I am concerned that the current proposal of $43 billion, more than $40 billion less than the Oberstar proposal, will leave shovel-ready projects on the shelf at a time when unemployment continues to rise (In New Jersey, Governor Corzine announced just yesterday that the State's unemployment rate has risen to 7.1%). More specifically, the current proposal reduces the New Starts appropriation from $2.5 billion to $1 billion, while transportation coalitions have identified more than $4 billion of New Starts projects ready to award contracts within 120 days. I understand some Congressional leaders are concerned about the spend-out timeline for infrastructure projects, particularly with regard to transit projects. I can say without hesitation that NJ TRANSIT can fulfill the spending expectations included in the Oberstar proposal and I expect my transit colleagues across the country would echo that sentiment.

It is important to note that the Chairman also included transparency and accountability requirements in his proposal that will help ensure infrastructure spending moves quickly and efficiently. I have not studied the other provisions of the Chairman's proposal but I assume the due diligence his committee has shown in crafting the transit portion has carried over into the highway, rail aviation and remaining sections of his proposal. I will leave the discussion regarding offsets for increasing the transportation allocation to the Oberstar proposal levels to the economists and just say one more time unequivocally that NJ TRANSIT is prepared to award contracts for its portion of the Oberstar proposal in 90 days.

First of all, I don't think that any other part of the package would have to be cut in order to expand the investment in transportation. Second, what matters -- both in substance and in terms of marketing this portion of the package -- is how the money is spent, not just how much. I agree with John Krieger about requiring that the highway and bridge money go to repairs and maintenance, given the backlog of such projects, the likelihood that they are "shovel-ready" and public concern about crumbling infrastructure.

That portion of the monies should also go to ITS, as Randell Iwasaki says, to manage road capacity more effectively. Even mundane technology like traffic signals could benefit from an upgrade: According to a 2007 report card from AASHTO, ITE, ITSAmerica and others just $1.125 billion a year would make all signals worthy of an "A" grade. The groups calculate that not only would this reduce traffic congestion, it would contribute to the President's national goal to save 3.6 million barrels of oil daily in ten years by conserving 17 billion gallons a year.

Of course, the other issue with the bill is the relatively meager investment in other projects that save oil: Transit and rail. My friend Paul Loeb and I wrote a piece about this in the Huffington Post. The operating assistance is especially worth including, since it as ATU points out it would retain and generate 120,000 jobs in short order, preventing the economy in those areas from slipping further and meeting the "ready-to-go" criterion.

The House bill combines economics and politics. This should not surprise any of us. It does not appear , however, to have a consistent objective of creating short-term jobs. For example, a major portion of its costs concerns short-term tax breaks. These have a history of modest impacts on personal expenditures, witness last year’s tax refund, most of which went into savings. Many of the 150 or so specific programs reflect various policy interests as much as they do a simple focus on job creation. I suspect that if a good economist were given the task of developing a stimulus package that generated the same number of jobs, but at the lowest possible expenditure, the package would be significantly smaller in size. Funds for infrastructure would make up a larger fraction of such a program and, most likely, a larger total dollar amount than in the current House bill.

In terms of transportation, I suspect everyone on this blog shares the desire to see more funds to help meet the backlog of investment demands and to improve the capacity and quality of our nation’s transport system. In addition to near-term jobs, this will help support long-term growth. As Emil Frankel says, we should look for “good” projects. While many of these may also be “shovel ready” we should not restrict ourselves to these, nor to only those that involve repairs to the existing network. In particular, applied technology often offers a high rate of return and can help support the nation’s technology businesses.

The bill has a provision that could be termed “use it or lose it.” This sounds like a logical way to encourage state DOTs, MPOs, and others to spend funds quickly. But, how likely is it that Congress will take funds back from projects that are half way completed?

Here is a piece from streetsblog on the transit operations topic:

"Hire a construction worker, fire a bus driver"

http://www.streetsblog.org/2009/01/23/hire-a-construction-worker-fire-a-bus-driver/

I would echo Pete Rahn's earlier comments by pointing out that the $40 billion in the House bill for highways, bridges, transit and rail – while helpful and much-needed – amounts to less than 5 percent of the stimulus package. This seems disproportionately small given the vital role that transportation plays in our nation’s commerce and industry, not to mention the lives of our citizens who depend on safe, efficient and reliable transportation.

John Krieger makes a good point about the need to ensure that spending leads to a more efficient and sustainable transportation network. One way we are working to do this in California is by integrating Intelligent Transportation Systems (ITS) and technologies into our transportation system that can help reduce traffic congestion, cut back on unnecessary emissions and energy use, and operate our transportation network more safely and efficiently for the traveling public. Today’s transportation infrastructure isn’t just steel and concrete; it’s about sensors, signals, cameras, and computers. By modernizing our infrastructure with the latest technologies, we are adopting a range of cost-effective transportation solutions including traffic signal optimization, active traffic management and incident response systems, electronic weigh-in-motion, open road tolling, smart transit systems, highway ramp metering, and advanced traveler information with real-time data about traffic conditions, transit schedules, and even parking availability. Many of these systems can be implemented relatively quickly, and investment in ITS and related technologies will create jobs across multiple sectors including green jobs, high-tech, automotive, IT, consumer electronics, engineering, manufacturing, and many other industries.

As Congress and the new Administration work to fund projects that will create near-term jobs and economic stimulus, they should make it a priority to encourage transportation investments that will also lead to long-term productivity, a more efficient and environmentally friendly transportation system, and a stronger, more globally competitive economy for American workers and businesses.

BNSF Chairman, President & CEO Matt Rose is also a member of a new group called the OneRail Coalition, which was formed to advocate for greater investment in passenger and freight rail initiatives. To learn more about the coalition, see my colleague Bara Vaida's post on National Journal's lobbying blog, "Under the Influence." Here's the link:

http://undertheinfluence.nationaljournal.com/2009/01/rail-coalition-forms-run-by-qu.php

Congress has the opportunity to achieve a lot more than just stimulus in the stimulus bill. It can support economic development, “green” objectives like reduced transportation emissions and mitigating traffic congestion. However, if it gives little attention to rail – passenger and freight- it will undershoot all of those objectives. Railroads are, on average, three times more fuel efficient than trucks, and because greenhouse gas emissions are directly related to fuel consumption, every ton-mile of freight that moves intermodally- that is, by rail and truck - reduces greenhouse gas emissions by two-thirds or more. Intermodal rail service represents the most efficient business model and carbon footprint for moving freight, now and especially in a future of carbon constraint and energy independence.

What should Congress do to both stimulate job creation and realize the environmental and transportation benefits that rail provides? Two significant opportunities are in the area of tax policy: bonus depreciation and an expansion investment tax incentive. The capital intensity of the freight rail industry makes this policy a winner. BNSF took full advantage of the last bonus depreciation provision Congress passed, making purchases that it otherwise would not have made for the duration of the policy.

Railroads have long advocated investment tax incentive for expenditures on expansion capacity, as an important way to expand the Nation’s freight rail network. At this point in the economic downturn, it will take an incentive to generate the kind of investment that will be needed when the economy returns to stability and healthy volumes. The time to incentivize these expansion investments and initiate construction is when volumes are down.

U.S. Department of Commerce data indicate that every dollar of related freight-rail infra­structure investment would generate more than three dollars in total economic output, because of the investment, purchases, and employment occurring among upstream suppliers. $300 million in additional freight rail capacity investment would result in nearly $1 billion in overall economic stimulus, most of which would begin to occur immediately as upstream suppliers expanded capacity to meet the increased demand for rail projects. All told, each $1 billion of new rail investment induced by the tax incentive would create an estimated 20,500 jobs nationwide. It would also have a tremendous impact on the hundreds of firms and tens of thousands of employees in the supply industry, which sells supplies and services to freight railroads.

The other areas where Congress can promote more passenger and freight rail investment and the resulting economic stimulation are programmatic. First, the dollars that Congress provides to states for transportation projects in the stimulus bill are General Funds, not Highway Trust Funds. Therefore, they should be mode neutral and states should be able to target them to passenger and freight projects that otherwise meet the objectives of the stimulus bill. States are well-ahead of the Federal government in promoting the benefits of rail. Many states and their MPOs have robust rail programs, all funded without the benefit of federal dollars, since rail projects are largely ineligible for federal transportation funding at this time. It is important to give states the flexibility necessary to address the full spectrum of surface transportation challenges they face and meet important stimulus and environmental goals that Congress and Administration share.

Additionally, Congress has enacted several grant programs that should be fully funded in stimulus legislation to maximize the goal of expanding rail investment. For example, the House stimulus bill provides for $1.1 billion for Amtrak capital grants. Amtrak runs on freight rail networks outside of the Northeast corridor, and pays only incremental costs for use of those networks. Additional funds are needed to satisfy the tremendous pent up demand for projects across the country that would improve Amtrak’s service and reliability.

Congress should also fund the Positive Train Control (PTC) grant program, which it authorized last year in the context of a rail safety bill that mandates PTC on virtually all passenger and most freight lines. This mandate is incredibly expensive and if this grant program were funded, Amtrak, commuter rails and the freight rails could front load some of the anticipated spending to meet it. In addition, Congress could fund the Railroad Relocation Program it enacted in the last surface transportation reauthorization bill. This would be another source of funding that many communities seek as they work with railroads to improve freight and passenger rail flows in and around them.

In sum, Congress has a tremendous opportunity to do good things with the stimulus legislation, and they are not limited to stimulus. By funding, supporting or incenting rail investment, Congress and the Obama Administration can take a step toward a cleaner environment, and congestion mitigation. The One Rail coalition of environmentalists, passenger and freight rail, which recently was announced in Washington, stands for this principle and will be advocating for a stronger rail component in stimulus, and beyond. I hope Congress and the Obama Administration will hear them.

I am struck by the article in the New York Times today about China's economic stimulus plan. (China's Route Forward.) China is investing $88 billion in intercity rail (including several ambitous high-speed rail projects) in their plan which is two months underway, while we are replacing wooden rail ties with concrete ones in the Northeast Corridor. The proposed amount of rail investment in the House stimulus plan is 1/80th of the amount that China is investing in a modern, efficient, nation-linking rail system in their economic stimulus.

I agree with the previous commentators that the focus for this bill must be on short-term job creation. But we fail to address the depth and potential length of this recession if we do not simultaneously support investments that will position America for long-term competitiveness and prosperity. Weaning the nation off its dangerous dependence on foreign oil must be part of that strategy and is why investments in an ambitious "Trans-American Network" of intercity rail, goods movement, regional rail and local public transit make so much sense.

Last month, America 2050 released a five-point plan for the economic stimulus, which recommended fix-it-first, phasing, green investments, training, and accountability. Some of these concepts have been incorporated in the House bill, but I'd like to highlight the issue of phasing.

It's unclear how long and how serious this recession will be, but it's possible that after Congress passes this stimulus plan, another will be needed in a matter of years. For this reason, I recommend that Congress establish a planning entity in this stimulus bill that would plan a system of nation-scale infrastructure investments that are needed to promote efficient transportation and the transition to a low-carbon economy. This would position the next set of projects for a subsequent stimulus bill and/or energy and transportation legislation in the coming years. There are precedents for this, including the National Resources Planning Board -- a New Deal era cabinet agency that developed early plans for the Interestate Highway System. A terrific paper by Robert Fishman on the National Resources Planning Board and other national planning efforts can be downloaded here.

You only need to look as far as the Obama Administration’s economic policy to see that aviation infrastructure improvement is vital to boosting the economy. The stimulus should dedicate $4 billion to fund the purchase and installation of equipment for NextGen, the new satellite-based air transportation system.

This would not only provide much-needed system upgrades within an industry that is responsible for 5 percent of our national GDP, but it will create an estimated 77,000 jobs in the near-term to get it done.

This would also be a huge investment in green technology, which this administration has promoted as vital to leading us out of the recession. NextGen will allow more direct flights and reduce flight delays, both on the ground and in the air. The result is a significant increase in overall efficiency and marked reduction of the fuel used. So NextGen is a perfect opportunity to invest directly in technology that will provide dramatic improvements in environmental performance.

Lawmakers should also take the opportunity represented by the stimulus bill to make some changes in tax law that would provide a big economic boost to aerospace and many other industries:

• Make the R&D tax credit permanent: The credit rewards companies for innovation and helps them compete internationally. As it stands, the credit must be renewed each year, creating instability and making investment planning all-but-impossible. Including this provision would allow companies to make immediate decisions that will create jobs and stimulate the high-tech economy.
• Repeal the “3 percent withholding” provision: This rule, slated to go into effect in two years, requires all government agencies – local, state and federal – to hold back that portion of payments for goods and services to guard against possible business tax avoidance. It has become clear that 3 percent withholding is unnecessary, because almost all companies fulfill their tax responsibilities. The rule is also onerous because it will cost agencies millions of dollars and countless man-hours to implement. If this goes into effect, it will artificially decrease cash flow in the economy, which I’m sure we all agree would be a bad idea. We are pleased to see the repeal of the 3 percent withholding rule in the House language and hope the Senate will follow suit.

The aerospace industry exported $99 billion last year, providing a foreign trade surplus of $61 billion – the largest of any U.S. manufacturing sector. Investment in our industry has far-reaching benefits for middle-class jobs in every state of the union.

Given the recent questions that have been raised, by a quickly discredited CBO report, about just how fast infrastructure investments will stimulate new economic activity, we need to make sure the final legislation does everything possible to appropriately accelerate the flow of funds. It is important for everyone involved in this process to remember that the stimulus is designed to provide immediate investments that will put people back to work, jump start the economy and deliver long-term benefits.

While there are any number of worthy-sounding policy reforms that ought to be considered quickly by Congress, the stimulus is not the right vehicle for doing that. For example, efforts underway to use the stimulus legislation to expand the existing, and rather substantive Buy-America provisions that already exist would invariably slow spending rates. That is because changing the requirements would then require revised reporting regulations, which would be slow to produce and expensive to follow, ultimately bogging down the process. We wouldn’t make firefighters fill out an extra form before putting out a fire. Why should we make workers across the country fill out extra paperwork before fixing the economy?

We also need to avoid the temptation to alter or adjust state procurement rules via the stimulus. While there is broad consensus that procurement methods can be improved, asking state leaders to scrap their method for awarding contracts while telling them to award contracts quickly would be confusing, costly and counterproductive. Just like with a falling building, you have to stabilize a collapsing economy before you can start thinking about making additions or adjustments.

Look how far we’ve come. Tax cuts and bailouts were the solution to every problem under the previous administration and there was little interest in creating jobs or taking care of our transportation needs. Now we have an economic recovery plan that will actually put people back to work building America’s crumbling transportation network and leaving behind a legacy for generations to come.

The economic recovery proposal is a great step forward, but why stop there? $43 billion dollars for transportation needs will help address many of our transportation needs and will create a lot of jobs. However, there are currently 1.4 million men and women unemployed in the construction industry alone and due to years of neglect there is work to do building our transportation system that far exceeds $43 billion. Many of those projects are ready to begin now and will quickly put paychecks back in the pockets of working people while circulating money throughout our economy and local communities. Why leave projects and jobs on the table?

Right now, less than 1/5th of the recovery plan will leave behind tangible assets for the future and the proposed $43 billion for transportation represents a mere 5 percent of the total package. The proposed $30 billion for highways and bridges, when added to the approximately $40 billion already scheduled for 2009, still comes up short of the $78.8 billion that is needed annually to maintain the current condition of America’s highways and bridges and well short of the $131.7 billion needed annually to improve them.

In order to maximize the job creation potential of the economic recovery package and address the needs of our country, LIUNA has proposed that one third of the total economic recovery package be devoted to building America – our transportation, energy and education systems.

To make more room for building America in the economic recovery plan, some of the tax provisions may need to be eliminated, particularly the multi-billion dollar tax handout for businesses under the proposed carry-back extension.

The top priority in the recovery plan must be creating jobs and nothing is better at creating jobs than building America.

There has been much discomfort in the transportation community about the amount of funding for transportation infrastructure in the stimulus, or economic recovery, bill reported out of the House Appropriations Committee a week ago Of course, we do not yet know what the final bill will contain for transportation or even the degree to which the House language is reflective of what the new President and his Administration desire, but this first significant legislative action on economic stimulus is an opportunity to remind ourselves of our goals and purposes.

I am not an economist, but it seems to me that the purpose of a stimulus bill is to stimulate the economy and, more specifically, to stimulate job creation. That is why there has been a focus on "shovel-ready" projects and why the House bill contained "use it or lose it" language. Nonetheless, as the Congressional Budget Office noted, there is some delay (often, fairly significant delays) before transportation authorizations are turned into outlays, that is, before they become money actually spent and invested in the economy. Indeed, even though every recent surface transportation authorization bill has been primarily justified on the basis of job creation, no one really knows how many jobs are created by transportation bills or how quickly. My limited exposure to this issue during my service at the U.S. Department of Transportation left me skeptical that there was very much authenticity in, or analytical rigor to, the estimates of "X number of jobs are created for $1 billion of spending" in this sector.

Nonetheless, while we may not know for certain how many jobs are created, or how quickly, by surface transportation spending, clearly these investments make fiscal sense in the current economic environment. With that in mind, let's continue to remember that job creation is the purpose of the transportation spending in this stimulus bill. The transportation sections of a stimulus bill are not designed to correct the serious shortfalls that we have had in infrastructure investment in this country for many years or to correct the fact that much of the surface transportation money that has been authorized by Congress in recent bills has not always been spent wisely.

Our goals should remain constant: however much money for transportation is contained in the final stimulus or economic recovery bill, those funds should be spent on "good" projects. That means projects that are likely to bring the greatest economic returns in the shortest time. Most often, these will be projects designed to restore transportation facilities and networks to states of good repair and to enhance the operational efficiency and productivity of existing systems.

Moreover, the principles of transparency, tracking, and accountability that are in the House stimulus bill should be retained in the final legislative language.

This discussion reminds us that we need significant long-term change in federal surface transportation programs. That is unlikely to happen in a stimulus bill, but we should be certain that the stimulus bill does not set this effort back. There was -- and, I suppose, there remains -- a risk that the attention on the total level of transportation funding in a stimulus bill would divert us from this purpose and would "swallow-up" the debate over national transportation goals and over the need to establish performance-driven and accountable surface transportation policies.

We need to articulate these national transportation goals, to redefine the federal role in transportation, to assure funding mechanisms that advance performance and accountability, to "get the prices right" in transportation (as the Eddington Report advocated for the U.K)., and to reform fundamentally federal surface transportation programs. These challenges will only be met in the surface transportation authorization bill yet before us, and these challenges will remain, no matter the level of transportation funding in the final stimulus bill.

Mr. Yarossi of HNTB makes a great point that bears reiteration – using the total capacity of the public AND private sector is critical. The Recovery and Reinvestment Bill handsomely addresses public rail such as Amtrak and transit. The American Short Line and Regional Railroad Association supports these efforts, but the package overlooks the critical role played by private freight railroads in our economy, and the potential economic benefit of investment in freight upgrades.

The 550 small freight railroads (“short line railroads”) are the first and last mile of rail transportation for over 13,000 businesses in America that employ over 1 million American workers. Increasing investment in freight rail will have immediate and long-term stimulus impact. House T&I Chairman Oberstar recognized the value of small railroads when he recommended including $100 million in funding for a short line infrastructure program. Another stimulus approach could include extending the existing short line railroad tax credit which has been incredibly successful.

Investments in freight rail infrastructure would: (1) jump-start “shovel ready” projects that provide immediate employment boosts as contractors hire workers; (2) create infrastructure with a 40 year lifetime, thereby investing in the future, while preserving an environmentally friendly freight mode; (3) lower rail customer costs by increasing the capacity of the infrastructure serving them; and (4) increase demand for American steel and timber products.

I would suggest one critical amendment: Let's make sure that stimulus funds for infrastructure are invested in the private economy rather than in the growth of government. A great risk of the current bill is that recovery money could be used to hire more government employees at just the time when stimulating the private economy is our greatest concern. Private engineers and contractors have traditionally been the engines of successful project delivery and economic growth. So let's put the money where it will do the most good.

Congress and the new Administration have a monumental task in front of them. Not only do they need to pass a stimulus package that moves our economy forward quickly, but they also must deal with the longer-term issues of transportation, energy, and the environment as they relate to the next transportation authorization package.

ACT applauds the House’s efforts to take advantage of authorized programs to appropriate energy and environmental improvements in the stimulus, especially for those improvements with a nexus to transportation. Specifically, ACT would encourage the use of the energy and environment block grant program authorized last year as a method to meet those goals within the stimulus package and hopes that the Senate follows the House’s lead.

ACT also commends authors for acknowledging that transportation has a significant role to play in stimulating our economy. $30 billion for highway infrastructure investment and $10 billion in transit capital assistance is a major contribution to maintaining our current transportation system. We understand that this funding distribution will take advantage of the current funding processes. That said, if states use this funding to prioritize maintenance and repair projects and transit agencies use the funding to modernize and improve their fleets, this influx of funds will provide commuters with more lasting benefits.

Additionally, the sub-allocation of funds to the metropolitan level is an important aspect of the House legislation. Given the size and speed of the package, it is unreasonable to assume that all of the action can be taken at the state level. The involvement of metropolitan regions is crucial to achieve the goals of the stimulus package, and we encourage the robust use of metropolitan structures to move the economy forward.

However, this stimulus package does not provide any direct benefit to workers who commute to and from work; in this manner, the House has failed. The second largest household expense, after housing, is transportation. Relief should be provided to commuters through bringing the level of pre-tax benefit for transit fare purchases, currently at $120/month, on a par with the pre-tax benefit allowed for parking costs, currently at $230/month. Providing a parity of benefit will provide relief for those who are commuting the longest distances, while providing a fairer pre-tax cost option for those with more choice in their mode of commuting. For those who already take advantage of this benefit, it would immediately provide a certain level of relief and put cash back in their pocket for use elsewhere. For long-distance commuters, which are being disproportionately hit by the mortgage crisis, this has a direct impact in freeing up cash to be able to maintain payments on their mortgage. Additionally, savings employers enjoy through this benefit would provide them with additional money to retain and hire additional staff.

The second opportunity that should be included in the stimulus package is a reinstatement of the Vanpool Investment Tax Credit. This credit, which previously expired in 1986, would potentially double the number of vanpools in operation today. While this credit is projected to cost the US Treasury $36 million if the fleet doubled, this has a direct stimulative effect on US automakers. Ford and General Motors are the only manufacturers worldwide of vehicles that carry 9-15 passengers, the core of the vanpool fleet. Through the re-enactment of this credit, it is projected that Ford and GM would see additional revenue of approximately $880 million over the next 4 years.

This is not a simple task, and there is certainly no “silver bullet” to fixing our economy. The stimulus package as put forward by the House is certainly a strong start towards re-invigorating our economy. These two provisions proposed here may allow for the benefits of the package to be more immediately seen by the American commuter.

Now is not the time to be parochial. It will hurt the American recovery. Using the total capacity of the public and private sector, and moving quickly, is the only way to make this stimulus a success--not only for the industry, but for our economy as well.

In response to Gabriel Roth's suggestion about doing research on alternative ways to finance roads that protect privacy:

I concurr that we need more demonstration projects on how we might make the transition from gas taxes to road user fees, and also that we must address head on the issue of locational privacy. We cannot and should not rely on notions of "trusted third parties." For more on this issue, go here:

http://networkmusings.blogspot.com/search/label/privacy

I've also given a lot of thought and effort to ideas about how we can leverage the impending investments in wireless technologies in the transportation sector (for road and congestion pricing, among others). The economic stimulas package includes spending on wireless (and wired) networks for health, education, and communities. We have a unique opportunity to tie all of these investments together by demanding that open archtecture and open standards, and that the networks built with US government dollars open up their excess capacity to others.

More on these topics here:

http://networkmusings.blogspot.com/search/label/mesh%20networking

I decided to try to think outside the box – or maybe this is just hanging on the lip: halfway in and halfway out.

The value of tax rebates as spending stimulus is controversial. Will the money be spent or saved? Will it be spent on foreign-built goods and therefore less valuable than a dollar spent by the US government? Will those rebate dollars create jobs?

Here is a proposal that might address the rebate and infrastructure spend priorities.

1. The US government declares that a carbon tax will be applied on all goods and services starting January 1, 2010. (bear with me to the end to discuss political viability.) Such carbon tax will be revenue neutral by means of a per capita “dividend.”

2. An energy efficiency incentive of $2000 (?) is given to people making less than $150,000 (?)/year, with the express idea that this money would be well spent making investments that will reduce next year’s carbon tax.

Anticipated Outcomes:

Anyone might consider applying this money toward more fuel-efficient cars. Households will spend on home energy efficiency and alternative fuel efforts if they are home owners (creating local jobs and bolstering those sectors of the economy). Over the course of the year people will politically favor projects that will reduce their personal carbon tax. People who spend the money in some other unrelated way leave the US economy in the same position as the current open-ended tax rebate proposal.

The carbon tax should also affect how states will choose to spend the money that goes out to them. They will favor transit projects over highway expansion proposals.

In answer to impending comments about whether carbon taxes are politically viable or better or worse than cap and trade, I refer you to my blog on this topic here:
http://networkmusings.blogspot.com/2007/11/carbon-taxes-or-cap-and-trade-for.html

Economic Recovery Part I

$40 billion-plus of new money is a substantial investment to be made so quickly after a new election. Does it fall short of all of our needs? Yes. But is it likely to be the last tranche of new money made available? No. I think the Obama Administration and members of Congress are being particularly careful to make sure that this first installment of monies is spent quickly and responsibly. That is wise and, if successful, may help repair not only transportation infrastructure, but also the public's perception about the wisdom of the public investments we make in transportation.

As Ken Mead points out, the severity and length of the recession, combined with the busy agenda for transportation in 2009, will provide additional opportunities for project proponents, states, and local governments to accelerate their plans to get their projects funded. At the same time, it will provide legislators and executive agencies the time to make necessary changes in programs such as New Starts, freight policy, and air traffic control modernization to provide opportunities to spend money more wisely and more inclusively for many of the priorities discussed in this blog.

The message should not be a missed opportunity, but a call to project proponents everywhere to complete their review processes for pending projects and get them "ready-to-go" for the opportunities to come.

Steve Van Beek

The purpose of transportation investments should be not only to “create jobs” but to provide goods and services for which consumers would be willing to pay, and to pay enough to cover their costs. Furthermore, they should be “smart” investments to encourage the development of proven new ideas and technology.

My humble recommendation (humility is in vogue these days) would be to scrap the program proposed for transportation and to substitute investments of three kinds:

First, the development of HOT (High-Occupancy or Toll) expressway networks in major American cities starting with Atlanta, Dallas/Fort-Worth, Houston, Los Angeles, Miami, San Francisco, Seattle and Washington DC, as first proposed by Bob Poole and Ken Orski in 2003. These networks would be modeled on the successful HOT Lanes first established on State Route 91 in Southern California in 1995, and subsequently replicated in the vicinity of San Diego, Denver and Minneapolis, and planned for the Washington Capital Beltway.

Users of the express lanes would get congestion-free travel by paying tolls that would be electronically debited from pre-paid accounts. The rate of tolls would be varied to ensure the absence of significant congestion at all times. Those paying the tolls to avoid congestion would benefit, and so would other travelers in the corridors, because of fewer vehicles on existing lanes. Buses, and other specified types of High-occupancy vehicles, could be exempted from the tolls. The costs of these networks —which would also provide congestion-free routes invaluable in emergencies — could reach $50 billion, but most of the costs would be repaid out of the tolls.

Second, a program of research and development to improve methods of charging for road use, without invading the privacy of road users.

Third, to provide high-quality unsubsidized transit services in medium and small communities: A program to finance the purchase of minibuses to be owned by those willing to form associations, each modeled after the Atlantic City Jitney Association (preferably more than one in each area), to provide high-frequency services responsive to local needs. Such services operate successfully in Atlantic City and in numerous places overseas, but are generally prohibited in the USA. They reduce unemployment not only by directly employing the drivers who provide the services, but also by improving mobility, which assists others to get and hold jobs.

Judging by the commentary in the transportation trade press and elsewhere, the stimulus dollars targeted for transportation should be more substantial than the $40 plus billion in the House bill. That may be an accurate assessment, but I think a useful point of focus is how expeditiously and prudently this amount of money can find its way into actual projects and translate into jobs. We have seen the very substantial estimates of projects that would fall into the "shovel ready" or "ready to go" category in highways, aviation, transit, and rail. Accepting all these estimates as credible, the sheer magnitude of these estimates strongly suggests that the projects will be there and all that will remain in the critical path is the Federal, State, and local logistical and workforce capacity to get them underway shortly after the money becomes available.

The language of the draft House bill does not so far as I can determine actually use the term "shovel ready" or "ready to go" projects, but it is implied by both the timelines for putting projects under contract as well as by the draft House report. For example, in the case of highways, 50% of the funds awarded must be under contract within 120 days of the grant award. Speaking generally, the remainder must be obligated and under contract no later than July, 2010. The devil may be in the details of what the final version of the stimulus looks like, but the Congress, USDOT, OMB, the Inspector General, GAO and the media all will be watching closely to see how quickly the shovels actually go into the ground, that the infusion of funds is done properly, and, more fundamentally, that the estimates of need on which the stimulus is predicated correlate approximately with the expedition with which projects get underway and the money is needed. In the case of highways, transit, and aviation--this will take on added importance. As Congress deliberates on multi-year reauthorizations later this year, the Congress also will have to set multi-year funding levels. As the year unfolds, the track record and experience with spending under the stimulus may well have a bearing on how heavy a lift it will be to achieve significantly higher multi-year authorization levels.

While I’m pleased there is at least a transportation component to the economic stimulus proposal, the $30 billion highway and bridge amount does not live up to the rhetoric preceding the release of the overall package. $30 billion is not going to "repair America’s crumbling roads and bridges" and it does not represent "the greatest investment in infrastructure since Eisenhower." At under 70% of a normal annual highway appropriation, the program lacks critical mass. The transportation portion should be doubled. A change I would make to the proposal is to allow the use—on a one-time emergency basis—of transit funds for system operations due to the severe decline in other ordinary revenues. I don’t believe any other areas of the stimulus proposal have to be reduced to increase the transportation-funding portion. There is concern that $825 billion may not be enough; transportation is an appropriate area to grow because of its long-term benefit to the nation.

Given the historic opportunity before Congress and the incoming administration to both meet urgent critical needs and to invest in long-term national priorities, the House transportation proposal represents a small step in the right direction where bold strides are needed.

On one hand, money to modernize and expand public transportation networks will put thousands to work while reducing our nation's dependence on oil, traffic congestion, and global warming pollution. Also, accountability measures included in the proposal will go a long way toward eliminating fraud and abuse, but they will do little to ensure that the spending leads to a more efficient and sustainable transportation network.

Two modifications would drastically improve the efficacy of the plan with little impact on the overall price. Transportation and Infrastructure Committee Chairman Oberstar has called for the addition of $2 billion in energy assistance grants for transit agencies to prevent layoffs, service cuts, and fare increases. Several transit agencies are being forced to cut their operating budgets and layoff workers at a time when ridership is spiking. Transit systems, with few exceptions, may not use their FTA funds for operating expenses. For many of these transit agencies, even if economic recovery funds allow them to increase their existing fleets, without funds to operate them, the majority of the buses and cars will stay in the garage. A direct infusion into transit budgets would keep thousands of Americans from losing their jobs and employ thousands more. According to the Amalgamated Transit Union, a $2 billion investment in public transit operations would immediately preserve and add a total of 120,000 jobs.

Also, there is no formal assurance in the proposed legislation that the $30 billion in highway spending will prioritize repair and maintenance of existing roads and bridges over wasteful new superhighways and lane widening. Many state DOTs plan to divert a majority of highway funds from the Economic Recovery bill to these new capacity projects. Each road dollar spent on new and wider highways is a dollar not spent on repairing crumbling bridges and roads. The funds allocated to highways should be expressly directed to fixing and preserving the existing system with a specific focus on structurally-deficient bridges, of which there are more than 74,000 nationwide.

These two small, yet significant, changes to the proposed language would create and preserve more jobs, and demonstrate a long-term commitment from the Congress to meeting our country's most pressing transportation challenges.