WASHINGTON — The president is expected Wednesday in Cleveland to announce details of a $50 billion measure that would lead into a long-term program containing a national infrastructure bank — a proposal already offered by the administration but now being rolled out as part of an economic package.
Senate Banking Committee chairman Chris Dodd, D-Conn., announced Tuesday the committee will hold a hearing Sept. 21 on creation of a national infrastructure bank focused mainly on surface transportation.
White House officials said Monday, prior to President Obama’s initial announcement of the plan during a speech in Milwaukee, that the package would be a front-loaded investment as part of a multiyear plan. They were reticent to outline details of the proposal, saying only that the plan would create jobs during the course of 2011.
They declined to predict when Congress would approve such a measure. They stressed the plan is not intended to be a sprint toward job creation and that the proposals could be paid for by closing tax loopholes for oil and gas companies.
The president’s announcement Monday followed recent concerns in the municipal market that Congress will be unable to approve a multiyear reauthorization of the transportation law before 2013, in part because of lawmakers’ resistance to a fuel tax increase.
The most recent multiyear law — the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users, or SAFETEA-LU — expired almost a year ago.
A proposal in the House to replace that law has stalled at the subcommittee level since last summer, and no Senate or White House proposals have been offered. The administration promised earlier this year to release a set of principles for the reauthorization.
Obama is calling for a long-term framework that would create a permanent national infrastructure bank to focus on projects of national and regional significance. That would be in contrast to current formula grants that are parceled out to states and metropolitan areas, and with local projects that receive earmarked funding. The bank’s investments would be decided competitively.
The president has already proposed the creation of a national infrastructure bank. In his fiscal 2011 budget request, he asked Congress to dedicate about $5 billion per year for five years to such an entity.
Lawmakers have declined to provide such funding in the annual appropriations process because the bank has not yet been established by Congress. The infrastructure bank he proposed Monday would be housed within the Department of Transportation.
According to the White House, the plan would rebuild 150,000 miles of roads, construct and maintain 4,000 miles of rail, and rebuild or repair 150 miles of airport runway.
The investments would be in addition to the funding that has been sprinkled across the country as part of the American Recovery and Reinvestment Act, such as high-speed rail grants.
The proposal bears similarities to ARRA infrastructure investment that Congress approved last year. The ARRA funds created 33,000 miles of road improvements, according to Transportation Secretary Ray LaHood.
In all, the package provided $48 billion to transportation. Highways and bridges received $27.5 billion, various types of rail received $9.4 billion, and aviation programs and airports received about $1.3 billion.
It also provided tens of billions of dollars to projects that would improve water, sewer, and energy infrastructure.
“Because of these investments, and the tens of thousands of projects they spurred all across the country, the battered construction sector actually grew last month for the first time in a very long time,” Obama said of the ARRA transportation funds during his speech in Milwaukee.
The administration’s proposal to front-load a six-year plan with $50 billion would make the total investment less than the estimated $450-$500 billion package as proposed by House transportation leaders. However, administration officials told reporters that Obama’s proposal could not be directly compared to the House proposal in terms of funding requirements.
Market participants praised the announcement yesterday. However, many noted the short amount of time that Congress has before elections to approve the proposals, and sources have noted that spending bills are a political hot potato this year.
White House press secretary Robert Gibbs said Tuesday that the president’s economic proposals are aimed at long-term investment.
“The infrastructure [investment] is built off of what Congress will ultimately do as part of a six-year transportation reauthorization plan, partly because we know that one out of every five people that’s unemployed used to spend time in the construction industry,” Gibbs said.
Additionally, market participants speculated two months ago that a national infrastructure bank was unlikely to be created before next summer, citing the lack of specific presidential recommendations on how to fund it, what type of projects it should finance, and what its financing structure should be.
