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President Obama talks transportation but stakeholders say action is needed

By Jeff Berman, Group News Editor
January 29, 2014

President Barack Obama again stressed the importance of the role of transportation and transportation infrastructure as a key driver of the United States economy and the nation’s global competitiveness in last night’s State of the Union address.

Fairly early into his address, the President raised the point of how the nation’s corporate tax code is flush with loopholes that “punish businesses investing here and reward companies that keep profits abroad.” He called for these loopholes to end, coupled with ending incentives to move jobs abroad, and, instead, lower tax rates for businesses that can create domestic jobs.

“Moreover, we can take the money we save from this transition to tax reform to create jobs rebuilding our roads, upgrading our ports, unclogging our commutes-because in today’s global economy, first- class jobs gravitate to first-class infrastructure,” he said. “We’ll need Congress to protect more than 3 million jobs by finishing transportation and waterways bills this summer.”

The aforementioned bills he cited are the current surface transportation reauthorization MAP-21, which is set to expire at the end of September, and the Water Resources and Development Act (WRDA), which has not been signed into law since 2007.

Last year, the House and Congress both approved their respective versions of WRDA, through which Congress authorizes the U.S. Army Corps of Engineers to carry out its missions to develop, maintain, and support the Nation’s vital port and waterways infrastructure needs, and support effective and targeted flood protection and environmental restoration needs.

And the pending expiration of MAP-21, coupled with the ongoing funding issues related to the Highway Trust Fund, leaves the current predicament without a predictable outcome in sight, as transportation infrastructure is currently not being properly maintained and improved and without action the situation will become worse in the coming years, explain industry experts.

Other transportation- and logistics-related themes cited by Obama included streamlining the permitting process for key projects to get more construction workers on the job, the ongoing gains in domestic natural gas and oil production, and new trade partnerships with Europe and the Asia-Pacific.

Reaction to the President’s speech from industry stakeholders was somewhat mixed. 

Leslie Blakey, executive director of the Washington, D.C.-based Coalition for America’s Gateways and Trade Corridors, said that the fact that transportation issues were mentioned early on could be viewed to an extent as an order of priority for the White House and Congress.

“That was encouraging as was the fact that he mentioned WRDA and MAP-21, because often when transportation is mentioned, it is often very broad-based and not related to legislation in Congress,” she said. “It highlighted that Congress needs to get the WRDA bill out of conference also move on MAP-21 to get it to the President’s desk before it expires.”

Blakey also made note the Obama is the first president since Dwight D. Eisenhower to even talk about transportation in these addresses and he has done so each year, adding that it has been a recurring theme for him.

But as also has been the case, she noted that funding for these various initiatives was once again not mentioned.

“He continuously refers to transportation as investment and in connection with our ability to maintain our status in the global economy and as a powerhouse of innovation and growth,” said Blakey. “Transportation is not just about spending, it is about investing. I think his message on that to roads, railroads, ports, and airports shows that he will continue to press on his agencies to raise the importance of multimodal investments in transportation.”

Eno Center for Transportation President and CEO Joshua Schank said transportation was again a big component of the State of the Union speech, but he cautioned that with that comes a degree of skepticism because none of that rhetoric has translated into more meaningful action over the last five years since Obama took office.

And like CAGTC’s Blakey he said that it was a positive that he cited WRDA and MAP-21 as keys to augmenting the nation’s transportation system and paying attention to Congress, passing these bills would be a boost for U.S. supply chains.

“But I would not get too excited about it,” he said. “What exactly is he going to do to push that legislation through and to what extent is he capable of doing anything, given where his approval ratings are. MAP-21 depends entirely on finding money to fund it, and I don’t know how any closer we are to that. The President has mentioned corporate tax reform as a way to fund infrastructure in the past and primarily mentioned it as a one-time infusion of cash rather than a long-term sustainable investment strategy, which is what I would imagine people operating ports and freight and logistics would care about. They are looking for a long-term transportation investment strategy.”

Schank said the current state of U.S. transportation infrastructure is south of being “stuck in neutral,” as neutral would be staying the course and not changing things, but he said things are worse than that as there is no certainty with respect to funding due to the volatile nature of the Highway Trust Fund, which makes it harder to make wise investment decisions over the long-term.

The biggest potential for funding improvement, according to Schank, is finding a way to cut spending and use those spending cuts to make long-term transportation investments.

“Instead of relying on the gas tax alone, perhaps there is another revenue source that is not necessarily a user fee but is relevant to transportation, like income tax for example,” he said. “You could say that is relevant to transportation because transportation makes a substantial contribution to GDP,” he explained. “If you said instead we are going to stop spending money on something and instead save $50 billion a year for transportation, that would have a much better chance of becoming law than trying to rely on user fees over the long-term.”

American Trucking Associations President and CEO Bill Graves said it was encouraging that the President touched upon transportation infrastructure, but stressed that more action and certainty is needed.

“While we appreciate President Obama making reference to the need for infrastructure investment, we remain disappointed in the continued lack of specificity when he discusses funding,” Graves said. “While it is critically important to the nation that Congress and the administration come together on a multiyear highway bill this year, we believe that until the administration puts forward a serious, user-based funding proposal we will risk going over the Highway Trust Fund ‘fiscal cliff’ in the near term and be woefully underfunded to meet the longer term needs of the nation.”

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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