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Transportation infrastructure: Obama points to infrastructure as a key to economic recovery

By Jeff Berman, Group News Editor
October 12, 2010

The need to further invest and upgrade United States transportation infrastructure continues to receive a fair amount of attention lately, with President Barack Obama yesterday saying more needs to be done to rebuild America’s infrastructure.

Speaking at the White House with former U.S. transportation secretaries Norman Mineta and Sam Skinner on hand, as well as various bipartisan mayors and governors, Obama said that the country’s infrastructure is woefully inefficient and it is outdated.

“For years, we have deferred tough decisions, and today, our aging system of highways and byways, air routes and rail lines hinder our economic growth,” said Obama.

The President also said that congestion-plagued roads cost the country $80 billion per year in lost productivity and wasted fuel, while flight delays lead to another $10 billion in wasted production. What’s more, he pointed out that the U.S. spends—as a percentage of GDP—considerably less than several other nations, including Russia and China, among others.

And earlier this week The U.S. Department of Treasury and the White House Council of Economic Advisers issued a report, entitled “An Economic Analysis of Infrastructure Investment,” which highlighted four reasons as to why immediate attention needs to be paid to increased transportation infrastructure investment:
-well-designed infrastructure investments have long term economic benefits;
-the middle class will benefit disproportionately from this investment;
-there is currently a high level of underutilized resources that can be used to improve and expand our infrastructure; and
-there is strong demand by the public and businesses for additional transportation infrastructure investments.

This report lamented how there is currently very little direct private investment in our nation’s highway and transit systems due to the current method of funding infrastructure, which lacks effective mechanisms to attract and repay private investment in specific infrastructure projects.

One potential avenue for increasing investments proposed in this report was establishing a National Infrastructure Bank, which Obama also backed in a Labor Day speech touting the economic benefits of transportation infrastructure and was part of his proposed six-year, $50 billion plan to expand and upgrade U.S. roads, railways, and runways, which, he said, can enable the country to have the “best infrastructure in the world.”

“The findings reiterate what Building America’s Future has been advocating for 18 months: our nation’s infrastructure has been neglected for far too long, smart investment can yield job creation and long-term economic growth, and the public and business community want our government to act,” said Governor Ed Rendell (D-PA), co-chair of Building America’s Future, in a statement. “We applaud the administration’s leadership on this issue and look forward to working with them to repair and modernize America’s transportation infrastructure.”
Former U.S. Transportation Secretaries Mineta and Skinner also put out a report in conjunction with the Miller Center of Public Affairs at the University of Virginia that calls for increasing gasoline taxes to lessen the shortfall for maintaining U.S. transportation infrastructure at current levels, which range from $134 billion to $194 billion per year from 2008-2035. They explained that the gasoline tax has lost more than one-third of its purchasing power since it was last raised in 1993, resulting in “chronic underfunding of the Highway Trust Fund and need for general fund bailouts.”

Another funding possibility cited by the former DOT chiefs was raising revenue at the state or local level through facility-level tolling and pricing, but they said more debate and analysis is needed to advance these concepts—although they do provide at least a starting point for weighing long-term transportation funding challenges and options.

And of particular interest for shippers and other supply chain stakeholders is Mineta and Skinner’s call for better planning and investments in state-of-the-art freight transport facilities and systems that would result in a more efficient supply chain and reduce business costs. They added that along with the long-term economic benefits there would be additional environmental and social benefits, including reduced pollution and reduced congestion on roadways also used by passenger vehicles.

Some other notable recent transportation infrastructure efforts include recently-introduced legislation by Representative Laura Richardson (D-Calif.)— The Freight is the Future of Commerce Act in the United States Act of 2010 (Freight FOCUS Act, H.R. 6291)—which addresses efficient ways for goods to move in and out of the United States.

A cornerstone of this bill is the establishment of a Goods Movement Trust Fund that would serve as a dedicated source of funding for transportation infrastructure projects, with safeguards to ensure that if funding came in from a specific mode, funds would be dedicated to projects for that mode.

To fund the Goods Movement Trust Fund Richardson is calling for a 12 cent increase in the diesel tax paid by trucks, coupled with a $3 billion a year transfer from the General Fund into the Goods Movement Trust Fund. Were this to come to fruition, it would represent the first time a gasoline tax of any kind has occurred since it last was raised in 1994 and is currently at 23.4 cents for diesel and 18.4 cents per gallon of gasoline.

And in late September the United States Chamber of Commerce he United States Chamber of Commerce rolled out the inaugural edition of its Transportation Performance Index (TPI), which closely examines how United States transportation infrastructure is serving the needs of the country’s economy and business community.
According to the U.S. Chamber, the TPI is derived by combining 21 indicators of supply (availability), quality of service (reliability, predictability, safety), and utilization (potential for future growth) across all modes of passenger transportation and freight transportation.

U.S. Chamber of Commerce Director of Transportation Infrastructure and head of its Let’s Rebuild America campaign Janet Kavinoky told LM that her organization has had an ongoing conversation in recent years, focusing on when the economy hit the wall by not investing in the country’s transportation system.

“What we recognized on the big picture of infrastructure is sometimes you have to move the discussion from ‘stimulus and shovel ready’ and the current scattershot approach to things we have now to what is in it for long-term economic growth,” she said. “We eventually decided to do it ourselves, because nobody has ever actually quantified how well or how not well the transportation system is working for business and then trying to associate that with the role of transportation and economic growth.”

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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