bank insurance system. Then say the government “collected” all of those funds together in a public bank and used the money to invest as it wished in the private sector. If well managed, this system could make enough money through its investments not only to give its depositors high interest rates, but also a large profit that would go not to shareholders but instead towards the construction of new social housing and infrastructure.
It turns out that this is not that far-off of an idea: it’s exactly how France’s Caisse des Dépôts works. The independent agency, originally formed in 1816, finances much of the country’s affordable housing and urban redevelopment schemes; more recently, it has contributed to the construction of new high-speed rail lines. For the most part, these expenditures are in grant form, meaning that the Caisse is increasing France’s overall spending on infrastructure without increasing the nation’s debt load. That makes it significantly more effective in moving forward with new spending than would be the infrastructure banks proposed for the U.S.
Freemark rejects the idea of the bank functioning as a traditional investment bank because he sees it as frontloading spending into the present and leaving future generations with greater debt, and I can’t entirely disagree with him on that matter. But with programs like the European Investment Bank as a currently existing model for a NIB to be based on, and California’s 30/10 initiative as one example of the creative financing options open to states, an investment structure may be more politically feasible and cost-effective up front.
Of course, all of this is coupled the assumption that the NIB would function like a bank is supposed to, and not like a body that doles out grants and aid. The assumptions are that there is a profit motive in play for individuals and investors, and that this profit motive will lead to smart investing. There are still many details to be determined, though the process may gain some momentum when elections are over.
Moravian College will be hosting Dr. Vandana Shiva on Tuesday, October 12th at 7:30 in Prosser Auditorium. Shiva’s educational history and awards are numerous, but suffice it to say that she’s a world-renowned activist for environmental issues, especially those centering around climate change and the developing world.
I had the privilege of seeing Dr. Shiva speak a few times at last year’s Conference of the Parties on climate change and, while the conference overall was a massive letdown, Shiva was one of the more interesting highlights of the trip. She’s can be very radical in her approach at times so it will be interesting to see what she discusses at this event.
As far as getting there, Prosser Auditorium is located in the Haupert Union Building(HUB) just off of Main St. in Bethlehem.
Address to get there: 1200 Main St. Bethlehem, PA 18018.
The New York Times covers the story of the many state-established programs that aim to help out financially-strapped cities. In the spotlight: Harrisburg, which just applied for Pennsylvania’s distressed cities program. The city will not be able to pay its payroll without funds from the program. Mary Williams Walsh writes:
The situation is particularly acute in Pennsylvania, where the flailing of a state capital has drawn considerable attention. Late last year, Reading joined the state’s distressed program. Ways to exit the program have often been elusive. Eleven municipalities have been in the state’s program for more than a decade. They were joined there five years ago by Pittsburgh.
Public finance experts say Pennsylvania’s “home rule” form of government, where tiny boroughs and townships have full municipal powers, make the problem knottier. If one local government takes the bitter medicine and raises taxes, residents can dodge the increase by moving a few blocks away.
Unfortunately, this has only encouraged the siphoning out of the cities, with residents moving to the suburbs in flocks. In turn, the cities’ tax bases have dropped significantly — making tax raises nearly inevitable. It’s an ugly cycle — one that affects every community at some point.
So is the solution state monetary help? Or can we do better? Municipal consolidation, anyone?