Saturday, December 13, 2008

Obama And Congress To Screw Up The Stimulus?

NOTE: We've moved! Visit us at the California High Speed Rail Blog.

That's how I read this Washington Post article which suggests the road and highway lobby may win out over the 21st century in the composition of the economic stimulus package to be offered in January:

Most of the infrastructure spending being proposed for the massive stimulus package that Obama and congressional Democrats are readying, however, is not exactly the stuff of history, but destined for routine projects that have been on the to-do lists of state highway departments for years. Oklahoma wants to repave stretches of Interstates 35 and 40 and build "cable barriers" to keep wayward cars from crossing medians. New Jersey wants to repaint 88 bridges and restore Route 35 from Toms River to Mantoloking. Scottsdale, Ariz., wants to widen 1.5 miles of Scottsdale Road.

None of this in itself is bad. Maintaining what we've got is necessary. But what does this mean for the more important projects - those that will not only create jobs but provide lasting economic growth and value?

On the campaign trail, Obama said he would "rebuild America" with an "infrastructure bank" run by a new board that would award $60 billion over a decade to projects such as high-speed rail to take the country in a more energy-efficient direction. But the crumbling economy, while giving impetus to big spending plans, has also put a new emphasis on projects that can be started immediately -- "use it or lose it," Obama said last week -- and created a clear tension between the need to create jobs fast and the desire for a lasting legacy...

The Obama transition team is aware of the tension created by its goal of immediate stimulus but contends it can be resolved. For one thing, one aide said, some of the most legacy-building aspects of the recovery plan will be in areas other than transportation infrastructure -- such as expanding the electric grid, retrofitting schools to make them energy efficient and modernizing medical record-keeping.

Defending the emerging list of projects, the aide, who was not authorized to speak publicly, said there simply is a vast need for repairs. But the aide said that the Obama team also has its eye out for longer-term projects to invest in, and that for all the emphasis on quick spending, the recovery plan is considered a two-year undertaking. What is still to be determined is how some of those more ambitious projects would be chosen and how that money would be apportioned.


That aide doesn't really understand what he or she is talking about if that's what they believe provides "legacy". It is essential and at least 30 years overdue for America to stop subsidizing sprawl and start investing in mass transit alternatives, especially rail. Expanding the electric grid is valuable, but the other two mentioned - retrofitting schools and modernizing medical records - are just not significant compared to investing in new transit infrastructure. This is a time for thinking big and boldly, not to pull back and think small-time.

Some argue that it's OK if the economic stimulus doesn't focus on change, since later funding could provide the big investments we really need:

The construction industry also sees a two-step process. "Do the rinky-dink projects, the smaller projects," said Frank Rapoport, head of the global infrastructure practice at the McKenna, Long & Aldrich law firm. Then, later in 2009, he said, the government should use any leftover stimulus money to leverage private equity to tackle larger challenges, possibly via Obama's proposed infrastructure bank....

But that plan assumes that there will be enough money, political will and public support left over after an initial burst of spending to fuel broader investments. It is unclear how much money will be devoted to infrastructure in the stimulus package, which could surpass $500 billion. But the highway officials association has identified more than 5,000 road and bridge projects costing $64 billion that are ready to go, and the transit officials' association has identified 736 projects costing $12.2 billion that could start within 90 days.

If the stimulus funds many of those projects in the short term, there could be less appetite for increasing Washington's long-term investment beyond the roughly $50 billion a year it spends annually now. And on Capitol Hill, members of both parties agree that the focus has to be on the short term.

"Filling the potholes or repaving a stretch of road may not be as visual as the Hoover Dam or the Golden Gate Bridge, but that paved road is going to make a lot of difference in people's lives," said Jim Berard, spokesman for the House Transportation and Infrastructure Committee. "Will there be political will and money" for later spending? "We don't know. We'll build that bridge when we come to it. Trying to do bigger-type infrastructure improvement at this point would be irresponsible. You'd be fiddling while Rome burst into flames."

I don't see anything remotely good or optimistic in that. At all. Given how much money has been committed to various bailouts - the overall stimulus could reach $1 trillion - that's going to make it politically difficult to push the kind of large investments in transportation, like a national high speed rail network, that we need to both recover from this economic crisis and provide long-term growth for the economy the way New Deal projects did in the 1930s. The Congressional spokesman certainly didn't sound that committed - in fact he dismissed "bigger-type infrastructure improvement."

The only thing irresponsible here is NOT making those kinds of improvements. Our economic crisis is largely due to overdependence on oil and sprawl, which has now failed to provide growth and security as it once did. The economic and environmental costs are enormous. If we're going to provide energy independence as Obama has long proposed, we need to start immediately investing in the kind of major projects needed to get us down a more sustainable path.

Other officials understand the need to not throw good money after bad:

Minneapolis Mayor R.T. Rybak is proud that his city was able to quickly rebuild the Interstate 35 bridge that collapsed into the Mississippi River in 2007 while making sure to include capacity for a future transit line on it. But he worries that many of the road and bridge upgrades around the country will not be done in a similarly farsighted way, given the time pressures.

"The quickest things we can do may not be the ones that have the most significant long-term impact on the green economy," he said. "Unless we push a transit investment, this will end up being a stimulus package that rebalances our transportation strategy toward roads and away from [what] we need to get off our addiction to oil."


The details of the stimulus aren't fully public yet, but the above suggests that concerns over Obama's transportation priorities are valid. We need to push back hard against delaying big projects. One way to do this is to go to change.gov and let your voice be heard for high speed rail as part of the stimulus. Sure, it's possible that California will still get funded in a later bill - perhaps John Kerry's - but the more money that goes to road projects in the stimulus, the harder that later battle will be.

15 comments:

yes0n1a said...

This was not built for our HST program..We are not a short term item....We need a long term love affair ..As all the rail networks need.

Brandon in San Diego said...

There is some miscommunication going on.

The stimulus projects that the Feds are being fed come from some place. They are not being made up by junior legislative aides, or Obama's aides. Or the construction industry.

Nope, they are not.

Obama and all of Washington is only interested in projects that can turn dirt right away. By end of summer.

So where do these projects then come from? Well, municipal planning organizations, cities, counties and everyone else. They come from their current list of projects they've been working on.

Most will come from organizations like MTC in the Bay Area, or SCAG/LAMTA in Los Angeles, or SANDAG in San Diego. And come from their RTP's... essentially comprehensive Capital Improvement Plans.

Unfortunatly, the large majority of organizations like these already have extensive roadway programs and projects in their pipelines. Transit and other alternative transportation projects represent a minority of those.

The list is being pulled together very rapidly and there simply has not been enough time or staff to vet them in Washington. Additionally, there is only one president at a time and it's not Obama's place yet to provide 'direction' on any of this. And, it's the holidays.

And yes, there are a lot of roadway projects, especially in California, that are in need of repair and substantial maintenance due to deferred past efforts.

Kinda ironically, I am sure there are some states that have been proactive and wisely maintained their roadways. Those states may feel penalized for their past efforts when they see sister states recieve more on a per capita basis.

Marine Layer said...

Scuttlebutt is that MTC's Steve Heminger is on the short list for Transportation Secretary.

If he's appointed, how much good can he do?

Rafael said...

Unfortunately, the incoming Obama administration is facing urging and daunting challenges on many fronts all at once. This forces it into crisis management mode at the expense of strategic investments like CA HSR designed to reduce the transportation sector's excessive dependence on crude oil.

Right now, averting an economic depression is arguably the single most important objective. That means spending federal money on a large number of relatively small projects designed to create new jobs and reduce the rate at which existing ones are lost.

However, especially wrt to investments in infrastructure, it would be foolish to perpetuate policies that strongly contributed to the present crisis.

Therefore, the primary focus should be on repairing existing roads, bridges, aqueducts, sewage systems, public buildings etc. About 80% of the stimulus package should be allocated to a large number of these short-term low-risk projects that can break ground by summer, divided up between the states by population.

The other 20% should be reserved for
projects to extend or upgrade existing infrastructure or, to construct brand-new systems. This portion of the stimulus package should be restricted to a small number of large-scale medium-to-high risk projects that are mature enough to break ground by the end of 2010 and then generate a significant number of new jobs for at least five years - preferably longer.

Funding for this second group of projects should not be disbursed in proportion to state population but rather, based on how well individual proposals address PEBO's strategic investment goals:

- wean the US off foreign oil in 10 years
- create green-collar jobs that cannot be outsourced
- sharply reduce greenhouse gas emissions by switching to renewable energy

California HSR would be in an excellent position to qualify for federal funding as part of this second group of projects.

In terms of the legal logistics, there should be three bills. The first would articulate the framework for splitting the stimulus funds 80/20 as outlined above. It should articulate eligibility criteria for projects to be funded out of the 20% bucket.

The second bill disbursing the 80% should not mention any single project by name (i.e. no specific earmarks). Instead, it should spell out criteria for eligibility and a process by which the administration and congressional oversight committees jointly verify that each line item in a proposal qualifies. It would be up to the states and their Congressional delegations to formulate proposal packages such that verification becomes as straightforward as possible.

The third bill related to the 20% should consist entirely of big-ticket earmarks that meet eligibility criteria laid down in the first bill. Since it reflects a strategic shift in priorities and, concentrates spending on a small number of projects, it will be more controversial. In particular, it will be difficult to ensure that enough states benefit from this spending to achieve a majority.

Republicans may well oppose objectives such as structurally reducing demand for oil on principle, therefore all three of these stimulus bills should be introduced as budget reconciliaitons that are not subject to filibuster in the US senate. This is appropriate given the sheer size of the total stimulus package.

BruceMcF said...

One thing to keep in mind is that planning, environmental impact assessment, and other project development work employees more people per dollar than many infrastructure projects.

The part of the dollar that goes to via the diesel in the heavy equipment or the asphalt to the refinery to an overseas producers ... is just lost from any stimulus impact.

So fast-tracking project development to bring a portfolio of energy-conserving transit and regional transport projects into "ready to start" status is a worthy addition to the stimulus package that for damn sure can "break ground" in three months or less.

And as I've noted before, if CAHSR gets its share of that portion of a stimulus package, that is money that does not have to come out of bond funding. Indeed, it could keep the project proceeding full speed ahead even as California sorts out its most recent budget crisis.

Robert Cruickshank said...

You're certainly right about where these projects are coming from, Brandon, but I disagree that it's not Obama's place to exercise more leadership. He's obviously already done that by saying that he's going to privilege those projects ready to "turn dirt" within 6 months without regard to their long-term economic value.

Rafael's right that the goal is to avert Depression. But as FDR showed during the 1930s, easing the economic pain isn't enough. Your policies must accomplish 3 linked goals - Relief (which the stimulus as described in the WaPo article achieves), Recovery, and Reform. The stimulus as described doesn't achieve those latter two goals.

Again, as I said at the beginning of my post, in and of itself this stimulus isn't a bad idea. The real problem is whether or not it forecloses the more fundamental changes we need. Washington DC is still a broken place where the wrong priorities continue to dominate.

If the relevant House committee is talking as if the bigger projects can be sacrificed to political concerns, then that's a HUGE problem. Congressional Democrats have repeatedly proved they don't know the first thing about negotiating, so to see them going into a negotiation having ceded a bunch of ground at the outset is troubling.

The right approach is to say "big-picture transportation projects are essential" and if you have to whittle that down then you'll still come out with something. If you go in saying you want $10 and you get $5 that's better than going in saying you want $5 and getting $2.

Rafael said...

@ BruceMcF -

it's not just a question of how many people are employed but also what qualifications they must bring to bear. I doubt many construction workers are familiar with the inner workings of CEQA and other applicable regulations.

Besides, the absolute number of people employed is what matters politically right now. EIR/EIS processes need a small number of academically trained specialists, whereas actual construction requires large numbers of laborers.

If there is scope for including CA HSR in the stimulus package at all, it will be either in the context of a strategic medium-to-long-term component of that package (see my previous post) or, in the context of component project that can break ground quickly and deliver immediate benefits such as lives and commute time saved.

Grade separation in the Caltrain, LOSSAN and (perhaps) Fresno sections of the starter line could fit the bill, but only if the necessary project-level EIR/EIS work can be expedited.

The DTX tunnel in downtown SF could arguably also be included since it will be used by Caltrain as well as HSR. Throw in the pedestrian tunnel under Fremont St. to Embarcadero BART while you're at it. However, Congress might require that train operations begin before the superstructure of the new TTC was finished. CHSRA, Caltrain and TJPA would have to agree on which agency should apply for stimulus funding since it will be counted toward the total federal match for that agency.

It is true that federal funding could be used to get cracking on HSR-related projects even before California can sell any prop 1A bonds, as long as the state assembly and senate agree to count it as matching funds once they are ready to consider a funding request for constructing one of the segments defined in AB3034.

Rafael said...

@ Robert Cruickshank -

relief, recovery and reform also describes the rough order in which these aspects of an economic stimulus need to happen.

California HSR addresses the latter two but not the first, at least not well. It just isn't ready to break ground yet, though perhaps selected components could be brought forwarded in order to qualify.

No other state has a vested interest in supporting CA HSR right now, so the reform aspect in the short term should be a blanket refusal to pay for expanding or upgrading infrastructure. Where appropriate, this includes replacement rather than repair, in which case not expanding capacity at the same time might be foolish. However, except in cases where there is a clear and present danger to human health or lives, projects that maintain rather than expand capacity should be prioritized.

I'm pretty sure every single state has more potholes, rusty bridge supports, iffy levees, antiquated utility substations, leaking water mains and broken sewer pipes/treatment facilities than even a $500 billion stimulus could possibly fix.

Funding for strategic investments like HSR will be available, but it's unlikely to be part of the immediate component of the stimulus bill.

BruceMcF said...

@ Rafeal ... this is not the first time we've faced issues like that ... consider the number of people with expertise in price control and rationing logistics and the number of people that were put to work on the process very quickly in WWII.

Don't forget that even if the first three months are spent on training new hires on how to perform the parts of the process that they are going to perform, its still a paying job.

$20b over two years to fund establishment of an Secure Energy Transport Projects Bank would be spending spread out across all fifty states and would before the end of the first year yield a substantial number of projects that could in fact break ground quickly.

Since only the incurable optimist expects a strong recovery in 2009, and since the growth in joblessness continued for two years after the end of the last two recessions, I think a full court press on project development can pay dividends.

Brandon in San Diego said...

Robert,
I should have said... "at this point in time."

It's a matter of opinion; however, I feel Obama should be careful with his political capital; he's not in office for another 5 weeks. If he wishes to screen projects, which I am not entirely opposed to, I think efforts to do so.... or at least with a strong arm with legislators... should not occur 'til after January 20th.

Even if Obama selected to exert some influence, I am very doubful he could increase the bottomline amount for transit and alternative tansportation projects if turning dirt in 6 months were the goal. Screening out projects are a possibility, but then again, if things are said to be so dire then pumping as much as possible into the ecomony should be prioritized.

I also note, of those that have become unemployeed, many are construction workers.

Rafael said...

@ BruceMcF -

it looks to me like there are already quite a number of small scale, "shovel-ready" infrastructure projects at the state and local government levels, what's been missing is funding.

If you use stimulus funds to create an army of new EIR/EIS bureaucrats because that generates the most jobs per dollar spent, consider that those bureaucrats will want to keep doing those jobs for decades to come.

That can become an expensive proposition: California passed a three strikes law that has caused its prison population to skyrocket. That in turn has led to larger numbers of prison guards, health care providers etc. Their powerful unions are now making it politically impossible to relax the policy to help ease the budget deficit. Instead, federal courts may soon force the state to build lots of additional prison cells to ease serious overcrowding. The state currently has 100,000 cells and 170,000 inmates.

If EIR/EIS is a temporary bottleneck (or expected to become one), then it may make sense to outsource much of the legwork to private enterprises and task the available bureaucrats with quality control and decision-making.

Frank said...

Anyone know which new rail-related projects in CA are closest to being ready to "turn dirt"?

The two that I thought might be near-ready are the LA Union Station run-through tracks and the Foothill Gold Line extension. I believe they finished the EIR for the run through tracks back in 2005 and the project has been sitting idle since then.

Spokker said...

The Metrolink extension to Perris is also pretty close.

And I would also say Expo Phase 2.

The Bird said...

The environmental group Friends of the Earth is very concerned that tens or even hundreds of billions in stimulus funds will be spent on new road with very little oversight.

We've launched a campaign to keep new road funding out of the economic stimulus at www.RoadToNowhere.org. Instead, Obama should work with congress to draft a plan that creates green jobs by investing in clean transportation options including public transit, passenger rail, and bike and pedestrian infrastructure.

Anonymous said...

Road REPAIRS are fine.

Road WIDENINGS and *new roads* are *NOT ACCEPTABLE*. They are almost universally a waste of money and a disaster and we need to tell Obama not to fund any widenings.