Morning Brief: Congressional Leaders Try to Save Transportation Bill

Congressional leaders will meet today to resolve differences on the transportation bill (AP). House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) will join committee chairmen Sen. Barbara Boxer (D-CA) and Rep. John Mica (R-FL) in a discussion to try to find a consensus that has eluded the forty-seven member joint-chamber committee. The ninth temporary extension of federal transportation funding will expire on June 30, more than 1,000 days since the expiration of the last multiyear comprehensive law that supported highways and mass transit projects across the nation.

The first Renewing America Progress Report and Infographic Scorecard, released last week, assesses at the current state of U.S. transportation infrastructure policy.

Hurdles to Natural Gas Cars

Shale gas production is surging and yielding record low prices, but cost remains a barrier to fueling autos with natural gas (WSJ). Compressed natural gas (CNG) vehicles need a hefty storage tank that adds more than $5,000 to the car’s price and requires nine years to pay back through lower fuel costs. Refueling is another problem, as fewer than 1.3 percent of service stations are CNG equipped; home refueling requires $4,000 in equipment, plus installation and fuel costs. CNG continues to make inroads into commercial fleet vehicles, however, from bus systems to garbage trucks (WSJ).

In a new paper published by the Brookings Institution’s Hamilton Project, CFR’s Michael A. Levi—the David M. Rubenstein Senior Fellow for Energy and the Environment—argues that the economic benefit of allowing natural gas exports exceeds the potential benefit from CNG expansion.

Infrastructure. Read more on how upgrading the nation’s aging network of roads, bridges, airports, railways, and water systems is essential to maintaining U.S. competitiveness.

States Make Progress on Healthcare Costs

Since 2008, most states have cut Medicaid benefits and reimbursements (Stateline). Some are launching innovative programs to crimp costs and improve patient outcomes. Oregon’s “coordinated care organizations” will charge a fixed fee per customer to cover medical, dental, behavior health, and substance abuse services. New Jersey and Nevada are preparing similar programs for those with certain chronic illnesses and behavioral health problems. Health care costs are a significant burden to the federal government. More than half of all Medicare spending comes from general revenues; payroll taxes only supply a third (TaxVox).

California’s Bad Pension Bet

In 1999, California enacted retroactive increases to the pensions of hundreds of thousands of state workers to be paid for by expected future investment gains that failed to materialize (Bloomberg). Investment gains were only 75 percent of what was hoped, costing the Golden State over $20 billion. Popular policies that have faraway consequences can be dangerous; as Warren Buffett put it, “Because the fuse on this time bomb is long, politicians flinch from inflicting tax pain, given that problems will only become apparent long after these officials have departed.”

Debt and deficits. Read more from experts on the challenges in reducing U.S. debt.

Nuclear Titans Bring in Chinese Partners in Bid for UK Project

U.S. based Westinghouse (a Toshiba subsidiary) and France’s Areva are bringing in Chinese partners to help fund bids for a U.K. nuclear project (Reuters). Both firms had previously licensed their designs to these firms for construction of plants in China. It’s an example of the ability of Chinese firms to leverage their deepening experience in infrastructure construction, large foreign exchange reserves, and access to Western designs to create business opportunities in developed economies. For the United Kingdom, it’s a chance to use Chinese investment and potentially lower construction costs to expand electrical capacity in a time of austerity.

International trade and investment. Read more from leading analysts on the debate over next steps in U.S. trade policy.

Microsoft Unveils Surface, its iPad Competitor

To combat the success of Apple’s iPad that elegantly marries software and hardware, Microsoft announced its own tablet, the Surface (NYT). The growth of tablets and smartphones threatens the PC market that Microsoft dominates, particularly as lucrative business customers increasingly switch to iPads. Analysts believe that Microsoft does not think that its hardware partners are able to challenge Apple. One analyst said: “This was clearly a referendum on Microsoft’s partners. Microsoft felt they could not rely on others to deliver on their vision for Windows 8 in mobile computing.”

Innovation. Read more on how the U.S. capacity to innovate could play a chief role in economic growth.

The Morning Brief is compiled by Renewing America contributor Steven J. Markovich.