Can America Fix Its Infrastructure by Ending Its Wars?

President Obama says it can, but analysts say that's an oversimplification.
by | January 25, 2012

With just one sentence during his State of the Union Address Tuesday night, President Obama pitched a solution to a problem that members of Congress have debated for years: how should they fund America’s transportation infrastructure?

President Obama’s pitch was simple. “Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home,” he said.

It sounds simple, enough. The country spends about $150 billion a year on its wars in Afghanistan and Iraq. Ostensibly, ending those wars would leave extra money to spend on priorities like infrastructure.

But Obama’s position left transportation advocates scratching their heads, saying it’s an oversimplification of the funding challenges that are at the root of Congress’s continuing failure to pass a highway and transit bill.  The surface transportation authorization originally expired nearly two-and-a-half year ago and it’s been operating on temporary extensions ever since. The current legislation expires March 31.

Joshua Schank, head of the transportation policy think tank Eno Center for Transportation, said he liked what he heard from the president about the need for building infrastructure to help improve the country’s economy. But for Schank, “the funding is where it all fell apart.”

“Now, he’s in campaign mode,” says Schank, who worked as a transportation policy adviser to then-Sen. Hillary Clinton during development of the last surface transportation authorization. “He’s not going to say ‘this is how I’m going to pay for transportation for the next six years.’”

During 2011, lawmakers in the Senate and House committees responsible for formulating transportation policy worked to figure out how exactly to pay for a new highway and transit bill. The crux of the issue is the declining balance of the Highway Trust Fund, which relies on gasoline taxes to help pay for roads and transit. It’s funded primarily by a 18.4 cent-per-gallon tax which hasn’t been increased since 1993. It's generating less money than it has in the past due to the increasing fuel efficiency of vehicles. Going forward, the fund is about 20 percent shy of covering baseline highway and transit spending.

Many on the transportation committee have advocated for increasing the gas tax or switching to a different model, like replacing the gas tax with a per-mile tax. House Republicans are pursuing a plan to supplement the highway bill with royalties derived from energy production. Senate Democrats continue to explore other options.

But the president made no mention of the challenges facing the Highway Trust Fund, which will likely run out of money early next year, or explain how it can be bolstered. He also didn’t make a case for any other another permanent and ongoing funding source for transportation infrastructure funds. “Anything would have better than saying ‘war savings,’” Schank says. “It’s just red meat to the base. It’s not something that’s constructive.”

It's not the first time Obama has had lofty rhetoric calling for investment in transportation that fell short of a specific plan. His budget last year called for a six-year, $556 billion surface transportation bill that was viewed by most transportation experts as wildly optimistic given Congress's emphasis on reduced spending and deficit reduction.

Current proposals from the House and Senate committees taking the lead on transportation policy wouldn't increase funding for surface transportation beyond current levels. The Senate Environment and Public Works Committee has approved two-year, $54.5 billion bill. That funding level is consistent with the baseline, but it still comes $12 billion short of the revenue it needs. The Senate Finance Committee is tasked with finding the difference.

The House Transportation and Infrastructure Committee last year proposed a six-year bill that averages about $38.3 billion annually, which is in line with the actual funding available from the trust fund but would amount to a dramatic decrease compared to the status-quo.

After Obama's speech, committee chair John Mica (R-Fla.) announced that Republicans next week will introduce a major transportation bill financed by "increased American energy production, creating jobs, and lowering energy costs." A spokesman for the committee said a summary of the bill could be released within a few days. It may contain level funding, unlike the earlier proposal.

For states, the continual dickering over re-authorization has caused major complications. States struggle to plan long-term projects and formulate their budgets given the uncertainty of federal funds.

John Horsley, executive director of the American Association of Highway and Transportation Officials, praised the president for highlighting infrastructure, as he has in each of his previous State of the Union addresses. But, Horsley says, money has been the crux of why Congress hasn’t been able to pass a bill. A plan to spend war funding on transportation infrastructure isn’t going to build bridges in a deeply divided legislature. “I am not sure that technique will be embraced by Congress,” Horsley says.

Transportation Secretary Ray LaHood, speaking a transportation conference in Washington Wednesday morning, re-iterated the president's plan. "I hope we can work with Congress this year so we can get a surface transportation bill," LaHood said, calling the president's plans "encouraging."

But Republicans are skeptical. “America needs to rebuild its infrastructure, but I do not support what appears to be the President’s plan to finance that effort by downsizing the military,” Mica said in a statement after Obama's speech.

James Horney, a specialist on federal budget issues at the Center on Budget and Policy Priorities, says that Obama’s position can be viewed in two ways. Critics would contend that since war doesn’t occur in perpetuity, there is no cost-savings – it was expected that it would end at some point anyway. But from a wider perspective, Obama may have a point. Money is fungible, and it’s true that the country’s spending on war is on the decline.

Still, Horney says, Obama’ speech didn’t provide much guidance to the committees tasked with making tough decisions about funding. “Simply saying it’s coming from [war savings] doesn’t provide a funding stream,” Horney says.

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