AFTER SEVERAL INDICATIONS IN THE PRESS THAT PRESIDENT
Obama would tackle the infrastructure problem in his State of the
Union address, many were disappointed when the 6,718-word speech
contained only 63 words on the topic. However, the 2016 budget
proposal, released on Feb. 2, did contain an extension of the plan
proposed a year ago. It recommended to Congress a six-year, $478
billion surface transportation authorization—up from $300 billion in
the original plan—as well as an $18 billion fund for regional freight
projects.
The big unanswered question, however, continues to be how all this
will be funded. Though it might seem like the obvious solution, most politicians are quick to distance
themselves from the subject of fuel tax increases,
even when they’re called “user fees,” as the U.S.
Chamber of Commerce has dubbed them. About
half the funding for the president’s proposal would
come from a one-time 14-percent tax on earnings
held overseas by U.S. corporations. In addition, a
new 19-percent tax on foreign earnings would be
established. Clearly, this will not be popular with
the powerful multinational corporations that would
be affected. More importantly, it does not place
the burden where it belongs—with the users of the
highways and bridges through reasonable fuel taxes (or “user fees,” if
you prefer). I believe that expecting this to be resolved by the time the
current funding expires is extremely optimistic.
To add to the confusion, on the same day the budget was released,
Secretary of Transportation Anthony Foxx unveiled a 316-page report
titled “Beyond Traffic.” This is a report on a study by the Department
of Transportation to determine a 30-year blueprint for the overhaul
of the country’s transportation systems. The goal of the study was
to develop a comprehensive national transportation system, instead
of a collection of individual systems based primarily on the various
states’ wants and needs. The study drew on work already done by the
University of Virginia and the American Society of Civil Engineers
(ASCE). In a 2012 report, the ASCE projected that an infusion of $3.6
trillion by 2020 would be necessary to meet infrastructure needs. The
chances of that funding’s coming through are slim to none, but the
country desperately needs a well-conceived and well-researched plan.
Unfortunately, Secretary Foxx said the “report is not an action plan
and is not intended to be.” He calls it a “conversation about the future,
rather than a conclusive definition of a path forward.”
BY CLIFFORD F. LYNCH fastlane
Who’s on first?
To most of us, a description of the nation’s
infrastructure problems is a blinding glimpse
of the obvious. Hundreds of articles have been
written about the state of our roads and bridges,
and the continuing, clumsy efforts of Congress
to develop a sound, practical funding system.
What we have read very little about is a national
blueprint for the projects. Without this, there
will be no guarantee that the funds, when and
if available, from whatever source, will be spent
in the best interests of the
country as a whole.
Because of Congress’s failure to provide funding, a
number of states have raised
their own fuel taxes and are
using the funds for highway
and bridge construction and
repair. Although this, no
doubt, will help the states,
these projects may or may
not facilitate a national system. For instance, the state
of Tennessee has discontinued work on its
156-mile segment of Interstate 69, the so-called
NAFTA highway that would provide a direct
connection with Canada and Mexico. However,
the state just spent a whopping $753 million on a Nashville bypass. So far, its highest
and best use seems to be easing traffic flow
between Memphis and Knoxville on University
of Tennessee football game days.
While it is encouraging to see some increased
activity, I am not sure I see a good solution on
the horizon.
Clifford F. Lynch is principal of C.F. Lynch & Associates, a provider
of logistics management advisory services, and author of Logistics
Outsourcing – A Management Guide and co-author of The Role of
Transportation in the Supply Chain. He can be reached at cliff@
cflynch.com.
