Stimulus, shmimulus

Spending $50 billion on the country's transportation infrastructure may create some jobs now but it's not nearly enough to protect the economy in the long-term

September 08, 2010

President Barack Obama's call for spending an additional $50 billion on transportation was quickly dismissed by Republicans as more of the same old economic stimulus. They could not be more wrong. If there was a valid criticism to be made of the first stimulus package, it was that not enough was invested in the nation's infrastructure needs.

What Mr. Obama is proposing is not some wild-eyed liberal spending scheme but the kind of basic investment that Washington should be making whether today's unemployment is 9.8 percent or 2.8 percent. The country needs roads, bridges, rail lines and runways in order to, as the president observed, compete in the 21st century global economy.

What's $50 billion? Barely a start. The country has not kept up with these basic needs for years. The transportation bill — the nation's six-year road map for transportation spending — was allowed to expire this year. But the latest version being considered by Congress calls for $50 billion to be spent each year. Even that, many experts argue, would merely keep the country at the status quo.

To think of $50 billion as some extravagance is like treating roof shingles as a luxury item. Stop replacing them and a homeowner will quickly discover that the damage — and cost — of inaction is far worse than any savings afforded by staying pat.

Admittedly, it may be helpful to fast-track some of these projects to help the construction trades and give the economy some modest push in the short term. A report released earlier this year by the American Association of State Highway and Transportation Officials claims there are 9,800 so-called "ready-to-go" projects totaling about $70 billion that Washington could fund immediately. Maryland has an estimated $615 million of them.

Two things seem to have stalled the long-term transportation plan. First is an inability to find a way to finance such spending that is acceptable to Congress and the White House. In years past, the federal tax on gasoline (currently 18.4 cents per gallon and unchanged since 1993), was the chief source of revenue for the Highway Trust Fund, but politicians fear a public backlash if they seek to raise it. It's also not the ideal way to finance transportation since consumer demand for gasoline is not necessarily going to grow as reliably as it has in the past.

Many of the alternatives, from a carbon tax to a fee based on miles traveled, are politically problematic, too. The president's current proposal is to finance the $50 billion in spending by eliminating tax breaks and subsidies for the oil and gas industry, a perfectly reasonable idea that probably won't get far in special-interest-driven Congress, however.

But there is also some concern that Washington does not allocate transportation dollars as efficiently as possible. Too many Congressional earmarks and Alaskan bridges to nowhere. Mr. Obama alluded to this in a speech in Milwaukee, but alternatives such as infrastructure banks, independent entities governed by a panel of experts who might direct public and private investment to projects that would do the most good, may be seen as too risky.

What's needed is a bipartisan approach, something that probably isn't possible as long as leading GOP voices insist on looking at basic infrastructure spending as budget busting but regard extending the George W. Bush tax cuts for the wealthy as a lesson in fiscal prudence. Consumers can keep paying the same amount in gas taxes (unadjusted for inflation) and sit in increasingly congested highways or outside crowded airports with no hope for relief. Some government spending truly is investment on behalf of taxpayers.

Mr. Obama didn't cast his $50 billion as stimulus spending. But he might have reminded his detractors that not spending money on infrastructure is a veritable anti-stimulus that risks the loss of private sector jobs in an economy paralyzed by congestion and failing infrastructure. When Ronald Reagan was president and the economy was ailing in the early 1980s, he didn't just increase the federal gas tax, he agreed to more than double it. That's because preserving the transportation system is not a Red or Blue state issue, it's a an absolute necessity for all.

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