Money or Nothing: Schwarzenegger Joins Call for Infrastructure Investment

Building America’s Future (BAF) is a kind of DreamWorks for the infrastructure set.

It’s
an organization put together by Govs. Ed Rendell (D-PA) and Arnold
Schwarzenegger (R-CA) and New York City Mayor Michael Bloomberg — men
strongly committed to the idea that infrastructure investment is of
critical importance for a nation’s economic health, and should enjoy
bipartisan support. A timely mission, given the deteriorating state of
the country’s infrastructure and economy, and the new threats posed by
rising energy costs and global climate change.

The critical
nature of the challenge was at front and center in a discussion held
yesterday, co-hosted by BAF and the National Governors Association and
featuring former legislators Dick Gephardt and Newt Gingrich as guest
speakers.

Rendell and Bloomberg opened the session with a
typical call to arms — saying, simply, that we can wait no longer to
act and invest boldly. Gephardt and Gingrich, by contrast, focused
almost exclusively on the biggest challenge, and in many ways, the only
one that matters: money, money, and money.

Both men are
convinced that Americans can be persuaded to pay more for
infrastructure investments provided that a few conditions are met.
Namely, they’d need to be able to see progress (and quickly) and they’d
have to feel confident that money wasn’t being wasted through
incompetence or political chicanery. The hard part is understanding how
to get the government to satisfy these conditions.

The two
men recommend simple (sounding) steps. The government should use a
capital budget apart from the annual budget process (as do
corporations), so that investments aren’t counted in the same way as
normal expenses. Mega-projects should be on the agenda — surprisingly,
to me at least, this came directly from arch-conservative Gingrich.

Big
projects arouse public interest and pride, said the former Speaker, who
had in mind for the country a basic rail network with trains traveling
at 110 mph or more and a true high-speed, Mag-Lev, nationwide,
best-in-the-world system on top of that.

Perhaps
counter-intuitively, timid initial spending makes later spending more
difficult, goes the thinking, by accomplishing too little to build
corporate interest or public attention. Small things are easier to
kill. Beyond that, proper incentive structures, decentralization of
spending, and private sector involvement, among other things, should
minimize waste and help to earn public confidence.

But that
still leaves the question of where to find the necessary money. Both
men indicated that user fees would have to enter the equation;
Gephardt, in particular, singled out variable tolling as a necessary
step. A gas tax increase, establishing a floor on the price at the
pump, would help to fill out the coffers.

Both are good
ideas, but difficult to implement in the real world. Under the best of
circumstances, it would be a challenge to raise funds on this scale,
however great the merits of the projects to be funded, and these are
not the best of circumstances.

What’s more, there is a
chicken and egg problem to their strategy. Given public confidence in
and excitement about spending, there will be a willingness to pay
higher taxes. But spending at the appropriate scale can’t be begun
without a dedicated funding stream.

Given Congress’
discomfort with the current deficit, it is impossible to move
ambitiously without new taxes. And given the public’s discomfort with
Congress, it is impossible to get new taxes without some deficit-funded
demonstration that the government can handle big investments wisely.

Which
is why both Congress and the White House are moving forward cautiously
on transportation investment — there is no other option. As
significant a change in direction as the Oberstar bill is, it isn’t a
revolution. It amends the previous order, but does not at all overthrow
it. And the administration? Well, a two-year delay is just about the
opposite of a bold push for action.

When one is in a shallow
hole, one can escape with a single great leap. But when one is in a
deep hole, one can only get out by scratching and clawing.

  • OH Please….”Both men are convinced that Americans can be persuaded to pay more for infrastructure investments”. I don’t know enough about Rendell to offer a comment, but Schwarzenegger…you’ve got to be kidding!!!

    Let’s get the record straight here – the only ‘pay more’ strategy he supports is by using the government credit card, notwithstanding his ‘cutting up the credit card’ ploy early in his debacle as governor.

    He’s made no attempt to raise the state gas tax – unchanged since 1994 – and one of the lowest in the country @ 18-cents despite claims to the contrary by the oil industry (sales tax on gasoline is a sales tax,not a gas tax!).

    Our Governor created a $6 billion structural deficit upon his election in 2003 by cutting the vehicle license fee from 2% to .65%, and then made it difficult to restore. And he wants more infrastructure investment???? Paid for with what – more debt???

    Mayor Bloomberg, to the contrary, raised the City’s property tax over enormous populace objection – he’s got credibility, and then he tried valiantly to introduce cordon-style congestion pricing.

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