Congratulations to President Obama! One of the new president’s first tasks will be figuring out how to get Congress to fix the stimulus bill that the House proposed last week.
In its current form, the bill won’t do much for road and rail infrastructure, which was supposed to be one of its major points. In fact, it could hurt longer-term prospects for rational infrastructure investment.
In his inaugural speech this afternoon, the new president set the correct tone for smart investment. He mentioned “roads and bridges” first as part of his pledge to “lay a new foundation for growth.”
But the House bill didn’t set real, measurable upgrades to road (and rail) assets as a priority.
Consider: of the $825 billion stimulus bill, only $40 billion is earmarked for transportation and transit. That’s less than five percent of the total.
But it would take more than $70 billion annually in new spending to even begin to upgrade such infrastructure, according to the Department of Transportation.
To see how the House has prioritized its infrastructure investments, consider: the bill would devote $9 billion — split over two years — to transit projects.
But public housing public housing and other affordable housing investments will garner $15 billion. And physical upgrades to school buildings will get at least $20 billion.
The bill also puts an emphasis on “shovel-ready” projects, directing states to “initiate” the spending of roughly half the infrastructure money in the first four months or risk losing it. It also includes paving and surfacing work as core infrastructure investments.
This emphasis on speed and maintenance — coupled with the paltry allocations — doesn’t bode well for the best possible projects, which might not be the easiest, quickest, and cheapest.
Other than eschewing legislative “earmarks,” the bill makes no attempt to change how we think strategically (or don’t) about infrastructure projects.
As Obama and Congress rethink this bill, it would be a good idea, for example, for them to consider how the feds can lever their finite dollars. They should encourage projects that will measurably increase the private sector’s productivity and benefit the broadest base of people and businesses.
Drastically cutting commutes (on both road and rail) does that. Improving public and other subsidized housing for the relatively few people who live in such housing does not.
Second, the feds should think about how they can use these finite, supposedly special dollars to encourage state and local governments to embark upon technologically challenging projects. Such projects would be useful as demonstration projects for other states, cities, and towns.
To wit: Boston’s Big Dig, for all of its flaws, offers tremendous benefits to far-flung infrastructure planners. It laid 21st-century technology down on 19th- and 20th-century infrastructure, something that other places badly need to do. Its engineering “firsts” – both successful and unsuccessful – are a treasure trove of data for other places looking to embark on similarly ambitious projects to transform commutes.
Refurbishing a school building — even a “green” or “wired” school — just doesn’t offer the same opportunity for dramatic, and badly needed, innovation, or the same potential tdata bank.
The bill also errs in that it makes no effort to make the states prioritize their own infrastructure investment. This lack of prioritization has contributed to the current state of disrepair.
In fact, the bill does the opposite. It would devote $79 billion in operating aid to states, much of it to “prevent cutbacks in critical education” spending.
And it will allow states to accept 100 percent federal funding for some transportation projects, ensuring that those states don’t have to make any room in their own budgets for important projects.
But states like New York have long allowed education and medical spending to crowd out necessary infrastructure investment.
Discouraging states and cities to make needed cuts in bloated programs now — and forgoing an opportunity to encourage states to rethink how they spend money without results on the most politically popular programs — will make this problem worse.
And the bill does nothing to encourage states to look at their unsustainable labor costs in operating infrastructure projects once they’re built. Overly generous union contracts in many states, for example, mean that states and cities can’t afford to maintain their infrastructure after they’ve built or upgraded it.
Altogether, the current bill a paltry one-shot of money for transportation and transit coupled with provisions that make current imbalances worse instead of better.
To see how this would work in practice, just think about mass transit in New York.
The bill might offer New York $2 billion or so in new mass-transit funding, when the city’s Metropolitan Transportation Authority faces a $10 billion-plus funding gap for such projects over the next few years, and is struggling to keep up its assets under ridiculous pension and benefits costs.
Without major change, this bill is an inducement to keep up the status quo of slow disinvestment rather than to launch infrastructure re-investment to keep up with global cities.
It’s so important that Obama and his team prod Congress to get this right. The public won’t be interested in a do-over, even if the global bond markets let us try again in another few years.