from Renewing America

Obama’s Disappointing Legacy on Transportation Policy

October 16, 2014

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Blog posts represent the views of CFR fellows and staff and not those of CFR, which takes no institutional positions.

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We’ve seen it all before. Today Vice President Biden gave a speech calling for more infrastructure investment, but without offering a way to pay for it. We heard the same from President Obama this past July, May and February. While the message echoes over and over again, not much in the way of actual policy is changing. Now that we are nearly six years deep into the Obama administration, it is becoming clearer that Obama’s transportation legacy is sizing up to be a disappointment. His initiatives have fallen flat or were obstructed by Congress, and he (along with Congress) has done little to solve the fundamental problem of federal transportation policy—finding the revenue to pay for all the infrastructure investment he’s calling for.

How unexpected given how Obama’s presidency began. Infrastructure spending was among the biggest components of the 2009 stimulus package, receiving close to $100 billion, half of which went to transportation. There was also a new visionary idea contained within the package—high-speed rail—with hefty funding to back it up. Obama would be for high-speed rail what Eisenhower was for interstate highways.

But very quickly things started going south on Obama’s transportation ambitions.

Obama’s signature high-speed rail project has turned into an embarrassment. The idea may have been visionary, but it was not so practical. The benefits of high-speed rail just don’t add up to justify the costs. We don’t have Europe's or Japan’s population density. Nor do we have China’s willingness to throw cash at horrendously wasteful (though impressive) rail projects. Florida, Ohio, and Wisconsin rejected high-speed intercity link projects even though they would have received between $400 million and $2 billion in federal grants. California’s project linking San Francisco to Los Angeles, which is set to receive federal stimulus moneys once construction begins, still may not get off the ground. It’s tied up in courts, and, though a public referendum approved the plan in 2008, polls suggest the public would turn it down if a vote were held today. The projects that got off the ground are not so ambitious—ramping up existing Amtrak lines in the Northeast and Chicago-St. Louis corridors to speeds that barely count as “high” compared to the true bullet trains of Europe, Japan, or China. Congress isn’t buying into Obama’s vision either, having zeroed out funding to his high-speed program for three years running.

Congress has blocked most of Obama’s other big ideas. In 2011 he endorsed the creation of an infrastructure bank, which would have leveraged federal dollars with generous financing terms to attract private capital for infrastructure projects. Two years later he proposed a “Fix it First” program where the federal government would hire workers to do urgent infrastructure repairs. But these two initiatives carried a steep price tag of $10 billion and $50 billion, respectively. Without offsetting budget cuts, the Republicans were not going to budge. Only the relatively small TIGER competitive grant program has survived, funded at about $500 million a year for multi-modal transportation projects.

Passing basic federal surface transportation spending has been a trying feat, though Congress certainly deserves much of the blame. Going back to the elder Bush, Congress managed to push through surface transportation bills that guaranteed funding for five to seven years, allowing state and local transportation officials to draw up longer-term plans. Over Obama’s tenure, it took ten short-term patches before the most recent spending bill was authorized (MAP-21). Lasting only two years and setting spending at existing levels, MAP-21 was essentially a longish patch itself. Since it expired in July, Congress is back to multi-month patches, this time until next May.

Obama’s role in passing a multi-year bill has not been hugely constructive. In a break from his predecessors, Obama did not submit a formal multi-year spending proposal to Congress for the first five-and-a-half years of his presidency. The proposal he did eventually submit this past year, called the Grow America Act, was not taken very seriously by Congress. It would have lifted spending a whopping 40 percent over current levels for the next four years, but failed to provide a viable way to pay for it, citing only the vague possibility of linking cost-savings from a corporate tax overhaul. Soon-departing Rep. David Camp’s (R-MI) tax proposal did envision using revenue from repatriated corporate profits for infrastructure spending. But no one in Congress thinks it will happen. And Congress did not even bother holding a hearing to consider Obama’s plan.

This gets to the heart of the problem facing federal transportation policy—existing revenue streams are insufficient to pay for needed levels of spending, and Washington policymakers can’t seem to do anything about it. Everyone agrees, including economists and policymakers from the left and right alike, that we should be spending more money on infrastructure as a country. Yet real spending has been declining since 2002 at all levels of government, and worst of all at the federal level, which has seen a dropoff of 33 percent. The way the federal government funds its highway spending—through a dedicated gas tax placed in the Highway Trust Fund—does not work anymore. Americans are driving less and using more efficient cars. Plus the gas tax isn’t pegged to inflation and hasn’t been raised in over twenty years. Since 2008, Congress has had to borrow from the General Fund to make up the trust fund deficit. Now 30 percent of highway funding is supported by general funds, and projections show it will have to cover a larger share moving forward. Neither Congress nor President Obama has endorsed a plan for setting the trust fund’s finances on solid ground. Americans steadfastly oppose any federal gas tax hike, making it difficult for anyone to endorse the idea. Borrowing from the General Fund means transportation competes with other priorities in desperate need of cash.

Since public dollars are in short supply, everyone is eager to introduce a larger role for the private sector. Presidents going back to the elder Bush have promoted public-private partnerships (P3s) and research on congestion pricing, and Congress has loosened restrictions on tolling. Private project management and financing has indeed taken off, especially for new large-scale capital projects. Obama has built on his predecessors’ P3 efforts, expanding the popular TIFIA loan program first created under Clinton. Last summer the Department of Transportation formed a new center to guide state and local governments through the intricate P3 process.

Obama’s transportation legacy may actually be that the process of devolution started under his watch—or, in other words, that transportation decisions began passing from the federal government to states. Amidst federal paralysis, at least thirty states have launched serious initiatives to increase transportation-dedicated funding since 2013. Most major metro areas are expanding commuter rail networks, projects which are financed mostly by local taxpayers. Maybe local is the better way to go, since the vast majority of Americans only use infrastructure in their own county. Local ballot referenda for transportation bonds have a stellar success rate.

But this is more the result of federal inaction than deliberate policy. And it probably is not the legacy Obama was hoping for.

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