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Transportation Benefits: Agreement, but Weak Action

July 24, 2014 By Conrad deFiebre, Transportation Fellow

In my first major project as a Minnesota 2020 fellow, I highlighted the economic benefits for Minnesota of investing in transportation. This was a direct rebuttal to the contention of then-Gov. Tim Pawlenty that hiking state fuel taxes for the first time in two decades to support highway construction and maintenance and raising new revenue for transit improvements would "hurt our economy."

That canard was nothing more than cover for Pawlenty's lockstep adherence to the right-wing dogma of no new taxes no matter what, which had already prompted him to veto two previous transportation finance bills. When he vetoed a third, shortly after my report was issued in January 2008, however, bipartisan legislators overrode him.

I'd like to claim credit for this triumph of sound public policy, but two other things wielded greater influence. The first was the deadly collapse of the Interstate Hwy. 35W Mississippi River bridge in Minneapolis on Aug. 1, 2007, which focused public attention on deteriorating infrastructure as never before. The second was an about-face by the Minnesota Chamber of Commerce, which had lobbied against other transportation bills and, along with Pawlenty, was a target of my report's criticism.

Nowadays, as Congress and the White House alike repeatedly haggle over how to extend national transportation funding for shorter and shorter periods without irritating anyone at the gas pump, it's the U.S. Chamber of Commerce, unions and trade groups of truckers and manufacturers that are calling for the obvious long-term solution of increasing federal fuel taxes that haven't been adjusted for inflation in 21 years. But in dysfunctional Washington, that isn't even on the table, although no one I know of is saying it would hurt the economy.

What would hurt, all the players seem to agree, is impending default on federal Highway Trust Fund obligations, delaying up to 112,000 road projects and 5,600 transit projects and idling 700,000 construction workers. So we have a dizzying array of funding gimmicks being bandied about the hallowed halls, everything from moving fuel taxes up the pipeline and away from gas pumps to tax holidays on overseas corporate profits. The winner this week apparently is a proposal from the conservative-led U.S. House to change corporate pension accounting rules, impose higher customs fees and tap an environmental cleanup fund.

This plan was hilariously skewered by Comedy Central's Jon Stewart in a monologue for which you'll find a video link on Hindsight's Friday Morning Reads tomorrow. He didn't even mention that the House's brief eight-month funding patch will take 10 years of the aforementioned gimmicks to be paid for. Fiscal responsibility, indeed!

Nevertheless, with the highway fund needle ticking toward empty, the bill passed the House with overwhelming bipartisan approval, and President Obama and progressives in the U.S. Senate have voiced support. A Senate vote and signing ceremony are expected any day. Then the strange dance starts all over again after the November election.

Who's against the latest make-do? Far righties Heritage Action and the Club for Growth are giving members of Congress black marks for yea votes, and the libertarian Cato Institute published a screed headlined "The Federal Highway Trust Fund Is Going Broke. Here's Why That Could Be a Good Thing." In general, it pooh-poohs the fiscal and economic impacts of default and explains how to handle creaky bridges with "weight restrictions" or "smaller repairs."

Meanwhile, the National Association of Manufacturers also "scored" the House vote with a thumbs-up for support. The 367-55 roll call at least shows that most policymakers put more stock in the opinions of folks who make and ship stuff people actually buy than the radical dystopian dreams of "conservative" wacko birds. 

That said, there's still plenty not to like on rational grounds in this measure. Normally circumspect with its mass audience largely of business travelers, USA TODAY called it "a telling display of absurdity, [funding] highway construction by letting employers endanger their workers' retirement" and like "raiding your 401(k) to put a temporary patch on the hole in your driveway." It added: "The obvious near-term solution is to raise the gasoline tax back to where it was in 1993 dollars and index it for inflation."

The deeply conservative Wall Street Journal also thundered against the bill, but leveled most of its criticism at Obama and progressives for wanting "to claim a 'jobs' victory before Election Day." How dastardly of them!

More measured dissent came from no fewer than a dozen U.S. secretaries of transportation, a bipartisan group who served as far back as the Lyndon Johnson administration and included appointees of Ronald Reagan and both Bushes. In an open letter to Congress, they said: "Never in our nation's history has America's transportation system been on a more unsustainable course ...This bill will not 'fix' [it]. For that, we need a much larger and longer-term investment."

Being transportation wonks, the 12 secretaries glossed over mention of why a sustainable transportation is vital: because it underpins economic prosperity. Fortunately, a well-timed White House white paper makes that compelling argument:

"A well-performing transportation network keeps jobs in America, allows businesses to expand and lowers prices on household goods. It allows businesses to manage their inventories and transport goods more cheaply and efficiently as well as access a variety of suppliers and markets for their products, making it more cost-effective for manufacturers to keep production in or more production to the United States. American families benefit too: as consumers, from lower-priced goods and as workers, by gaining better access to jobs.

"The economic benefits of smart infrastructure investment are long-term competitiveness, productivity, innovation, lower prices and higher incomes, while infrastructure investment also creates many thousands of American jobs in the near-term."

No one seems to argue with this anymore. We can hope that someday our national leaders will find a way to translate that realization into robust, honestly financed policies that extend over the long terms required for sound planning of the travel routes to a vibrant 21st century economy.

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