Obama’s Big Pitch for Infrastructure Falls Short
Policy + Politics

Obama’s Big Pitch for Infrastructure Falls Short

iStockphoto/The Fiscal Times

Since the darkest days of the financial crisis, President Obama has portrayed spending on bridges, roads, waterways, schools and other forms of infrastructure as a silver bullet that could help the nation out of its worst economic woes.

But the president has a lot less to show for his efforts than is suggested by his lofty rhetoric.

As a measure of his conviction, Obama poured $48 billion of the American Recovery Act funds into more than 15,000 projects across the country, leading to improvements of over 350,000 miles of roads and repairs or replacement of over 20,000 bridges. During that same time, the Department of Transportation built or improved more than 6,000 miles of rail, 40 rail stations, and purchased 260 passenger rail cars and 105 locomotives, according to the Office of Management and Budget.

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Obama has proposed $50 billion for immediate infrastructure investments, and creation of an independent “National Infrastructure Bank” that could leverage public and private investments into hundreds of billions of dollars of new projects.

The president returned to these themes last Thursday as he once again touted infrastructure as an elixir for the economy’s painfully slow recovery in a speech he delivered at the port of Jacksonville, Fla.

“If you want to create jobs right now, but also jobs that will have impacts for years, here’s the way to do it,” Obama said to a cheering crowd of several hundred. “We know strong infrastructure is a key ingredient to a thriving economy. That’s how the United States became the best place in the world to do business.”

Yet the president and his allies on Capitol Hill, in state government and in the construction industry have been swimming upstream over the past five years in their efforts to realize this goal.  Experts warn that without a significant increase in spending in this area, the nation will suffer long-term economic hardships and the safety and dependability of bridges and roads will continue to be in question.

The federal government spends about $82 billion annually on transportation and highway projects, aviation, mass transit, waterways and environmental projects, according to a compilation by the U.S. Chamber of Commerce. States and cities contribute the lion’s share of the spending, but that, too, has diminished because of cutbacks in state budgets.

U.S. public construction spending as a percentage of the overall economy has dropped to its lowest point in 20 years, after a big uptick before the Great Recession, according to Joe Weisenthal at Business Insider. Overall, just two percent of the U.S. gross domestic product goes to infrastructure construction, compared to 5 percent of GDP in Europe and nine percent in China, according to a government report.


Government stimulus spending approved in 2009 provided some important job relief at the worst of the recession. It increased employment in the third quarter of 2011 by as many as 3.3 million full-time jobs, according to a report by the Congressional Budget Office. But many of those jobs disappeared after the projects were complete – leaving the construction industry in the dumps.

Throughout Obama’s years in office, unemployment in construction has run far ahead of the national average. It peaked at 20.6 percent in 2010 and only finally dipped below double digits last month amid the housing comeback.

Many of the president’s proposals – including the $50 billion of new, upfront infrastructure spending that he highlighted in his February State of the Union speech – have fallen victim to partisan gridlock or budgetary constraints on Capitol Hill.

“Unfortunately, over the past two years, too many folks in Washington have been cutting these investments,” Obama complained during his speech. “The world can't wait for Congress to get its act together.”

But the president isn’t blameless in this problem. He has repeatedly unveiled ambitious proposals with big price tags without doing the necessary spade work or follow through on Capitol Hill.  And he has antagonized Republicans by repeatedly attempting to end-run Congress with administrative and regulatory actions that do not require congressional approval.

While administration officials insist Obama had no alternative because of the GOP’s unrelenting opposition to the heart of his economic and social agenda, some Republicans insist that the president goes out of his way to poke them in the eye.

House Speaker John Boehner (R-OH) dismissed the president’s Jacksonville speech as “all sizzle and no steak.” Sen. Jim Inhofe (R-OK), a senior member of the Environment and Public Works Committee, said Obama could best safeguard the middle class by laying out a “responsible proposal” to expand and fund infrastructure instead of “more campaign-style pageantry,” according to Politico.

For at least the past three years, Obama has promoted the idea of an independent National Infrastructure Bank  -- one that could provide private developers with low-interest loans and guarantees by leveraging public and private investments by twenty-fold.
The idea has drawn a fair amount of bipartisan interest in the House and Senate, but some critics say Obama did little to push for passage of the measure. And the president lost his biggest champions of the measure when Democrat John F. Kerry of Massachusetts left the Senate to become Secretary of State and Republican Kay Bailey Hutchison of Texas retired at the end of last year.

Janet Kavinoky, executive director of transportation and infrastructure for the U.S. Chamber of Commerce, noted that it might not have made any difference if Obama had been more involved, given congressional Republican antipathy towards him.

She added that rather than complaining about their differences, “There are actually a couple of very specific things that Obama and Congress can be pushing right now on infrastructure that would make a huge difference.” 
One thing would be to enact the Water Resources Development Act to provide the Army Corps of Engineers with additional funding and authority to dredge ports, harbors and channel and to repair or replace aging locks, dams and levees – all essential to help boost U.S. exports and trade. Last May, the Senate approved the bill, 83 to 14, and the House will likely take up its version of the legislation after the August recess.

The other matter is to finally take on the crisis in the federal Highway Trust Fund that could lead to a 90 percent reduction in spending on highway and surface transportation projects for state and local governments in the next year or two.

The challenge is to maintain and rebuild an aging transportation infrastructure in an era when gasoline consumption is down and fuel efficiency is up. The federal government currently spends $51 billion a year on highway and mass transit projects. But revenues from an 18.4 cent per gallon federal gasoline tax dedicated for those purposes have been lagging far behind the overall cost for years.

The gas tax hasn’t been raised since 1997. It is now worth a mere 75 percent of its 1990s value in inflation-adjusted dollars. That means the tax generates less than 90 percent of the money spent by the federal government on roads and mass transit each year, with the rest of the $51 billion program coming from the equally tax-starved general fund.

The current trajectory of the Highway Trust Fund is unsustainable, according to a recent Congressional Budget Office analysis.  Bringing the trust fund into balance in 2015 would require cutting the authority to obligate funds in that year from the projected $51 billion to about $4 billion, raising the gas taxes by about 10 cents per gallon or undertaking a combination of those options, according to the CBO.

“Neither this president nor Congress in general has dealt with the problem of what the future funding for the Highway Trust Fund is,” Kavinoky told The Fiscal Times on Friday. “That is a real, clear, specific problem that is not going away. The president and Congress both have to step up and address that.”

The dangers inherent in the collapsing Highway Trust fund became apparent well before an interstate highway bridge in Minneapolis fell into the Mississippi River August 1, 2007, killing13 people and injuring 145. The American Society of Civil Engineers in its 2009 survey gave the nation’s roads a D- grade, slightly below the D grade given the nation’s infrastructure as a whole. Mass transit, which is guaranteed 20 percent of the highway trust fund in a deal reached during the Reagan administration, received the class average of D.

This year, the ASCE gave America’s infrastructure a cumulative D+ grade—only a slight improvement over its finding of four years ago. The grading is based on such factors as funding, quality of construction, maintenance and public safety.

“While the modest progress is encouraging, it is clear that we have a significant backlog of overdue maintenance across our infrastructure systems, a pressing need for modernization, and an immense opportunity to create reliable, long-term funding sources to avoid wiping out our recent gains,” according to the ASCE report.