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Obama rolls out six-year, $50 billion transportation infrastructure plan

By Jeff Berman, Group News Editor
September 07, 2010

President Barack Obama is putting a major emphasis on transportation infrastructure to help get the United States economy back on track.

At a labor rally in Milwaukee, Obama yesterday rolled out a transportation infrastructure plan focused on expanding and upgrading U.S. roads, railways, and runways, which, he said, can enable the country to have the “best infrastructure in the world.”

The wide-ranging six-year, $50 billion plan proposed by Obama is comprised of:
-rebuilding 150,000 miles of roads;
-constructing and maintaining 4,000 miles of rail, which is enough to stretch from coast-to-coast; and
-rehabilitate or reconstruct 150 miles of runways along with installing a NextGen system that will reduce travel time and delays.

The White House said that President Obama intends to mesh this proposal with a long-term framework to reform and expand the nation’s investment in transportation infrastructure, which could prove to be very timely as Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), the primary source for surface transportation funding which expired on September 30, 2009, and was then kept afloat by a series of continuing resolutions to keep funding at current levels. In March, Congress passed a measure to keep SAFETEA-LU funding intact through the end of 2010.

A major source of SAFETEA-LU revenue comes from “user fees” on the federal tax on fuel that last was raised in 1994 and is currently at 23.4 cents for diesel and 18.4 cents per gallon of gasoline. In recent years, SAFETEA-LU has had to receive funding from the United States General Trust Fund to remain solvent and enable states to work on surface transportation projects.

On the funding front for this proposal, the White House said that a $50 billion up-front investment, which represents a significant share of new infrastructure resources, would be required. But specific details on where the funding would come from were thin, with the White House saying it is committed to working with Congress to fully pay for the plan.  A New York Times report said that if Congress were to reauthorize the now-expired SAFETEA-LU and accounted for inflation, it would cost about $350 billion over the next six years, plus the additional $50 billion up-front investment which would be offset by eliminating tax breaks and subsidies for the oil and gas industries.

“If we are to enjoy the benefits that come from a world-class transportation system, Congress must enact a long-term reauthorization that reforms and expands our infrastructure investments and returns the transportation trust fund to solvency,” said White House officials in a statement.

Also touted as part of this plan is a pledge for an infrastructure bank, which would increase funding that is severely needed for surface transportation projects by leveraging private and state and local capital to invest in projects critical to economic success, rather than the more traditional federal government approach of spending through earmarks and formula-based grants.

This is not the first time the idea of an infrastructure bank has been floated. In fact, Obama’s proposed 2011 budget includes $4 billion to create a national infrastructure bank to provide a source of funding for infrastructure needs, which was rejected by a House Appropriations Committee transportation panel subcommittee in July, according to Bloomberg news. And he also broached the concept of an infrastructure bank that would invest $60 billion over a 10-year period for highways, technology, and other projects while running for President.

“The White House clearly seems ready to engage on the subject of infrastructure funding,” said Mort Downey, senior advisor at infrastructure firm Parsons-Brinkerhoff and chairman of the Coalition for America’s Gateways and Trade Corridors. “The proposed $50 billion infusion in a sense continues the enhanced levels that were provided under the American Recovery and Reinvestment Act (which had nearly $50 billion committed to transportation infrastructure investment).”

And with the economy not recovered yet, Downey said enhanced investment is needed and could segue into long-term funding. He added that the nature of the White House’s approach seems to follow with its strategic plan and the kinds of investments they have made in the Department of Transportation’s $1.5 billion Transportation Investment Generating Economic Recovery (TIGER) Discretionary Grant Program, which have been awarded on a competitive basis to transportation infrastructure projects that have a significant impact on the nation, a region or metropolitan area that can create jobs.

House Transportation and Infrastructure Committee Chairman James L. Oberstar made it clear he supports the White House’s plan.

“I am very pleased that the President wants to build on the success of the American Recovery and Reinvestment Act with further investment in our national transportation infrastructure,” said Oberstar in a statement. “I am also pleased that the President shares the Committee’s objectives of restoring our surface and air transportation systems to a state of good repair, increasing energy efficiency, and relieving the road and rail congestion that is crippling our economy.  The principles outlined by the President are consistent with those put forward by the Committee in the [proposed six year, $450 billion] Blueprint for Investment and Reform and the Surface Transportation Authorization Act.”

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


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