Senate Kicks Off Series of Infrastructure Hearings With Focus on Broadband

Sen. Wicker says better data about high-speed availability is crucial

Posted 3/13/2018 3:10 PM Eastern

By: John Eggerton

The Senate Commerce Committee kicked off a series of infrastructure hearings Tuesday with one focused on broadband, including a big focus on collecting accurate date about where broadband is, and more importantly, isn’t.

Sen. Roger Wicker (R-Miss.) presided, saying he was greatly encouraged by the President’s support for programs to increase broadband infrastructure in rural areas. While the President said getting broadband to farmers was a priority, he didn’t actually earmark any funds for broadband in his infrastructure plan, though he did say that $50 million would be going to rural infrastructure, with states free to use all or part of that for broadband.

Congress is currently weighing the best way to deploy that service. Democrats like to factor cost and underserved communities in the equation, while Republicans — and ISPs — want the money targeted to the unserved, rather than overbuilding existing private investment with public money.

Wicker said the process of identifying those unserved areas starts with collecting accurate date, something the FCC has been charged with since the Obama-era stimulus funding for a National Telecommunications & Information Administration broadband mapping program ran out in 2015, though some in Congress are trying to return that function to the NTIA with new money.

The FCC recently released a new map to help identify where broadband subsidies related to the Phase II Mobility fund should be going, but critics, including Democratic commissioner Jessica Rosenworcel, have pointed to some errors.

Wicker said it was critical to have good information so that communities that “truly lacked service” could be identified.

“Inaccurate information would only exacerbate the digital divide, he said, adding, “We don’t have accurate data yet.”

Related: White House Defends Lack of Direct Rural Broadband Investment (Or Any Direct Broadband Investment for That Matter)

Senate Commerce Committee ranking member Sen. Bill Nelson (D-Fla.) pointed out that he and his colleagues had wanted direct investments in broadband to be part of any infrastructure plan and called the Trump proposal — $200 billion in federal funds for all infrastructure, with $50 billion for rural, but no direct earmarks for broadband and the hope that the private sector leverages that $200 billion into a $1.5 trillion rebuild/buildout — “simply inadequate on broadband expansion.”

He signaled it was up to the Senate Commerce Committee to step up and fill that void with “critical” direct investment in broadband, something Democrats have done in their own infrastructure proposal to the tune of $40 billion.

Nelson used the hearing to put in a plug for a “reasoned discussion” about sensitive regulatory issues related to the build-out of small-cell 5G wireless broadband, including historic preservation and environmental concerns. The FCC next week is planning to vote on an order that would exempt some small-cell deployments from historic preservation and environmental reviews, something CTIA: The Wireless Association says could save $1.6 billion over the next eight years.

Nelson noted that the FCC seemed eager to, in his words, “wipe away key laws and regulations meant to protect our fellow citizens and important federal, state, local and tribal interests.”

Sen Brian Schatz (D-Hawaii), ranking member of the subcommittee, warned that Democrats were unlikely to support shifting the broadband infrastructure responsibility to states and localities, or undermining labor or environmental protections.

Gary Resnick, mayor of Wilton Manors, Fla., who testified at the hearing, said that while he agreed with removing impediments to deployment of broadband, like encouraging “dig once” policies for combining road revamps with laying broadband conduit, he said that preempting state and local reviews for small cell deployment was bad policy and that such deployments would not close the digital divide. “Small cell technology is not called small because the technology is small,” he said, “but because the signal covers a small area.”

Steve Berry, CEO, Competitive Carriers Association, was one of those not high on the FCC’s new broadband map. He said the FCC should have measured signal strength, rather than the map the FCC produced that identified the areas it thought were eligible for the USF Phase II mobility fund.

“I am very concerned that the map is so disfigured in terms of its reality on the ground that it is almost impossible to successfully challenge [it],” Berry said.

Bob DeBroux of TDS Telecom said he thought the FCC had made a good start using the data it had, and would be building the map as time goes on. He conceded that there were definitely flaws in the map, but that they could be refined and that the underlying data “is there.”

Our Infrastructure Inefficiency


From President Trump’s Camp David retreat with cabinet officials and congressional leaders at the beginning of this year, word emerged that the president and his advisers are divided on the best policy for infrastructure. Gary Cohn, director of the National Economic Council, presented a detailed plan to make $200 billion in federal investments in order to unleash $1 trillion of total infrastructure investment through public–private partnerships, a plan that has now been leaked to the media. The president himself, meanwhile, reportedly prefers a more straightforward national building program.

Any discussion of infrastructure spending needs to recognize the stark reality of the American cost disease. As explained in a December New York Times report on the New York subway, when the United States builds infrastructure, it often costs more than any similar industrialized country would consider spending. New York City brings the cost disease to its highest fever, but even cities that excel at cost containment by American standards would have their numbers thrown out on their ear in many other countries. Liberals sometimes wave away cost concerns by reemphasizing the need for any particular project, and conservatives sometimes blithely presume that any project is wasted money. But all parties involved must recognize and address the cost disease, which drastically reduces the amount of infrastructure Americans can get out of any particular budget figure. Building a tunnel six times more expensive than one in France means that you get one-sixth the tunnel that you should. As transit researcher Alon Levy has shown, the American cost disease is real, and the situation is dire.

While the entire basis of these cost overruns is still not known, it is clear that American labor costs significantly contribute to project-cost inflation. Prevailing-wage standards, set under the Davis-Bacon Act, are a frequent target of the ire of conservatives, who charge that the requirements empower unions to run up prices and drain the public purse. These prevailing wages certainly inflate costs, and repeal or reform of Davis-Bacon would help the taxpayer receive a fair value for his investment. However, competitor nations such as France and Spain cannot be said to possess weak unions or ungenerous labor laws, and those nations still manage to build infrastructure for a fraction of American per-mile costs. Davis-Bacon repeal is no silver bullet, and further reforms will be needed.

As Jarrett Walker explains in his book Human Transit, operation costs in industrialized countries are dominated by labor. Simply put, people are expensive in rich countries, and hiring workers requires paying significant wages and benefits. Thus, one of the most effective ways to exercise fiscal prudence is to ensure that human personnel are not wasted in their transit work. Unfortunately, wasting person-hours seems to be American transit’s most consistent accomplishment. Subway trains that should be able to be run by computer often must be managed by one or two drivers, and tunnel-digging machines that the French operate with fewer than ten people are managed by more than two dozen well-compensated Americans.

Capital costs, meanwhile, are also inflated by “buy American” procurement rules attached to federal infrastructure financing. When local governments take advantage of federal grants or loans to expand their infrastructure, they are required to buy at least 60 percent of rolling-stock components, such as rail cars and buses, from American manufacturers. (Current law requires that level to rise to 70 percent by 2020.) Manufactured goods, on the other hand, must be 100 percent American in materials and manufacture. While well-intentioned in their concern for American manufacturing, such policies can further inflate the cost of infrastructure. For example, according to the American Action Forum, Americans pay 34 percent more for their metro cars than the global average. Even with such policies in place, contracts often go to the most competitive global firms, which then set up separate manufacturing facilities in the United States. The profits are passed back to the foreign headquarters, while taxpayers pay the price for not being able to access the normal industry supply chains.

For the American taxpayer to receive assurance that his money is being spent wisely, any major infrastructure investments should be accompanied by actions to treat the cost disease. Already, the governors of New York and New Jersey are expressing indignation that the Trump administration has renounced an Obama-administration plan to fund half the ballooning cost of their new tunnel-building program. They would do well to turn that indignation toward their own transit authorities for wasting historic amounts of money. The 50 percent of the projected cost that the governors were already willing for their states to pay should be beyond sufficient to complete the entire project, and then the concerned states would not have to go through federal procurement channels at all.

Furthermore, when the national government picks up significant portions of the tab, it often incentivizes projects that should never have been undertaken at all. In 2010, self-described “recovering engineer” Charles Marohn pointed to a project in Staples, Minn., that cost $9.8 million to build an overpass above a railroad in order to connect two state roads and ease the congestion that came from waiting for train cars to pass. Staples has a population of 3,000. The federal government offered it $8.8 million for the project, and the state of Minnesota chipped in for the other $1 million. While the good people of Staples might enjoy their uncongested cross-town connection, Marohn wryly predicted that if they “were asked to simply pay 10 percent of the cost, . . . this project would not be happening.” Most federally supported projects are not so heavily subsidized, but a more customary 80 percent federal match was enough for the Louisiana city of Shreveport to attempt the decidedly retro project of bulldozing a working-class, mostly black neighborhood to build an urban highway connector through the city in the name of economic development.

The good news is that even as Washington continues to argue over the best way to make infrastructure investments, private actors are already emerging to offer innovative means of transportation. Whether with cars, trains, or the humble bicycle, new companies are stepping up to unleash American mobility, and each innovation holds the potential to reshape demand for other infrastructure components as people adjust their living and travel patterns.

Virginia’s McAlester’s Field Guide to American Houses conveys this recurring effect in a few pages as it details the development of American neighborhoods. Towns and cities were first built to be accessed most regularly on foot, meaning that homes, workplaces, and shops necessarily intermingled, all built on relatively narrow plots of land. The advent of horse-pulled streetcars stretched out development along a commuting pattern that opened up land for neighborhoods of residential rowhouses. The electric streetcar created spokes of development, populated by detached houses, emanating out from city centers. Because the neighborhoods still had to be navigated on foot after residents disembarked from the streetcar, though, homes in these early suburbs were built on relatively narrow lots. The automobile filled in the land between the streetcar spokes and eventually pushed out to fields opened up by freshly paved highways, allowing direct access to ranch houses and split-levels built on much wider lots.

We may now be approaching a similar point of transformative change through the explosion of private transportation services. The most well-known newcomers to the transportation scene are ridesharing companies such as Uber and Lyft. By enabling people to turn their personal cars into de facto taxis, the services upended the long-standing taxicab-medallion cartel system and tapped an explosive reserve of unmet consumer demand for point-to-point mobility. Uber and Lyft are also among the most active investors in what is widely projected to be the next phase of the automobile’s development: the autonomous vehicle.

Cars are far from the only mode of transportation undergoing significant innovations, however. In Florida, the “Brightline,” the first private passenger-rail project to be constructed in the United States in a century, is taking paying customers. The privately funded, financed, built, and operated line connects West Palm Beach and Fort Lauderdale, with stations in Miami and Orlando set to follow over the next few years. And Texas Central recently passed its first major federal environmental review on its way to constructing the first true high-speed-rail system on the American continent. Texas Central will connect Houston and Dallas, the fourth- and fifth-largest metro areas in the country, and it will run without state subsidies.

Creativity is also bubbling up in the bicycle world, as many American urban centers have seen bikeshare programs emerge. The market appears to have decided that the time is ripe for such systems to make money. Companies such as Ofo, Mobike, and Limebike are surging into city centers and finding huge numbers of customers. Seattle, for instance, had just wound down its failed city-run bikeshare program when three dockless bikeshare companies filled the void, building the second-largest city bikeshare fleet in the country without spending a single public dime. In China, such dockless bicycle companies, which offer cheap and easy last-mile connections, have dried up the ridesharing services’ market in short-range trips and driven demand back into transit.

To commit enormous federal funds right now while the forms of American mobility are so rapidly shifting, then, would be to bet one’s stack of chips while one’s hand is still being dealt. Instead of rushing to build new roads and highways based on past habits, we should turn our focus to rescuing and reinforcing the investments we have already made. The “crumbling” bridges and roads that President Trump decries will not crumble any less because a new bypass is being built on the other side of town, and maintenance liabilities are already outstripping many communities’ capacity.

Instead of starting another highway-building program, the United States would do well to focus on maintenance, to devolve planning and funding decisions to localities, and to ensure that the playing field is level enough to accommodate whichever road the future of transportation goes down.

– Mr. Coppage is a visiting senior fellow at the R Street Institute, where he studies conservative urbanism and the built environment.

A Summary of the Annual Report of the Council of Economic Advisers

The purpose of the Annual Report of the Council of Economic Advisers is to provide the public and the economic policy community with a detailed account of the performance of the U.S. economy in the preceding year and with an analysis of the Administration’s domestic and international economic policy priorities for the years ahead. In this Report, we thus review the salient policy developments of 2017 and preview policy aims for the coming years, in the context of the Administration’s unified agenda to expand our economy and the economic prosperity of all Americans.

The U.S. economy experienced strong and economically significant acceleration in 2017, with growth in real GDP exceeding expectations and increasing from 2.0 and 1.8 percent in 2015 and 2016 to 2.5 percent, including two successive quarters above 3.0 percent. The unemployment rate fell 0.6 percentage point, to 4.1 percent, its lowest level since December 2000, while the economy added 2.2 million jobs, an average of 181,000 per month. Notably, manufacturing and mining—having lost 9,000 and 98,000 jobs, respectively, in 2016—added 189,000 and 53,000 jobs during 2017. Labor productivity grew 1.1 percent, compared with a decline of –0.1 percent in 2016, and average hourly earnings of private employees rose 2.7 percent, compared with average growth of 2.1 percent during the preceding 7 years. Reflecting the economy’s outperformance of expectations, the January 2017 Blue Chip consensus forecast of 2.3 percent GDP growth in 2018 was revised upward in February 2018 to 2.7 percent.

The four quarters of 2017 thus marked a nontrivial trend shift. From 2010 through 2016, real output in the United States grew at an average annual rate of 2.1 percent, while labor productivity grew, on average, by less than 1 percent. The pace of economic recovery was slow by historical standards, particularly because recent research has confirmed Milton Friedman’s original observation that in the United States, deeper recessions are typically succeeded by steeper expansions, and that this correlation is in fact stronger when the contraction is accompanied by a financial crisis. Since the nineteenth century, the recent recovery was one of only three exceptions to this pattern.

In the Report, we provide evidence that the historically anemic recovery from the Great Recession was not independent of policy choices, and accordingly we proceed to identify the exacerbating factors in the weakness of the post-2009 recovery and the current Administration’s strategies and menu of policy options to address them.

First and foremost, on the historic Tax Cuts and Jobs Act (TCJA), we find that investment and labor productivity have been inhibited in recent years by the coincidence of high and rising global capital mobility and an increasingly internationally uncompetitive U.S. corporate tax code and worldwide system of taxation. This combination had the effect of deterring U.S. domestic capital formation, thereby restraining capital deepening, productivity growth, and, ultimately, output and real wage growth, with the economic costs of corporate taxation thereby increasingly and disproportionately borne by the less mobile factor of production—namely, labor. Indeed, the five-year, centered-moving-average contribution of capital services per hour worked to labor productivity actually turned negative in 2012 and 2013 for the first time since World War II. We estimate that by lowering the cost of capital and reducing incentives for corporate entities to shift production and profits overseas, the corporate provisions of the TCJA will raise GDP by 2 to 4 percent over the long run, and increase average annual household income by $4,000.

Similarly, we discuss a large body of academic literature indicating that an excessive regulatory burden can negatively affect productivity growth, and thus overall growth, by attenuating the flow of new firms’ entries and established firms’ exits, and also by amplifying the spatial misallocation of labor and creating employment barriers to entry. We furthermore highlight actions the Administration has already taken to eliminate inefficient and unnecessary regulations, with the effect of raising prospects for innovation, productivity, and economic growth.

On labor markets, we find considerable evidence suggesting, as with regulation, that postrecession efforts to strike a new optimum on the frontier of social protection and economic growth may have sacrificed too much of the latter in pursuit of the former. We also find that while demographic shifts owing to the retirement of aging Baby Boom cohorts exerted strong downward pressure on the labor force participation rate, factors other than demography accounted for one-third of the overall decline in participation during the recovery, and half the decline since the cyclical peak in the fourth quarter of 2007. For instance, we find that increases in fiscal transfers during the Great Recession intended to mitigate the demand-side effects of rising unemployment generated persistent negative effects on the prime-age labor supply. Meanwhile, structural unemployment coterminous with imperfect geographic mobility—exacerbated by regulatory restrictions, drug abuse, and inadequate investment in infrastructure—have similarly intensified downward trends in labor force participation among prime-age workers.

These challenges, however, particularly those of low labor productivity growth and declining labor force participation, are not policy-invariant. For example, policies that incentivize highly skilled and experienced older workers to defer retirement, such as the marginal income tax rate reductions enacted by the TCJA, can have important implications not only for labor force participation but also for productivity. Moreover, by raising the target capital stock, we expect the TCJA to result in capital deepening, again contributing to productivity growth and rising household earnings.

Relatedly, we document the deficiencies of our current public infrastructure, and investigate the adverse effects of these deficiencies on economic growth and consumer welfare, as well as potential remedial policy options. In particular, we examine how the fundamental mismatch between the demand for and supply of public infrastructure capital could be ameliorated by utilizing existing assets more efficiently and by adjusting longrun capacity to levels best matched with local needs, which would allow local governments more flexibility in giving prices a larger role in guiding consumption and investment decisions, and in streamlining environmental review and permitting processes. Moreover, addressing the current inadequacies of our public infrastructure would help to attenuate the coincidence of structural unemployment with imperfect geographic mobility—again, exacerbated by regulatory restrictions—that has been a factor in the decline of labor force participation.

We also look at issues in international trade policy and actions the Administration has taken and could take to generate positive-sum, reciprocal trade agreements with our trading partners. Specifically, in addition to reviewing the benefits of economic specialization and consequent gains from trade, we also demonstrate how instances of unfair trade practices by a subset of our partners have had the effect of limiting the potential gains from trade to the United States and the world, with particularly adverse consequences for the U.S. manufacturing sector. Addressing these issues would raise productivity by encouraging greater investment in sectors where the U.S. economy enjoys a comparative advantage, especially but not exclusively energy and agricultural products.

We then turn our attention to the health of the true catalyst of U.S. economic growth: the American worker. Although the Affordable Care Act (ACA) expanded insurance coverage to at most 6 percent of the U.S. population—through Medicaid, marketplaces, and the dependent coverage provision—we survey a large body of academic literature that estimates the effect of insurance coverage on health to be substantially smaller than commonly presumed. Indeed, for the first time in over 50 years, U.S. life expectancy declined in 2015 and 2016, suggesting that factors such as drug abuse, particularly of opioids, and obesity may have a larger impact than insurance coverage alone can redress. Instead, we find that increased choice and competition, along with a recognition by policymakers that the determinants of health are multidimensional, may constitute more efficient avenues for improving health outcomes, particularly among lower-income households. Fundamentally, it is the view of this Council that healthy people not only live longer, more enjoyable lives but are also an essential component of reversing recent trends in labor productivity and labor force participation.

We then consider the emerging challenge of cybersecurity, particularly in the context of our ongoing transition to an information economy. Malicious cyber activity presents new threats to the protection of property rights, including rights to intangible assets and even information itself, and thus imposes large and real costs on the U.S. economy. Given the existence of positive externalities from investing in cybersecurity, we discuss policy options that might shift this investment to its socially optimal level, including public-private partnerships that promote basic research, protecting critical infrastructure assets, disseminating new security standards, and expanding the cybersecurity workforce.

Finally, we examine the year in review and survey the years ahead. Acknowledging underlying strengths and challenges, the Administration’s November 2017 baseline forecast, which excludes the effects of the TCJA, projects that output will grow by an overall average annual rate of 2.2 percent through 2028. The policy-inclusive forecast, however, which assumes full implementation of the Administration’s agenda, is for average annual real GDP growth through 2028 of 3.0 percent. We expect growth to moderate slightly after 2020, as the capital-output ratio approaches its new steady state level and the pro-growth effect of the individual elements of the TCJA dissipate, though the level effect will be permanent. However, expected further deregulation and infrastructure investment will partly offset the declining contribution to growth of tax cuts and reforms toward the end of the budget window. The policy-inclusive forecast is conservative relative to those of previous Administrations, and in fact is slightly below the median of 3.1 percent. Moreover, the baseline forecast is precisely in line with the long-run outlook given in the 2017 Economic Report of the President, reflecting our view that nonimplementation of the current Administration’s policy objectives will imply a reversion to the lower growth trend of recent years.

Preliminary indicators suggest that markets indeed detect a trend shift. In the weeks immediately following the TCJA’s passage, over 300 companies announced wage and salary increases, as well as bonuses and supplementary 401(k) contributions of $2.4 billion affecting 4.2 million workers, citing the new law. In addition, by the end of January 2018, this Council tallied $190 billion in newly announced corporate investment projects that were publicly attributed to the TCJA, revealing that firms are responding to the TCJA as theory and empirical evidence predicted.

As a society, we hold many values and aspirations, including but not limited to expanding economic prosperity, that may not exist always and everywhere in complete harmony. It is the view of this Council that in recent years, the pursuit of alternative policy aspirations at the expense of growth has imposed real economic costs on the American people, in the form of diminished opportunity, security, equity, and even health. We therefore endorse an agenda for returning the American economy to its full growth potential.

The Long Game on Infrastructure

by Debra Knopman and Martin Wachs


With the release (PDF) of its Legislative Outline for Rebuilding Infrastructure in America, the Trump administration announced its intent to rely on state, local and private investment to provide the lion’s share of new infrastructure funding. Local projects with the highest non-federal share of funding would have priority and a project’s economic benefits to the public would take a back seat to revenue potential in the plan’s ranking system. But with its lack of new federal funding, the plan may not be the best path to economically beneficial or creative solutions to America’s most serious regional, national and long-term problems.

The plan would diminish the federal role in funding and regulation and reduce requirements for environmental permit reviews that the administration blames for slowing project approvals. Private developers would be incentivized to play much larger roles in financing public infrastructure.

State and local governments today bear 62 percent of the cost of building new transportation and water infrastructure and 92 percent of their annual operations and maintenance costs. Annual public spending on transportation and water across all levels of government currently exceeds $400 billion (PDF). The federal share is under $100 billion. Freight railways are almost all privately owned, but private ownership accounts for less than 1 percent of America’s surface transportation and water infrastructure assets.

The president’s plan asserts that federal spending of $200 billion over the next 10 years will unleash some $1.3 trillion in new spending by states, local governments and private developers for a total of $1.5 trillion. But most of the $200 billion would likely come from cuts in existing infrastructure and other domestic programs—it would not be “new” money on top of current federal infrastructure programs unless Congress acts to raise the gas tax or generate other new revenues.

How the six- or seven-fold increase in state, local and private investment would happen is a mystery. The plan includes $20 billion for federal spending on “transformative projects,” defined as projects with positive impacts unlikely to attract private investment.

Block grants to rural states for spending on infrastructure are another element of the plan, with a total set-aside of $50 billion. Rural economies need a boost, but the vast majority of aging infrastructure and most economic growth are in highly urbanized states.

Even more important than imprecision about national spending priorities is the absence of clarity about the future federal role and the need to raise new revenues and increase direct spending on infrastructure. With the interstate highway system complete, many believe federal leadership in transportation funding is no longer necessary and that the federal share of transportation spending, now less than 25 percent of the annual $220 billion (PDF) total, can continue to decline. They maintain that local projects should be supported by local resources, public and private. This is already the case for water and wastewater utilities where the federal share is only 4 percent, although most local governments depend on federal subsidies through tax-exempt municipal bonds for financing and low-interest loans through federal and state programs.

Federal retreat is appropriate for projects that largely benefit local populations. But an entirely different class of projects could bring widespread benefits to larger regions and the nation as a whole. Such projects would transcend state boundaries and promote clearly national goals. Harbor improvements, major flood control works on the nation’s great rivers,and the interstate highway system were the reasons the federal government years ago began funding “internal improvements.” The Clean Water Act of 1972 cleaned up the nation’s rivers and streams. It initiated a massive public works program to help cities of all sizes build secondary sewage treatment plants to comply with new water quality standards.

The nation has different needs now, but there still are national needs. More than 60 percent of the interstate highway system was built before 1970, and a renewed national road network is needed no less in the current era of fast-changing new road and vehicle technologies than it was in the 1950s. Freight hubs connecting rail, roads and ports around the country are congested and reaching their limits. The plan would allow states to toll interstates to raise needed money for improvement, but it does not mention how the bankrupt federal highway trust fund could be put on sound footing.

Urban mass transit—considered a national asset in other countries—provides economic and environmental benefits that cannot be fully financed by fares. The plan requires local governments to capture land value increases near transit stations to fund transit, but does not commit sufficient federal money to match local revenue. Coastal and riverine cities are struggling to keep up with increasing threats from stormwater flooding, with federal spending on recovery from natural disasters—mostly flood-related—exceeding $300 billion in 2017 alone. Federal spending on protection could save federal money on recovery.

The conversation about national infrastructure policy should be not only about which level of government or which private investors will put up the money. It should be a call for imagination and vision of what U.S. infrastructure needs to be for a prosperous 21st century. The conversation could and should transcend party politics. Achieving that could be the biggest transformative project of all.

Debra Knopman is a principal researcher at the nonprofit, nonpartisan RAND Corporation and a professor at the Pardee RAND Graduate School. Martin Wachs is an adjunct principal researcher at RAND. They are the principal co-authors of a RAND Corporation report entitled Not Everything is Broken: the Future of Transportation and Water Infrastructure Funding and Finance in the U.S.

This commentary originally appeared on U.S. News & World Report on February 16, 2018. Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.

ARTBA: Analysis of the Trump Administration’s Infrastructure Package and FY 2019 U.S. Department of Transportation Budget Proposal

Prepared by American Road & Transportation Builders Association


Trump Infrastructure Package

The White House Feb. 12 released the detailed infrastructure package that President Donald Trump promised throughout his first year in office. It arrived the same day the administration issued its FY2019 budget, the day has finally come.

The introduction of the 55-page “Legislative Outline for Rebuilding Infrastructure in America”, says: “To help build a better future for all Americans, I ask the Congress to act soon on an infrastructure bill that will: stimulate at least $1.5 trillion in new investment over the next 10 years, shorten the process for approving projects to 2 years or less, address unmet rural infrastructure needs, empower State and local authorities, and train the American workforce of the future.” The president adds, “My administration is committed to working with the Congress to enact a law that will enable America’s builders to construct new, modern, and efficient infrastructure throughout our beautiful land.”

The plan details differ little from what Trump administration officials have discussed for months. The main focus is largely on incentivizing state and local governments and private sector entities to use their money to capture some of the $200 billion the administration proposes to spend. The plan also reforms and speeds the construction project approval process at the federal level and increases workforce capacity to carry out the jobs that may be needed and created because of this investment.

As expected, the Trump administration’s infrastructure package does not address the looming Highway Trust Fund (HTF) solvency problem. Beginning in FY 2021, the HTF will need roughly $18 billion per year, on average, to avoid severe cuts in the amount of annual investment levels of the federal highway and transit programs during subsequent years. In fact, the proposal only raises the HTF in passing and without addressing the looming fiscal crisis. Moreover, the package does not include a way to pay for the $200 billion in federal resources the president is recommending.

Here is a breakdown of how the package intends to leverage the federal dollars to produce as much as $1.5 trillion in total investment:

  • Infrastructure Incentives Program ($100 billion), a competitive grant program for projects including major investments by states, localities, and the private sector. It would be administered by the U.S. Department of Transportation (DOT), U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers. The plan does not say how much would be allocated to each agency. As part of the selection process, the plan does weight heavily towards how much new, non-federal revenue can be brought to the table for a project. The federal share is capped at 20 percent per project, and no state can receive more than 10 percent of the $100 billion.
  • Rural Infrastructure Program ($50 billion) that aims to improve the condition of infrastructure, enhance regional connectivity and access to markets and employment opportunities and spur economic growth outside cities. Eligible projects would include transportation, broadband, water, power and electric infrastructure. In this program, 80 percent of the funding would be distributed by a formula based on population of less than 50,000, and lane mileage. The remaining 20 percent would be distributed via a performance grant program for states that submit a comprehensive infrastructure investment plan. Tribal and U.S. territorial areas would also be eligible for funding under this program.
  • Transformative Projects Program ($20 billion) would provide federal funding for, “bold, innovative, and transformative infrastructure projects that could dramatically improve infrastructure” but are, for various reasons, considered too risky for private sector investment. The U.S. Department of Commerce would oversee this program, with consultation as needed from other departments, and eligibility would include all previously mentioned uses of infrastructure as well as “commercial space”. Up to 50 percent of planning costs and 80 percent of construction costs could come from this program.
  • Infrastructure Financing Programs ($20 billion) would allocate an additional $14 billion for the expansion of existing federal credit programs, including the Transportation Infrastructure Finance and Innovation Act (TIFIA), Railroad Rehabilitation and Improvement Financing (RRIF) program and Water Infrastructure Finance and Innovation Act (WIFIA). This additional funding would allow the administration to further diversify the portfolios for these programs. Specifically, port and airport infrastructure projects would be eligible for TIFIA credit assistance, which is currently limited to highway, bridge, transit and certain intermodal projects. The RRIF program would be amended with incentives for short-line freight and passenger rail projects.
  • Another $6 billion would be used to broaden eligibility for tax exempt Private Activity Bonds (PABs). This financing tool has been an option for certain highway and freight facility projects since 2005, subject to an overall cap of $15 billion. The proposal would remove this cap (as well as similar state volume caps) to strengthen the certainty of PABs’ future availability. The administration would also enable PABs to be used for reconstruction projects, longer-term private leases and concession arrangements, and a number of new non-transportation infrastructure categories.
  • Federal Capital Financing Fund ($10 billion) to help federal agencies purchase real property and pay for it over a 15-year period rather than the current requirement that this be done within one year. The fund would help finance these purchases and the relevant department would repay the fund in 15 installments via annual appropriations. The aim is to save money in the long run by hopefully avoiding some cost-prohibitive leases.

Transportation Financing and Contracting

The administration’s proposal would enable states to toll existing Interstate facilities, and use tool revenues to benefit certain surface transportation infrastructure projects beyond the scope of the tolled facility itself. Similarly, states would be able to commercialize rest areas on Interstate highways, provided they “reinvest” the proceeds in the same corridor.

The administration also seeks to eliminate normal federal-aid requirements for highway and transit projects where federal dollars are “de minimis” and for smaller projects largely out of the federal-aid highway right-of-way. A state would also have the option to repay a project’s federal share to the HTF and terminate the need to comply with federal requirements in its maintenance and operations. In the same vein, “federalization” requirements for projects funded by state infrastructure banks would be reduced. The proposal would also raise the threshold for “major” highway projects from $500 million to $1 billion, in order to decrease the number of these larger projects subject to additional supervision and administrative requirements by the Federal Highway Administration (FHWA).

Other provisions:

  • Enable federal land management agencies (such as FHWA’s Federal Lands Highway Division) to use a wider variety of alternative contracting and project delivery methods.
  • Expand existing pilot programs intended to encourage public-private partnerships (P3s) and partnerships between public agencies for transit capital projects, and enable the privatization of airports.
  • Authorize utility relocation for highway and transit projects to take place prior to completion of the National Environmental Policy Act (NEPA) process.
  • Require the use of “value capture financing” as a prerequisite for certain transit capital
    grants. As an example, private entities benefiting from a transit project may be asked to share in its cost through a tax, fee, assessment or other arrangement.
  • Establish an Interior Maintenance Fund that would allow the U.S. Department of the Interior to keep half of the revenues collected from new energy and mineral exploration in order to address the deferred infrastructure maintenance backlog – including roadways – within the inventories of the National Park Service and the U.S. Fish and Wildlife Service.
  • Allow the disposition of federal real property, making it easier to sell federal government-owned assets that may better be managed or owned by states, localities or the private sector.

Project Approval Process

President Trump’s infrastructure proposal would make significant changes to the environmental review and approval process for transportation construction projects. The proposal builds on his August 2017 executive order on reforming the permitting process by setting a two year time limit for environmental reviews. Specifically, the lead agency on any project would have 21 months to complete an environmental review and then additional permitting requirements from other agencies would have to be completed three months thereafter. A number of reforms to NEPA are also made, including limiting the range of alternatives to options which are feasible and eliminating duplication of agency review efforts. The plan would also revoke EPA’s authority to review NEPA decisions made by other agencies.

The proposal also calls for changes to major environmental laws impacting transportation construction. Specifically, the plan would remove EPA from the wetlands permitting process (making the U.S. Army Corps of Engineers solely responsible for such permits) and eliminate EPA’s ability to retroactively veto Clean Water Act permits. Additionally, the Clean Air Act’s transportation conformity process would be altered by requiring that it apply only to the most recent set of National Ambient Air Quality Standards (NAAQS). This would eliminate the problem of counties struggling to meet old standards when new ones are introduced. The plan would also eliminate duplicative regulatory requirements for historic sites and parklands.

NEPA delegation – such as that currently done by FHWA – would also be expanded to other agencies under the proposal. Additionally, the program would be broadened to include delegation of regulatory responsibilities outside of NEPA, including Clean Air Act transportation conformity decisions, flood plain determinations and noise policies. Also, changes would be made to the way in which courts review challenges to transportation projects. Under the plan, courts would only be able to halt transportation projects for legal challenges in “exceptional circumstances.” In addition, federal agencies are directed to establish guidelines on the timeliness of data used in environmental permitting decisions. Once these guidelines have been established, courts will not be able to entertain challenges to agency data based on whether or not the information is current.

Workforce Development

Because of an anticipated increase in construction and other employment resulting from infrastructure legislation, as well as related economic growth, the administration proposes numerous improvements and reforms to federal education and training programs. These include:

  • Expand Pell Grant eligibility to individuals seeking a vocational certification or credential, often through a short-term educational or apprenticeship program.
  • Reform the Perkins Career and Technical Education program with the objective of improving access to high-quality technical education in secondary and post-secondary institutions. This would include directing a larger share of Perkins funding to high schools, in part to “fast track” interested high school graduates to infrastructure-related jobs.
  • Grow the eligibility for the Federal Work Study program among students pursuing career and technical education, particularly low-income and low-skilled students seeking quick entry or reentry to the workforce.
  • Require states accepting federal dollars for infrastructure projects to allow participation by workers with skilled trade licenses from other states.

Trump Administration’s FY 2019 U.S. Department of Transportation Budget Proposal

Conventional Washington wisdom says that any administration’s budget request is usually “dead on arrival.” That may be especially true this year. Congress and the administration agreed Feb. 9 on overall discretionary funding levels for both defense and non-defense spending for FY 2018 and FY 2019. The deal by congressional leaders and the president increased spending by more than $300 billion over FY 2017 funding levels, a portion of which will undoubtedly go towards transportation programs. The question is which programs?

The budget deal combined with the Trump administration’s infrastructure package release make the transportation sections of the FY2019 budget somewhat subdued. However, the president’s budget is helpful in that it demonstrate the areas the administration feels should be emphasized and those that may be reduced or eliminated. Congress controls the “power of the purse,” however, and will make most of the funding decisions, despite the administration’s request.

Federal Highway Program

For FY 2019, the administration’s budget for highways conforms to the amount enacted in the FAST Act, as it did for FY 2018. The budget recommends $46.001 billion in new contract authority, up from $44.924 in FY 2018, and an obligation limit of $45.269 billion, up from $44.234 in FY 2018. Both FY 2019 figures represent an increase of 2.3 percent over FY 2018. In addition, $739 million of contract authority could be obligated above the limitation, bringing total obligation authority for the year to $46.007 billion. This represents a significant change from the FY 2018 budget, when the administration recommended freezing highway program funding for FY 2019 at the FY 2018 level.

Nonetheless, the long-term outlook for the highway program remains highly uncertain. At current funding levels, outlays from the highway account exceed projected revenues by about $8-$9 billion per year. The balance in the highway account will be dissipated by the end of FY 2021. In response, the administration’s budget includes the following adjustments:

  • First, the administration’s budget assumes a freeze on new contract authority and obligations at $43.969 billion per year through FY 2028. By contrast, the FAST Act provides for annual growth of just above 2 percent, or close to $1 billion, annually. A freeze thus means the obligation limitation in FY 2028 would be about $10 billion less than continuation of the FAST Act.
  • Even more critical, however, is the forecast that outlays for highways will have to be cut from $47 billion in FY 2021 to $36 billion in FY 2022 and beyond. In essence, rather than raise new revenues, the administration is proposing to limit payments to states and contractors from the Highway Trust Fund after FY 2021 to no more than projected HTF revenues under current tax rates. To fill the $11 billion gap, states would have to use their own funds, stop construction work on some projects, or slow down reimbursements to contractors.

Public Transportation Program

The Mass Transit Account of the Highway Trust Fund is the source of funding for the Transit Formula Grants program, which includes money for a wide variety of transit needs, including operations and maintenance of urban transit facilities, bus purchase and repair, repairs to fixed guideway transit systems, transit programs in rural areas, and transit for seniors and persons with disabilities, among others. For FY 2019, the Trump administration proposes to provide $9.90 billion for the Transit Formula Grant program, down from $10.5 billion in FY 2018. Longer term, like the highway program, the Highway Trust Fund can continue to pay for the transit program only for another couple years before revenue constraints force a cut. Following FY 2021, the administration’s budget proposes a reduction in outlays for the transit formula program from $10.1 billion to $6.3 billion in FY 2023 and beyond. Absent new revenues, this would mean significant program cuts or a greater burden on state and local governments to fund mass transit needs.

Only a small fraction of Formula Grant funds, however, are used for construction of transit facilities. Most funding for major transit project construction goes through the Capital Investment Grants/New Starts program. In recent years, this program has been funded from the general fund and requires an annual appropriation. For FY 2019, the administration’s budget recommends cutting new money for this program to $1 billion, down from $2.4 billion in FY 2018, and using the funds only to continue construction activity on ongoing transit projects. There would be no federal funding for new transit projects. Longer-term, the budget projects funding for Capital Investment Grants to remain at the $1 billion level through FY 2028.

Highway Trust Fund

A $70 billion infusion of general funds into the Highway Trust Fund under the 2015 FAST Act will, according to the FY 2019 budget, keep the trust fund solvent through FY 2021. After that, however, the trust fund will not be able to maintain existing funding for highway and transit improvements without new revenues, either in the form of another general fund transfer or an increase in highway user fee revenues.

Unfortunately, this critical issue is not addressed in either the FY 2019 budget or the Administration’s Rebuilding Infrastructure in American plan. According to the FY 2019 budget, the federal motor fuel and truck taxes will generate no more than $42 to $44 billion per year in revenues into the Highway Trust Fund for the foreseeable future. At the same time, annual outlays of $55 to $58 billion per year from the trust fund would be required just to maintain existing levels of investment in the federal highway, transit and highway safety programs. As a result, the balance in the highway trust fund would be depleted by the end of FY 2021.

The administration’s response to this bleak Highway Trust Fund forecast is two-fold:

  • After FY 2021, limit outlays for the federal highway, transit and transit safety programs to Highway Trust Fund revenues. As the table shows, this means cutting outlays by about $13 billion.
  • Shift responsibility for investing in transportation infrastructure to state and local governments, as well as the private sector.

Aviation Programs

The Trump administration once again is advocating for the privatization of the nation’s air traffic control system. House Transportation & Infrastructure Committee Chairman Bill Shuster (R-Pa.) passed legislation out of his committee in 2017, but it did not advance beyond that stage and has generated substantial opposition from Republicans in the House and Senate. Under the administration’s approach, the aviation passenger ticket taxes would be reduced and the new entity would impose new user fees to support the system.The budget proposes continuing Airport Improvement Program (AIP) funding at $3.35 billion—the level at which it has been since FY 2012. The AIP is the federal capital construction program that airports use to build and maintain runways, taxiways and other critical infrastructure.

Other Transportation Programs

The Trump administration FY 2019 budget also calls for:

  • No funding for the National Infrastructure Investments program, or TIGER Program, which was initiated by the Obama administration and provides grants from the federal general fund for a variety of transportation projects—highway-related activities are the historically largest recipient of the program. Congress provided $500 million in FY 2017.
  • A $962 million cut in Amtrak funding over FAST Act authorized FY 2019 levels, a 57 percent reduction, and cuts to several other smaller rail programs.
  • $1.25 billion, or 21 percent, cut to the Army Corps of Engineers budget from what was enacted in FY 2017. These programs, among other things, support port and water infrastructure activities.

What’s Next?

Now that the Trump administration’s infrastructure plan is public, the real work begins in the halls of Congress. The authorizing committees will likely hold hearings on the administration’s plan in the coming weeks and will, hopefully, begin crafting legislative language to move promptly through the House and Senate.

The president’s detractors, including the media, will likely focus on what’s missing from the plan. Some of that criticism is justified, given the absence of a HTF user fee solution. However, ARTBA will continue pressuring Congress and leadership on both sides of the aisle, in particular, to move an infrastructure package forward that includes a HTF revenue solution as its foundation.

President Trump’s plan is like the starter’s gun at an Olympic speed skating race. In order for a package to be completed before Congress begins to focus full time on the November midterm election, we need to work hard to make sure this package moves at a record-breaking pace.

Rethinking Infrastructure Funding


It Is Time to Rethink the U.S. Highway Model

Our highway funding system based on per-gallon fuel taxes is breaking down for several reasons.

I’ve been writing this Public Works Financing column for more than two decades. During this time, I’ve researched and written dozens of policy studies on transportation infrastructure, advised federal and state transportation agencies, and served on various transportation committees and commissions. From all of this I’ve concluded that the way we fund and manage the U.S. highway system is broken and needs serious rethinking if it’s going to meet the needs of 21st century America.

The problems are legion, beginning with the huge direct cost of traffic congestion in America’s 200 or so urban areas—a whopping $160 billion per year just in wasted time and fuel. And while our highways and bridges are not “crumbling,” there are chronic problems of deferred maintenance, leading to many rough roads and a surprisingly large number of structurally deficient or functionally obsolete bridges.

Our highway funding system based on per-gallon fuel taxes is breaking down for several reasons. A growing share of the proceeds is no longer spent on highways, so people have come to view gas taxes as just another tax, which politicians are therefore leery of increasing. Yet as cars continue to get more efficient—using fewer gallons to go a given distance—revenues from per-gallon fuel taxes can’t keep pace with either the growth in driving or the cost of building and maintaining highways.

Moreover, with decisions on how to spend transportation revenues being largely political, at both state and federal levels, the billions raised and spent each year are often not spent on projects that would produce the most bang for the buck. Most federal highway and transit money is doled out by formula, and although members of Congress are no longer allowed to “earmark” pet projects, the overall process is based far more on politics than on sound economic principles (such as ensuring that benefits of a project exceed its costs).

I now think that a far better model would be to reconceive highways as another category of network utility, in addition to the familiar examples of electricity, water supply, telecommunications, and natural gas. Most network utilities are not run by government agencies, with key decisions made by legislators. Instead, the providers are organized as companies that sell services to customers, under government oversight. That’s true regardless of whether those companies are owned by investors or are government enterprises (like municipal electric and water utilities).

If highways were provided by highway utility companies—investor-owned concession companies, government toll agencies, or nonprofit user co-ops—a great many things would be different. For example:

  • People would pay for highways based on how much they use them, just as we pay for water by the gallon and electricity by the kilowatt hour.
  • People would be just as familiar with what highways cost, based on their monthly bill, as they are with the cost of cable television, cell phones, electricity, etc.
  • Per-mile highway charges would be subject to some form of regulatory oversight, based on the extent to which the highways and bridges in question had competitors or were essentially monopolies.
  • Large-scale highway investments—for new highways and for replacing worn-out ones—would be financed via the capital markets, just as individuals do in buying a home and as other utilities do in building new facilities, rather than being paid for piecemeal out of annual appropriations.
  • Major highway investments would be primarily business decisions, not political decisions, subject of course to the same kinds of land-use and environmental constraints faced by all other commercial developments.
  • Highway operations would be managed in real time, to provide customers with the quality of services they were willing to pay for.
  • Highway companies would have strong incentives to keep their facilities in excellent condition, to attract and keep customers.

That may sound like a utopian vision, but there are reasons to think we are at a point where dramatic change will be necessary. The federal government is on a path toward insolvency, where nearly all federal revenues will be consumed by entitlements, defense, and paying the interest owed on the national debt. There will be no “general revenue” left over to bail out a Highway Trust Fund.

Most state governments are saddled with huge unfunded pension and health care obligations to retired public employees, so they are not in a position to take up the slack from a reduced federal role in transportation. And per-gallon fuel taxes will have to be replaced by a propulsion-neutral funding source—some form of per-mile charging.

These conditions set the stage for the transformation to a new highway system, supported by three other key developments. One is the growing worldwide success of revenue-financed public-private partnership (P3) concession projects for highways and other transport infrastructure. Compared with Australia, Chile, France, and Spain, the United States has hardly scratched the surface of what is possible.

Second is the emergence of global infrastructure investment funds, which have amassed over $350 billion of equity to invest in revenue-producing infrastructure in the past five years. Most of this is being invested in European, Asia-Pacific, and Latin American infrastructure—but these funds clearly desire to invest far more in the United States, if only there were a “pipeline of projects.” America’s aging, hyper-congested highway system could offer an ample pipeline.

A third development is the increasingly recognized need for public pension funds to diversify their portfolios by investing more in revenue-producing infrastructure. That’s hard to do in U.S. transportation, because nearly all airports, highways, and seaports are owned and operated by governments. But P3 concessions open such infrastructure to serious investment by non-profit pension funds as well as for-profit investment funds.

The transformation of U.S. highways from state-owned enterprises to highway utility companies could not happen overnight. But in my forthcoming book, Rethinking America’s Highways: A 21st Century Vision for Better Infrastructure (University of Chicago Press, June 2018), I lay out scenarios showing how a several-decades transition could occur. The book shows that investor-owned toll roads have a long European and U.S. history that was overlooked once motor vehicles arrived on the scene. The concept was rediscovered in post-World War II Europe, and it spread to Australia, China, and Latin America late in the 20th century. It is only in the last 15 years that P3 highway infrastructure has gained a toe-hold in the USA.

The preview of the White House infrastructure plan (leaked on January 22nd) offers some steps toward beginning this transition. It recognizes the need to reduce the direct funding role of the federal government for infrastructure owned and operated by state and local governments. It provides for expanded P3 financing tools (Private Activity Bonds, Transportation Infrastructure Finance and Innovation Act programs, etc.) as well as repealing the federal ban on toll-financed Interstate reconstruction and modernization. And by not embracing a federal fuel tax increase, it de-facto encourages the needed shift from per-gallon gas tax to per-mile charging, led (as it should be) by the states that own the highway infrastructure.

A version of this column first appeared in Public Works Financing.

Robert Poole is director of transportation policy and Searle Freedom Trust Transportation Fellow at Reason Foundation. Poole, an MIT-trained engineer, has advised the Ronald Reagan, the George H.W. Bush, the Clinton, and the George W. Bush administrations.


Trump’s infrastructure plan hits early roadblock over funding

By Mark Niquette, Bloomberg, WP Bloomberg


Top Democrats are questioning President Donald Trump’s infrastructure plan even before it’s released, raising doubts about whether the administration’s approach can win bipartisan support.

Trump has long touted his plan to upgrade U.S. public works as something that can win Democratic backing, and he will appeal to Democrats on infrastructure in his State of the Union address on Tuesday. He’s offering at least $200 billion in federal money over 10 years to spur states, localities and the private sector to spend as much as $1.6 trillion.

Democrats say that’s not nearly enough. Senate Minority Leader Chuck Schumer and other Senate Democrats have called for $1 trillion in federal investment. The American Society of Civil Engineers has said more than $2 trillion in additional funding is needed by 2025 to upgrade conditions of everything from roads, bridges and airports to mass transit and drinking water.

“It’s a ‘nothing burger,’” Oregon Rep. Pete DeFazio, the top Democrat on the House Transportation and Infrastructure Committee, said of the administration’s proposal in a Jan. 9 interview. “It has to have real investment, not just a bunch of polemics and ideology pretending to be taking major steps to rebuild our infrastructure.”

Infrastructure is the next big item on Trump’s legislative agenda, after a failed attempt to overhaul health care and passing a tax bill last year. But Democrats’ call for more funding comes in addition to the tax measure costing $1.5 trillion over 10 years, and Republican leaders say they don’t want a big spending bill. The push also follows the acrimonious government shutdown, and lawmakers are already fighting about budget spending with mid-term elections looming in November.

Trump is expected to tout his infrastructure plan in his State of the Union speech, and detailed principles will be transmitted to Congress a week or two after that to start the legislative process, adviser DJ Gribbin said.

With Republicans controlling the Senate by only a 51-49 margin, Trump needs Democratic votes. It’s unlikely an infrastructure bill can pass on a simple, party-line majority, the way the tax overhaul was enacted last year, using what’s known as budget reconciliation.

Delaware Sen. Tom Carper, the leading Democrat on the Senate Environment and Public Works Committee and a former governor, said he supports encouraging states and localities to generate funding for projects. But he returned from a meeting with administration officials earlier this month skeptical about their approach.

“Can we do a better job using scarce resources to leverage state and local monies? Yes,” he said. “But I’m still not sure how you transform $200 billion into $1 trillion. You’ll have to show me.”

Rep. Bill Shuster, the Pennsylvania Republican who is chairman of the House Transportation and Infrastructure Committee, said he has told Trump that any bill must be bipartisan and fiscally responsible.

Democrats will want to address the Highway Trust Fund, which uses primarily federal fuel taxes to help fund state and local projects but is projected to become insolvent by 2021, Shuster said. Republicans don’t want deficit spending, he said.

“So we have to find a path forward that satisfies both the Democrats and Republicans,” Shuster said. “But I believe there is a path forward.”

Trump will appeal to Democrats in his State of the Union speech that a bipartisan approach is needed to rebuild the country, Marc Short, the White House legislative affairs director, said on “Fox News Sunday.” Trump has eyed Democratic support for his public-works plan, in part because it means jobs for the Democrats’ traditional allies in labor unions.

There’s no doubt that Democrats in Congress will want more federal dollars, but there’s a significant debt problem in the U.S., Short said. “This can’t just be all federal largess that pays for this,” he said.

Some governors and mayors have said they’re already paying their fair share and that they need a better federal partner. But Trump wants to allow communities to keep more of their funds, make their own decisions, and “simplify the federal bureaucratic maze,” White House spokeswoman Lindsay Walters said.

“The Washington establishment still thinks that infrastructure can only be built correctly if they make all the decisions and control the purse strings, but one look at the crumbling bridges and roads across America shows that approach has failed,” Walters said in an email.

Still, allocating $200 billion in federal funds is “a drop in the bucket” compared with the cost for slashing taxes for corporations and the wealthy in the tax bill, said Sen. Ron Wyden, the top Democrat on the Senate Finance Committee. It appears Trump also wants to shift the funding burden to states and cities already strapped for cash, he said.

“This is not a formula to pull our infrastructure out of disrepair,” Wyden said in a statement.

Drew Hammill, a spokesman for House Minority Leader Nancy Pelosi said “a token GOP infrastructure plan” that guts environmental protections, privatizes assets and increases tolls won’t work, and that Democrats “will continue to fight for broad, bold federal investment.”

Trump’s White House wants to change the approach to funding projects to reduce over-reliance on federal money and get more public works built and maintained. A leaked draft of principles that emerged this week said half of the federal monies would go toward incentives in a competition to encourage non-federal entities that own most assets to secure their own funding for projects. Tax-exempt bonds also would be expanded to help attract private investment, according to the draft.

White House officials have said the plan being developed also would allocate funding for rural projects, money for federal lending programs and “transformative” projects that can’t secure private financing. Streamlining environmental reviews and permitting to get project approvals in an average of two years also will be part of the plan, officials have said.

Gribbin said the White House is “open to conversations” with lawmakers about increasing the $200 billion, and the administration is purposely not including new revenue in its proposal to allow those details to be negotiated with Congress.

Congressional Republicans have been supportive of streamlining project approvals and leveraging federal dollars, though lawmakers who represent rural areas, including John Barrasso of Wyoming, chairman of the Senate Environment and Public Works Committee, have expressed concerns about relying too heavily on private investment that doesn’t work well in less-populated areas.

Barrasso has said his panel was working on a bill while waiting for a White House proposal. Committee Democrats outlined a blueprint in July that called for more than $500 billion and may draft their own measure, Carper said. Other committees would also be involved.

While some administration proposals are good, $200 billion in federal funds “barely gets you out of the starting gate” in addressing deficient bridges and other U.S. needs, said Ed Rendell, the former Democratic governor of Pennsylvania who co-founded Building America’s Future, a bipartisan coalition of officials that promotes infrastructure spending. He called the White House framework “dead on arrival.”

“It’s all show and no go,” Rendell said. “You can’t do infrastructure without a significantly sized federal commitment, and I think it has no chance to get Democratic votes — and it won’t get 100 percent of the Republican votes because of the Tea Party.”

Ray LaHood, a Republican and former transportation secretary under President Barack Obama, said he thinks it’s possible to find a spending amount that both Democrats and Republicans could support “if people will be reasonable and talk to one another.”

“I think the administration really wants to be bipartisan on infrastructure and wants to include Democrats and wants Democrats in the room when the bill is written and when the funding sources are really determined,” said LaHood, who is a co-chairman of Building America’s Future.

Even so, getting a major infrastructure bill enacted in 2018 will be “an uphill climb,” said Stephen Sandherr, chief executive officer of the Associated General Contractors of America, representing more than 26,000 construction companies and other firms. Sandherr said a lot of his members are more optimistic than he is because of the partisan political battles during the past year.

“To think that they’re all going to now, all of a sudden in the new year sit around a campfire, hold hands and sing ‘Kumbaya’ on infrastructure is a little bit unrealistic,” Sandherr said on a conference call with reporters earlier this month.

What Amazon wants for its new HQ


FOX Business


Just 20 cities are left standing in the competition for Amazon’s second headquarters and the 50,000 jobs it will bring.

Future is Bright for train travel in Florida

First ride: Aboard Florida’s new Brightline train

Lisa Broadt, The (Stuart, Fla.) News, Published 9:11 p.m. ET Jan. 12, 2018 | Updated 9:12 p.m. ET Jan. 12, 2018


WEST PALM BEACH, Fla. — On the eve of Brightline passenger rail launching in South Florida, the railroad already is looking beyond its original goal of service between Miami and Orlando.

Brightline’s intercity system could be expanded within Florida to Jacksonville or Tampa and could be replicated in other states with similar demographics, including Georgia and Texas, railroad officials said at a media event Friday.

“Our vision doesn’t stop here,” said Wes Edens, co-founder of Fortress Investment Group, Brightline’s parent company. “Our goal is to look at other corridors with similar characteristics — too long to drive, too short to fly.”

Brightline — the country’s only privately owned and operated passenger railroad — is to officially begin passenger service Saturday morning.

For now, trains will run between West Palm Beach and Fort Lauderdale. But the railroad will expand to Miami later this year, with full service to Orlando still two years away.

Elected officials and members of the media on Friday took the 40-minute trip on BrightGreen, one of Brightline’s five colorful diesel-electric trains.

It was a chance for the $3.1 billion railroad to show off the amenities they say will set Brightline apart from other forms of public transportation, including Tri-Rail, South Florida’s existing commuter rail.

Leather seats, wide aisles, bike racks, free wireless Internet — with two power outlets and two USB ports per seat — are among the amenities Brightline says will appeal to its target customers, which include tourists, business travelers and Millennials.

Friday’s event also was a chance for Brightline to introduce the staff that it says will provide world-class hospitality.

Train attendant Whytni Walker, 23, of West Palm Beach said she applied to Brightline because she wanted “to be part of something new.”

Walker said she believes the staff, many of whom are Millennials, are helping to create a vibrant atmosphere aboard the trains and in the stations.

“There’s energy everywhere,” Walker said. “Since training began, there hasn’t been a dull day.”

But even with the launch of service just hours away, Brightline officials on Friday were focused on the future.

The project’s successful launch — and performance in the coming years — could have implications for passenger rail nationwide, Edens said in an interview with USA TODAY.

To be economically viable, the railroad must capture 2% of the approximately 100 million annual trips between Miami and Orlando, according to Edens.

The private-equity investor and co-owner of the NBA’s Milwaukee Bucks said he’s confident Brightline will deliver.

“The service offering and the convenience and the expense of it are so compelling that 2% seems like a good risk,” Edens said.

The Brightline model could be replicated in other highly populated, highly congested city pairs, such as Atlanta-Charlotte, Houston-Dallas and Dallas-Austin, according to Edens.

The company has long said that its use of the Florida East Coast Railway — a Miami-to-Jacksonville corridor established in the late 19th century but currently used only for freight — was a key factor in making Brightline financially viable.

Similar infrastructure exists in Texas and Georgia and is, in fact, abundant in many areas of the country, according to Edens.

“The U.S. has very poor passenger rail, but the best freight system in the world,” he said. “The existing infrastructure is very usable in many of these places.”

Within Florida, Tampa and Jacksonville are among the most obvious expansion opportunities, Edens said, adding that each comes with unique benefits. Expansion from Orlando to Tampa, Florida’s second-largest city by population, would be aided by the fact that the state owns right-of-way between the cities, while an expansion to Jacksonville, the northern terminus of the Florida East Coast Railway, would have the advantage of the existing infrastructure, according to Edens.

Introductory fares between West Palm and Fort Lauderdale are $10 each way for Smart Service, Brightline’s coach class, and $15 for Select Service, its business class. Seniors, active military personnel and veterans will receive a 10% discount, and children younger than 12 will ride for half price as part of discounted introductory fares, according to Brightline.

Initial service will include 10 daily round trips on weekdays and nine on weekends between 6 a.m. and 11 p.m.

Brightline ticketing and schedule information is available online and through the railroad’s new mobile app.

Urban Mobility: Data Driven Decision-Making and Solutions

Who Owns Urban Mobility Data?

Policymakers need it; private transportation companies have it. Here’s one way to broker a solution.



How, exactly, should policymakers respond to the rapid rise of new private mobility services such as ride-hailing, dockless shared bicycles, and microtransit? As I argued here several months ago, in order to answer that question city leaders will need accurate and detailed information about all urban trips—however the traveler chose to get from one place to another. And that information needs to come in part from the private mobility companies that are moving a growing share of people within our cities.

In 2017, these services had a tumultuous year. Apocalyptic images of discarded dockless bikes in China left American officials that are experimenting with this model for bikesharing scrambling to ensure their cities avoid the same fate. Meanwhile, Uber’s admission that it paid a $100,000 ransom to hackers who stole 57 million user accounts damaged that company’s credibility as a protector of passenger privacy. And a widely shared study from researchers at University of California-Davis refuted several optimistic hypotheses about ride-hailing’s societal benefits: It found that companies like Uber and Lyft are spurring urban congestion, siphoning public transit riders, and failing to entice many people to give up their cars. Not coincidentally, transit agencies like Washington, D.C.’s WMATA are now launching their own investigations to see if declining ridership can be traced to the emergence of ride-hailing.

Beyond these broad issues, there are a number of specific questions that can’t be answered without access to trip information from Uber, Lyft, Limebike, and the like. For example, without such data it’s hard for policymakers—or the general public—to decide if it’s a good idea to convert a parking meter to a ride-hailing drop-off point, or to ensure pedestrians aren’t obstructed by heaps of dockless bikeshare bikes on the sidewalk. Unfortunately, new mobility services have generally refused to let the public sector see inside their data vaults.

But the tide is turning, especially as the line between public and private forms of urban transportation blurs. American transit agencies are partnering with ride-hailing companies to offer late-night service, move people to bus or rail stations (“first mile/last mile” solutions), and manage paratransit for riders with limited mobility. Ride-hailing companies are in an awkward position if they refuse to share data with governments that subsidize them. “If I’m paying you to move a passenger, the data for that passenger isn’t yours,” I heard a Texas transit official say recently to a ride-hailing executive. “It’s mine.” The executive had no response.

When will policymakers finally be able to access the data they need to manage streets and sidewalks in the public interest, and how will they get it? The most likely solution is via a data exchange that anonymizes rider data and gives public experts (and perhaps academic and private ones too) the ability to answer policy questions.

This idea is starting to catch on. The World Bank’s OpenTraffic project, founded in 2016, initially developed ways to aggregate traffic information derived from commercial fleets. A handful of private companies like Grab and Easy Taxi pledged their support when OpenTraffic launched. This fall, the project become part of SharedStreets, a collaboration between the National Association of City Transportation Officials (NACTO), the World Resources Institute, and the OECD’s International Transport Forum to pilot new ways of collecting and sharing a variety of public and private transport data. Kevin Webb, the founder of SharedStreets, envisions a future where both cities and private companies can utilize SharedStreets to solve questions on topics like street safety, curb use, and congestion.

That’s a laudable goal, but Shared Streets will have to solve several challenges in order to become a go-to resource. For example, it’s hard to provide a complete picture of urban mobility unless the heavyweights like Uber, Lyft, Didi Chuxing, Ofo, and Mobike participate; so far none of them has signed on. There is also the question of how tech behemoths like Google and Apple—collectors of massive datasets about individuals’ movement—can be involved. Perhaps they can be sources of reliable revenue that SharedStreets will need in order to scale (at present the initiative is being incubated with philanthropic support).

Finally, there is the critical question of privacy. Although Uber’s hacking scandal has dinged ride-hailing’s credibility as a protector of passenger data, new mobility services do have a point when they push back against handing over rider information to the government. It’s reasonable to assume that at least some customers will balk at the prospect of public agencies accessing their personal ride histories. Webb says that SharedStreets will handle those concerns by collecting aggregated data that is rich enough to allow for deep analysis while still hiding information about individual rides. New mobility service companies could further protect their passengers by converting trip data into so-called “synthetic populations” of artificial data modeled after trips that people actually took.

However the new mobility service data arrives—almost certainly aggregated, and potentially artificially modeled—there will need to be a way to ensure it is accurate. After all, companies like Uber and Lyft have a vested interest in the questions policymakers pose about their impact on city streets. Data validation—especially for modeled data—is crucial for such an exchange to be trusted.

Bosch: The Smart City Of The Future Has Arrived

Conducting connected pilots in 14 urban centers worldwide



While much of CES is focused on the smart home, Bosch is looking beyond our abodes to the mega metropolises that house them.

Leveraging its IoT, AI, software and sensor smarts – the building blocks of smart cities – the Germany-based business is already working to cure many of the ills that plague large urban areas, including traffic, pollution, high energy consumption and crime.

In a CES Media Day presentation on Monday, Bosch Group management board member Dr. Stefan Hartung and Mike Mansuetti, president of Bosch North America, cited 14 current “Beacon” projects in metroplexes worldwide, where “The smart city of the future is already here,” Hartung said.

Among the pilots: A connected-parking program, being tested this year in 20 U.S. cities, in which specially-equipped cars automatically report available parking spaces to the Cloud as they pass, helping to reduce traffic, fuel consumption, pollution and time spent hunting for a spot.

The company is also outfitting 5,000 streetlights in San Leandro, Calif., to only illumine when needed, which is expected to save the municipality $8 million over 15 years.

On the product front, Bosch has developed a shoebox-sized micro-climate monitoring unit called Climo that urban managers can use for traffic control. A winner of a CES 2018 Innovation Award, the device is one-tenth the cost and one-hundredth the size of standard monitors, Mansuetti said.

The executives also touted a telematic eCall plug, which fits into a car’s cigarette lighter and can monitor and report the driver’s performance, and emit an emergency alert signal if needed. The device can help calm parents of young drivers and reward safe motorists with discounted insurance rates.

To help make smart cities a reality, Bosch has deployed 4,000 IoT engineers and is operating three AI research centers, in Germany, India and Silicon Valley. Why the urgency? According to Hartung, two-thirds of the world’s population will be living in mega cities by 2050, while Mansuetti pointed to the big business that smart city has become: 19 percent annual growth and a projected 800 million Euros in expenditures by 2020.