The Other ‘Structural Deficit’ Gets New Champions
Business + Economy

The Other ‘Structural Deficit’ Gets New Champions

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One of Washington’s oddest couples, Richard Trumka and Thomas Donahue, has teamed up to  lobby Congress to invest in infrastructure in order to rebuild a strong economy and create jobs — echoing what President Obama has called for in his agenda to “win the future.”

On Wednesday, Trumka, president of the labor union AFL-CIO, and Donahue, president of the pro-business Chamber of Commerce, set aside their differences and appeared before the Senate Committee on Environment and Public Works in the hopes of breaking through the partisan warfare to boost more investment in the country’s bridges, highways and rail projects.

The two adversaries recognized they rarely have found themselves on the same side of an issue. “Rich and I may not be Facebook friends, but we can occasionally find common cause, pool our resources, and get stuff done,” Donahue joked.

“The fact that Mr. Donahue and I appear before you today does not mean that hell has frozen over or unicorns are now roaming the land,” Trumka said. “We both realize that our country needs to step up our ‘Investment in America’ for business, as well as working Americans, to succeed.”

Trumka and Donahue urged Congress to pass a multibillion-dollar bill that would provide funds for investment infrastructure programs, claiming it is economically sound policy that would allow the U.S. to compete with emerging markets and employ millions of workers in the U.S. 

Their rare appearance together on Wednesday resonated with their joint statement issued after the State of the Union, which praised the President’s calls for additional funding in infrastructure investment.

“Congress and the administration must maximize the use of existing infrastructure and streamline project delivery for new infrastructure,” Donahue said. “Better strategies and the smart use of technology can help us get the most bang for our buck from existing assets.”

On Monday, President Obama proposed an ambitious six-year, $556 billion proposal for highway, transit and passenger rail construction, as well as safety programs, as part of his fiscal year 2012 budget.  This proposal would also include his six-year, $53 billion initiative for high speed rail. However, the president has offered few specifics on how this plan would be funded.

House Republicans would cut $1 billion in government funding to a high speed rail program compared with the President’s 2011 budget request.

There is a growing consensus among lawmakers on the urgent need to invest in infrastructure, but questions remain on how to fund the projects, similar to the spending cuts showdown over the continuing resolution.

“Election season comes soon enough but now we have an obligation to work together for the American people — for jobs, for business and for our nation,” said panel chairman Sen. Barbara Boxer, D-Calif.

“Everyone needs to keep an open mind,” Donahue said. “I am well aware of the fiscal constraints facing this Congress and the nation. But we must avoid cutting off our nose to spite our face. Without proper investment and attention to our infrastructure, the United States’ economic stability, potential for job growth, global competitiveness, and quality of life are all at risk.”

Ideas on the Table

Trumka said everything should be on the table when looking for funding sources and offered several of his own ideas. He suggested Wall Street should pay a 0.05 percent transaction fee that would raise $100 billion in revenue each year. He said the Federal Reserve could allocate a portion of its bond authority to buy infrastructure bonds. He also said there could be user fee based on vehicle miles used.

Trumka and Donahue favor raising the federal gasoline tax — currently $0.18 a gallon — which hasn’t been raised since 1993. Raising this tax to fund road projects has not won support from the administration or Congress. Sen. Tom Carper, D-Del., a member on the panel, said he is one of two Senators who support a gas tax increase for the investments.

Last year in a Labor Day speech, Obama proposed a $50 billion national infrastructure bank, which would be a six-year investment to be used to rebuild 150,000 miles of roads, restore 150 miles of airport runways, and construct and maintain 4,000 miles of rail. The bank would create and fund projects through a competitive, merit-based process, but no one has worked on the details — not even the administration.

The idea for an infrastructure bank is hardly new. Senate Banking Committee Chairman Chris Dodd, D-Conn., and Sen. Chuck Schumer proposed legislation in 2007 which gained little traction.

Investment banker and former governor of the New York Stock Exchange, Felix Rohatyn, has championed a national infrastructure bank for at least 15 years. “It’s more dangerous today than it has ever been if we don’t do anything because of the failing architecture or infrastructure,” Royatyn told The Fiscal Times.

The American Society of Civil Engineers estimates it would cost approximately $2 trillion to $3 trillion to fix the infrastructure system in the country over five years if investments aren’t made quickly. The nation’s transportation infrastructure system has an annual output of $120 billion in construction work and contributes $244 billion in total economic activity to the nation’s gross domestic product, according to the ASCE.

Rohatyn said he is optimistic to see two adversaries talking to each other about a subject that needs urgent attention. He suggests infrastructure projects should be funded by independent agencies, which can finance three to four times their equity when compared to a one-shot plan that might come out of a budget process from Congress.