Logistics news: Obama puts transportation in the spotlight
Transportation infrastructure development is viewed as a significant component of U.S. economic recovery, but industry groups insist that $50 billion falls well short of what is really needed.
By Jeff Berman, Group News Editor -- Logistics Management, 3/1/2009
Washington and Denver — President Barack Obama officially signed the American Recovery and Reinvestment Act of 2009 into law last month, paving the way for the United States economy to get back on track.
Many in logistics and transportation were happy to see that transportation infrastructure development figures significantly into the bill as a way to stimulate economic growth and job creation. While the House and Senate versions of the bill were $819 billion and $838 billion, respectively, the final version came in at $789 billion—with roughly $50 billion dedicated to transportation infrastructure investment.
"We know we cannot build our economic future on the transportation...networks of the past," said Obama prior to signing the legislation at the Denver Museum of Nature & Science. "We are remaking the American landscape with the largest new investment into the nation's infrastructure since Eisenhower built an interstate highway system in the 1950s. Because of this investment nearly 400,000 men and women will go to work rebuilding our crumbling roads and bridges...building high-speed rail lines that will improve travel and commerce throughout our nation," Obama added.
In terms of specific funding allocations dedicated to transportation infrastructure initiatives, highlights of the bill include:
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$27.5 billion for highway and bridge construction projects;
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$8.4 billion for mass transit, public transportation projects;
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$8 billion for high-speed rail projects
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$1.3 billion for aviation projects;
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$4.6 billion for water infrastructure projects undertaken by the U.S. Army Corps of Engineers and $100 million for the Maritime Administration; and
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$1.5 billion for a discretionary program for large multi-modal and intermodal projects in the form of competitive grants to state and local governments for transportation investments—including highway, rail, transit, or port infrastructure.
This legislation comes at an opportune time in the economic history of the country, but according to various concerns, the roughly $50 billion allocated to infrastructure investment is nowhere near enough to tackle the projects that are already in the works.
In its recently-issued infrastructure report card, the American Society of Civil Engineers said that one-third of America's major roads are in poor or mediocre condition, and 45 percent of urban highways are congested. The society added that the nation needs to spend $2.2 trillion over the next decade to get roads and bridges in "good condition."
"Transportation infrastructure pays off in so many ways that the argument for budget busting deficit spending is probably stronger for transportation infrastructure than it is for most anything else," said Leslie Blakey, executive director of the Coalition for America's Gateways and Trade Corridors. "Construction puts people to work, and the efficiency of the transportation network improves the ability for us as a country to improve and get more production out of our economy," added Blakey.
Despite the funding allocated towards transportation infrastructure in this bill, the difference between the final tally and what is needed is wide. In December 2008, the American Association of State Highway and Transportation Officials (AASHTO) said that based on the results of a survey sent to the Departments of Transportation for the District of Columbia and all 50 states, there are 5,148 "ready-to-go" transportation projects worth more than $64 billion.
AASHTO said that these projects are considered "ready-to-go" because they could be under contract within 180 days and support an estimated 1.8 million jobs if sufficient funding were available. Meanwhile, the National Governors Association recently informed President Obama that there are approximately $150 billion in transportation projects ready to build, with each $1 billion in spending able to produce 40,000 jobs.
The potential for job creation was cited by the House Committee on Transportation and Infrastructure that stated that the $50 billion of total infrastructure investment will "sustain more than 1.8 million jobs and $322 billion of economic activity. [And] each $1 billion of Federal funds invested in infrastructure creates or sustains approximately 34,779 jobs and $6.2 billion in economic activity."
While the funding currently allocated for highway and bridge construction projects falls short of what is needed, it appears to be a step in the right direction, said Janet Kavinoky, director of transportation infrastructure for the U.S. Chamber of Commerce.
"This is a good start, but there is much more demand out there," said Kavinoky. "It is a down payment on what Congress has to turn around and do, which is deal with the major re-authorization bills towards the end of this year."
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