Transportation: the “phantom issue” in presidential race

Supply chain stakeholders lament the absence of transportation policy in Presidential candidates' policy agendas.

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By John D. Schulz, Contributing Editor

You’ve seen them. Those ubiquitous presidential political ads accusing, depending on their source, President Barack Obama of being unkind to animals and children and Republican challenger Mitt Romney unfit to organize a two-car funeral.
 
Well, almost. But in all those attack ads, both Republican and Democratic, there is one thing missing.
 
There is no mention of transportation. Not freight. Not passenger. Nothing, nada, zip.
 
On this particular issue, there seems to be bipartisan support in Washington.
 
On both candidates’ Web sites, there is zero mention of transportation, either passenger or freight, among the 25 or so major “issues” cited by both.
 
Considering transportation (including automobiles) accounts for about one-fourth of this nation’s Gross Domestic Product, top officials in transportation said they were concerned transport was getting a presidential brush-off.
 
“I’m disappointed, but not surpassed,” said Lana R. Batts, a veteran Washington transportation official and managing partner of Transportation Capital Partners. “Transportation is rarely mentioned when budgets are tight.
   
“Neither party wants to address the fact that the infrastructure is crumbling beneath their very feet because it means raising taxes to pay for it,” Batts added. “Building the interstate system took a visionary; maintaining it takes politicians with the guts to raise taxes and not just cut ribbons.”

Jean Godwin, executive vice president and general counsel of the American Association of Port Authorities, got the LM eagle eye award for scoping out the vague lip service to infrastructure spending on both parties’ platforms. But neither side set out a way to fund such investments.
 
“Both the Republican and Democratic national convention platforms highlighted infrastructure, including specifically port infrastructure, as critical to creating jobs and growing our economy,” Godwin told LM. “As our nation recovers from its economic troubles and our population continues to grow, we know that demand for goods will rise and cargo volumes will expand and that ports are crucial in this equation.”
   
Kelly Kolb, vice president, global supply chain policy for the Retail Industry Leaders Association, said it was “disappointing that while both parties presented their vision for growing the economy, neither made meaningful reference to a strong and efficient transportation system.
 
“Reliable infrastructure is the lifeblood of our economy and should be featured in the current dialogue,” Kolb added.  “I have little doubt that both parties recognize the need for investment, the questions will be when, where and how much.  Ultimately, actions will speak louder than words and we will reserve judgment until there are actions to judge.”
 
In separate letters in late August, to the presumptive nominees for the Office of the President of the United States, The National Industrial Transportation League has requested President Barack Obama and Gov. Mitt Romney outline their views on addressing investment in the nation’s transportation infrastructure with a particular emphasis on freight transport.
 
Additionally, they were asked to provide views on the rising costs of energy, greenhouse gas emissions and security impacts on transportation. At press time, NITL President and CEO Bruce Carlton said he had not heard back but said it was still relatively early in the campaign.
 
Carlton said NIT League members are “very concerned” about existing problems in the nation’s transportation infrastructure and the difficulties that U.S. companies face in moving products efficiently and effectively.
 
Of particular concern, he said, is the need to indentify new sources of funding not only to meet growing demands on our infrastructure, but the resources that are needed to maintain the existing system.
 
“It is important to the future of the economic health of our nation that we understand how both candidates will address these vital areas,” Carlton said.
 
The issue of funding infrastructure is front and center.  The United States now ranks 23rd in the world in overall infrastructure spending (Spain is 22nd). The U.S. spends just 2.4 percent of GDP on roads and bridge and other projects (Europe spend 5 percent and China 9 percent).

To simply maintain highways and bridges to satisfactory condition will require $89 billion a year over the next 20 years. Current funding levels are not half of that. Even though Congress finally passed an 18-month transportation bill last summer, it keeps funding at levels that were established nearly 10 years ago—about $55 billion a year, including mass transit.

“Roads and bridges are not like fine wine—they do not get better with age,” Lane Kidd, president of the Arkansas Trucking Association, says. “Highways upon which the trucking industry depends are decaying. Our industry pays its fair share for their upkeep, but not enough.”
 
Kidd said Americans like common sense in politics. “But in the current political climate, anything related to a tax is now a bad thing. Period,” he told LM. “So it’ll require our leaders to exercise some courage for the sake of the country.”
 
Batts said what’s needed is an emphasis on what she called “bread and butter transportation issues—not bridges to nowhere or high speed rail system to nowhere.  Congestion will further erode our nation’s productivity.” 
 
The Congressional Budget Office predicts the Highway Trust Fund Account will end fiscal year 2012 with a balance of $8.7 billion and that the Mass Transit Account will end FY 2012 with a balance of $4.7 billion. But CBO also estimates that both accounts will be unable to meet obligations at some point in 2015, although the Mass Transit Account may have some difficulties before that, depending on cash flows into and out of that account.
 
It is important to note that these figures reflect an $18.8 billion transfer to the Highway Trust Fund through the General Fund to shore up those accounts up until 2015.
 
In late August, the Obama administration said it was sending more than $470 million in unspent highway funds to states that promise to use the money to create jobs and improve transportation as part of an election-year effort. 
 
The money initially was allocated to the Transportation Department for special projects known as earmarks from 2003 to 2006. The Republican-controlled House has since banned earmarks, which are provisions tucked into bills which direct taxpayer dollars to lawmakers’ pet projects.
 
Trucking interests say an increase in the fuel tax—last raised in 1993—is the best way to assure the Highway Trust Fund is solvent in the coming years. But that tax increase requires political courage, something they say is in short supply these days.
 
“Politics is rarely logical but ignoring how an investment in transportation could resonate with the American people is shortsighted,” Kidd of the Arkansas Trucking Association said. “While the President frequently mentions building roads and bridges, neither he nor Mitt Romney will dare tread onto the topic with much specificity because they both know, as does everyone in Congress, that the only way to invest in roads and bridges is to pay for them, and that means raising the fuel tax,” Kidd said.
 
But Kidd said that if that highway tax money were segregated, as it is in the Highway Trust Fund, and spent for that particular purpose, Americans could be sold on supporting a fuel tax for that purpose.
 
“President Clinton faced the same challenge in 1992 when he proposed an increase in the fuel tax,” Kidd recalled of his fellow Arkansan.” Virtually every business group on Capitol Hill and most Republicans at the time opposed he fuel tax and claimed it would ruin the economy. It had the opposite effect on the economy.”

 


About the Author

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. Contact Jeff Berman

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