Donahue declares infrastructure investments a must
U.S. Chamber of Commerce President supports Obama’s commitment to recovery package, urging that Washington needs to take “a defibrillator to the U.S. economy.”
By John D. Schulz, Contributing Editor -- Logistics Management, 2/1/2009
WASHINGTON — The new Obama administration needs to invest in “quick turnaround” infrastructure projects in transportation and energy sectors to help the nation recover from a deepening recession, the nation’s top business lobbyist recently declared. “We applaud the new President’s commitment to make infrastructure a central part of his economic recovery package,” said U.S. Chamber of Commerce President Thomas J. Donohue during the Chamber’s 11th annual “State of American Business” report presentation in Washington last month. “Washington needs to take a defibrillator to the U.S. economy,” he said.
To do that, Washington will spend more federal money than anyone ever thought it would, and infrastructure spending is at the core of that spending—which is good news for all who operate in the freight and logistics sectors. “Let’s get America moving again,” added Donohue.
A record Highway Trust Fund bill that should get passed by the end of 2009 could do exactly that. With estimates that it will cost $500 billion over four years, it will be nearly twice as large as the current Highway bill that expires on Sept. 30 of this year.
Donohue urged the entire business community, including logistics managers and freight transportation carriers, to ask themselves one simple question: “What are you doing to make this economy work better?”
Certainly, President Barack Obama and transportation officials in Congress seem to have asked that question of themselves recently. Transportation and logistics are a part of the solution, they say. The House Transportation and Infrastructure Committee has identified at least $35 billion in what it calls “shovel-ready” projects to help jump-start the struggling economy. These projects are now part of the Obama team’s nearly $1 trillion economic stimulus package that it would like have passed by Congress in the first 100 days.
But Donohue would like to see smarter infrastructure investments, including infusions from the private sector. Already, at least one expert is seeing an uptick in activity that should aid freight carriers as the nation gets ready to pour concrete and steel to improve the infrastructure. “There are some definite bright spots in construction,” said Ken Simonson, chief economist of the Associated General Contractors of America, a trade group. Although home construction remains in the doldrums, other areas such as military, hospital, schools, and other institutions have begun an uptick in construction activity, Simonson noted.
“I hope they put a substantial part of that stimulus package into infrastructure projects,” said Simonson, former chief economist of the American Trucking Associations back when Donohue led that group. For every $1 billion in investment about 28,000 jobs are created, Simonson added—and more than half those jobs are non-construction-related.
He added that increasing infrastructure spending by the government is just a “down payment” on what could be a larger improvement. As the private sector recovers, it is prepared to make “all kinds of investment from seaports to airports,” Donohue said.
Business will make these investments when the government eliminates what the Chamber calls the “legal and regulatory impediments” that Donohue predicts would “unlock” private sector infrastructure investments as the U.S. recovers from what economists are calling a deep, continuing recession.
The U.S. economy began contracting in the fourth quarter of 2007, enjoyed two quarters of anemic growth, and then declined again in the fourth quarter of last year. An anticipated first quarter GDP decline will mean that the U.S. economy will have contracted in four of the past six quarters.
Martin A. Regalia, chief economist for the U.S. Chamber, is predicting a 3 percent decline in GDP in the first quarter before the U.S. economy bottoms out in mid-year. Unemployment could exceed 9 percent this summer, he predicted. “We are going to get out of it but not before we set records for longevity and some notable records for decline,” Regalia said.
However, the Chamber is optimistic that there is “much common ground” between the business community and the new Obama administration. Still, Donohue predicted that there will be inevitable clashes, including what he called an “an abusive” Employee Free Choice Act, which many trucking executives fear could help unions organization.
“If they try to do too much too fast and pile too much on the business community, it could topple the entire system,” Donohue said. In fact, he’s urging the government to make “smart, effective, targeted, and temporary” spending to spur the economy, but warned: “We cannot afford and will not tolerate another New Deal.”
The last thing the Chamber wants is long-term government interference with business. As Donohue said, “With all due respect to members of Congress, most of them could not operate a candy store.”
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