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LaHood will push for infrastructure bank, but T&I head Mica calls proposal “dead on arrival”

By John D. Schulz, Contributing Editor
October 13, 2011

Transportation Secretary Ray H. LaHood is vowing to go to the mat against his former House Republican colleagues in winning $10 billion in seed money to create a national infrastructure bank to fund freight projects of national significance.
That comes in the wake of House Transportation & Infrastructure Committee Chairman John Mica, R-Fla., calling the infrastructure bank idea “dead on arrival” in the House.
“The infrastructure bank is something that President Obama has pushed very hard for,” LaHood said. “We support it in the American Jobs Act [where] there is $10 billion dollars for the infrastructure bank. That money could be used to leverage billions of private dollars to build roads, to build bridges, to build some infrastructure on the waterways to build water treatment plants, and to build sewage treatment plants,” LaHood said. “[An infrastructure bank] would give communities the opportunity to take not only aging infrastructure like roads and bridges but all the other things communities [need] in order to operate.”
LaHood, who announced this week he plans to step down from his position at the conclusion of his term in 2012, says being the only Republican in the president’s cabinet will be helpful as he tries to lobby his former colleagues into passing the $447 billion American Jobs Act, which includes the infrastructure bank seed money.
“I have a good relationship with people on both sides of the aisle,” LaHood told LM. “I think it has really helped us moved our agenda at DOT having the relationships on Capitol Hill.”
LaHood says he reminds his former House colleagues “there are no Republican or Democratic infrastructure projects,” only improvements “They’re bipartisan and I think my relationship has been helpful to the administration, to the President, and to moving the transportation agenda.”
One issue that does have partisan backing is the Transportation Investment Generating Economic Recovery, or TIGER grants. They have provided $1.5 billion in improvements in 51 projects around the country. LaHood said more money is on its way.
“I think that Congress like the TIGER program very much,” he said “We started out with $1.5 billion in the stimulus bill (that) funded a lot of very creative ideas. The most significant, positive aspect of TIGER is you come directly to the department with a creative idea. You don’t have to go to a governor. You don’t have to go to some other jurisdiction. If you’ve got a good idea bring it to us, we look at it and the money comes directly to you. There are not a lot of bureaucracies involved and we really funded a lot of very creative ideas.”

TIGER grants are another example of the Obama administration’s commitment to multimodal approaches to transport, LaHood said.
“It’s creating this idea that some people may want to bike to work, may want to walk to work, may want to take the Metro to work, may want to drive their car, may want to get on a bus, or light rail or streetcar and that’s what TIGER has really allowed,” LaHood said. “[It’s] a lot of creative thinking about transportation not just one mode, not just a car, not just the bus but light rail, streetcar, walking, biking and we’ve been able to use TIGER money where people come directly to us. Not a lot of bureaucracy.”

Whereas the TIGER grants have bipartisan support, President Obama’s call for an infrastructure bank is running into resistance in Congress, especially the Republican-controlled House.
Democrats view the infrastructure bank as a quick way to provide federal funding to specific, critical transportation projects of national importance. LaHood, the lone Republican in the president’s cabinet, told LM he favors creation of such a bank.
“The infrastructure bank is something that President Obama has pushed very hard for,” LaHood said. “We support it in the American Jobs Act [where] there is $10 billion dollars for the infrastructure bank. That money could be used to leverage billions of private dollars to build roads, to build bridges, to build some infrastructure on the waterways to build water treatment plants, and to build sewage treatment plants,” LaHood said.
Specifically, LaHood cited a program on the Mississippi and Illinois rivers for the locks and dams which are over 50 years old. “An infrastructure bank would be used to fix up the locks and dams,” he said. “We’re going to push this very hard. We believe this is a pot of money that leverages a lot of other money that really gets the private sector involved.”

Not surprisingly, LaHood’s fellow Republicans differ. They view the infrastructure bank as a unnecessary new federal program that would be very similar to the existing Transportation Infrastructure Finance and Innovation Act (TIFIA) program.  TIFIA provides federal credit assistance to multi-modal surface transportation projects of regional and national significance. 

Republicans say the President’s infrastructure bank proposal is also similar to State Infrastructure Banks (SIBs).  SIBs are revolving fund mechanisms that allow states to finance highway and transit projects through loans and credit enhancements by utilizing their federal aid highway funds.

During a hearing chaired by House T&I Committee Chairman Mica, on Oct. 12, critics pointed out that establishing and operating a new NIB would consume a significant amount of resources, and serve a function that could be fulfilled by TIFIA and SIBs.

Specifically, Republicans questioned the wisdom of spending an estimated $270 million in a year-long process of creating another federally backed agency designed to pick project winners and losers.
“Unfortunately, they still haven’t learned ‘shovel ready’ is a national joke,” Mica said in a statement. “While the administration is pushing these projects forward with current red tape and rules, they just push further back or stall hundreds of other projects pending federal approval. We must expedite the review process for all projects, not just a handful. When the entire infrastructure project process is mired in red tape, the administration’s plan is a drop in the bucket compared to what must be done.”
The Senate backs the infrastructure bank idea. A bipartisan Senate bill, co-sponsored by Sens. John Kerry, D-Mass., and Kay Bailey Hutchison, R-Texas, includes language that would establish such an infrastructure bank.
The infrastructure is one of the few things that both the AFL-CIO and U.S. Chamber of Commerce are in agreement. Both those organizations have backed the infrastructure bank idea.
Mica said the administration is merely using existing authority to better coordinate project reviews, but it is not actually streamlining the project process.
“Why is the administration suggesting improved coordination for only a few projects and not all?” Mica asked.
In place of the infrastructure bank, Mica favors expediting projects when the Administration proposed its first stimulus and was touting ‘shovel-ready’ projects in 2009. Now, more than two years later, 35 percent of infrastructure stimulus funds are still sitting in the U.S. Treasury, ‘shovel-ready’ has become a national joke, and the more-than-$787 billion stimulus has failed to deliver the jobs that were promised.
“A six-year transportation reauthorization proposal by the Transportation and Infrastructure Committee that specifically cuts red tape for all projects and dramatically expedites the cumbersome process, (will) put people back to work across the country,”  Mica said.
Oklahoma Transportation Secretary Gary Ridley said a variety of existing transport funding sources are available to states. “The concept of a new federal corporation seems untimely and totally unnecessary,” Ridley said at the hearing.
Democrats indicated they would fight for the infrastructure bank idea, but conceded it was not a “cure-all” for the nation’s spending shortfall.
“It can be a useful adjunct,” said Rep. Pete DeFazio, D-Ore., the ranking Democrat on the T&I committee. “States need guarantees. Banks aren’t lending. An infrastructure bank could be more useful to the states.”
Specifically, Rep. DeFazio said an infrastructure bank would be helpful in projects “with a revenue stream,” such as public-private partnerships in toll roads and bridges. “An infrastructure bank would be useful in revenue-producing transportation projects, but it has its limits.”
Rep. Jerrold Nadler, D-N.Y., said an infrastructure bank managers would still have difficulty in establishing which projects are most worthy to help fill what experts have estimated to be a $1.5 trillion shortfall in infrastructure spending.
“What is more worthy, a subway project that moves a million people a day or a port, which moves thousands of tons of freight a day?” Nadler asked. “Well, a subway is used by people who vote and freight does not vote. But that is not the right priority.”
On a related issue, LaHood said he was proud of the administration’s commitment to maritime infrastructure improvements, which he claims dwarfs other administrations’ financial backing of U.S. ports and inland waterways.
“We’ve invested in 13 ports,” he told LM. “In the history of DOT, I don’t know if DOT has ever invested in 13 ports. We’ve actually given ports money so they can expand their capacity. Then you take an expanded port and you use the waterways and we actually put out this year a marine highway plan that actually shows the marine highways, how we would use them, how they connect to the ports and how they connect to the roadways.”
LaHood said this was another example of how multiple modes of transportation can improve the nation’s freight flows. “Multimodal [is] not one over the other,” he said. “But [we’re] really trying to make sure we are making the best capacity that we can from allotted forms, different forms of transportation. But expanding our ports enables us to really use the marine highway.”

About the Author

John D. Schulz
Contributing Editor

John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. He is known to own the fattest Rolodex in the business, and is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis. This wise Washington owl has performed and produced at some of the highest levels of journalism in his 40-year career, mostly as a Washington newsman.

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