Even as Congress remains at a budget impasse, President Barack Obama continues to tout his plans to increase federal investment in the nation’s ailing infrastructure, a $50 billion initiative that the White House claims will spur job creation and economic growth.What remains unclear, however, is how the Obama administration plans to pay for this and other infrastructure initiatives that the President outlined in his State of the Union speech last month.
In a speech to the National Governors Association Monday, the President fleshed out additional details of the plan, announcing that his administration will create “regional teams” that will assist states in implementing infrastructure projects.
“We’re going to help the Pacific Northwest move faster on renewable energy projects,” Obama said. “We’re going to help the Northeast Corridor move faster on high-speed rail service…We’re going to help states like North Dakota and South Dakota and Montana move faster on oil and gas production. All of these projects will get more Americans back to work faster.”
As with his earlier proposals, Obama did not say how the White House plans to pay for the regional team infrastructure program. Overall, Obama’s plan, which was fleshed out by the White House last week, call for an up-front investment of $50 billion, and includes three major initiatives that will likely require additional funding over time.
Here are the basic details of the proposal:
- The “fix-it-first” program: This calls for $50 billion in front-loaded transportation infrastructure investment, $40 billion of which would go towards highways, bridges, transit systems, and airports “most in need of repair.”
- The “Rebuild America Partnership”: This part of the plan focuses on increasing private investment in infrastructure plans. It includes a National Infrastructure Bank; new “America Fast Forward Bonds,” a successor to the Build America Bonds program included in the 2009 stimulus act; and the implementation of the new Transportation Infrastructure Finance and Innovation Act (TIFIA) program, which provides federal credit assistance to local infrastructure projects.
- Eliminating red tape: The third part of the plan would build on White House initiatives to streamline infrastructure projects by “modernizing” the federal permitting and review process “through expanded use of integrated planning, landscape and watershed-level mitigation, information technology, and publication of public timelines for permitting and review decisions to improve transparency and predictability.”
Republicans have mocked Obama for the proposal, which has been knocking around the White House for the past few years despite gaining little traction in Congress. Earlier this month, House Speaker John Boehner accused Obama of acting like “Santa Claus” for touting infrastructure plans without proposing how they would be funded.
The irony here is that infrastructure spending enjoys broad support, even among Republicans. Infrastructure investments have substantial economic benefits, boosting state economies by two dollars for every federal dollar spent, according to a recent study from the San Francisco Federal Reserve. And as Obama pointed out to the NGA Monday, investments in infrastructure actually save the government money, due to the high cost of deferred maintenance.
Moreover, U.S. infrastructure repairs are badly needed. A report from the American Society of Civil Engineers last month found that without a $2.7 trillion investment in infrastructure upgrades by 2020, the U.S. will face massive job and income losses, higher retail prices, deteriorating traffic conditions, and increasingly frequent power outages.
Despite these circumstances, however, it is unlikely that Congress will reach an agreement on infrastructure spending, at least for the foreseeable future. Republicans are loathe to accept anything that looks like a stimulus plan, and many are demanding that infrastructure investments be paid for by cuts to other programs, particularly entitlements.
“If there is a need and a desire in the Democratic Party to spend money on infrastructure, what are they willing to do to enable the country to do that?” GOP communications strategist Brad Dayspring said in a recent interview with Business Insider. “So far, they’ve been unwilling to say.”
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