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Monday, November 1, 2010

Editor's Note: Funding, Continued

Listening to satellite radio the other day while approaching Washington’s Capital Beltway, sometimes referred to as “the world’s largest parking lot,” I was reminded of President Obama’s proposal to invest $50 billion in the nation’s transportation infrastructure, often referred to as “crumbling.” When the President floated the proposal on Labor Day in Milwaukee, I relegated it to the category of midterm electioneering.

But darned if the President wasn’t talking transportation again in October, this time backed by “An Economic Analysis of Infrastructure Investment” prepared by the Treasury Department and Council of Economic Advisers. The report’s release coincided with a round table meeting Obama held with sitting cabinet secretaries, former transportation secretaries, mayors and governors to promote the very same infrastructure spending proposal.

“Our roads, clogged with traffic, cost us $80 billion a year in lost productivity and wasted fuel. Our airports, choked with passengers, cost nearly $10 billion a year in productivity losses from flight delays,” Obama said later in a Rose Garden statement. “ … This is work that needs to be done. There are workers who are ready to do it. All we need is the political will.”

In addition to the proposed $50 billion “up-front investment, connected to a six-year reauthorization of the surface transportation program,” the plan would stand up a National Infrastructure Bank designed to attract private sector co-investment and apply “a rigorous analytic process” favoring projects with the greatest societal payback. The goal: to rebuild 150,000 miles of road, 4,000 miles of passenger rail and 150 miles of runway, “while upgrading our outdated air-traffic control system.”

No secret this is a jobs-driven proposal at a time of persistent unemployment, a kind of Work Projects Administration for the 21st century. If the President could put millions of Americans to work painting candy canes for Christmas, no doubt that would take priority. But if the ever-crumbling transportation infrastructure benefits, what’s not to like? The plan wouldn’t add to the deficit, the White House says; rather the cost would be offset by eliminating tax breaks for the oil and gas industry.

Yes, transportation and infrastructure have been much discussed lately, at least where I reside inside Washington’s Capital Beltway. A week before the President’s round-table, the University of Virginia released a report by some 80 transportation experts led by former Transportation Secretaries Norman Mineta, a Democrat, and Samuel Skinner, a Republican.

The study, “Well Within Reach: America’s New Transportation Agenda,” presents seemingly out-of-reach numbers: the estimated gap in current sources of funding for transportation infrastructure and the funding needed to maintain and improve the system ranges from $134 billion to $262 billion per year through 2035. “A system launched with a bold and historic vision is now characterized by pork and political opportunism,” the experts state. “Financing models that once served America well are no longer sustainable. … What’s needed is nothing less than a fundamental overhaul of America’s transportation policies and programs.”

As regards aviation, “The Vision 100 Century of Aviation Reauthorization Act, the enabling legislation for America’s federal aviation programs, expired at the end of September 2007 but has not yet been replaced,” the experts note. “Congress is thus three years late in reauthorizating America’s aviation programs at a time when more stable and predictable funding for the ‘NextGen’ modernization of our air traffic management system is critically needed. Absent a catalyst, the Administration and Congress seem unlikely to address reform in a meaningful way.”

Indeed, something is afoot in transportation. But I’m inclined to agree with the experts that Congress, especially, is incapable of making bold, sweeping improvements to the system.

All the more interesting, then, is the commercially driven NextGen equipage funding mechanism we describe on Page 24 one that already has two airlines committed. “The airlines should be able to confidently move into an equipage program quickly,” Michael Dyment, of NEXA Capital Partners, told me. “We can have 75 percent of the U.S. fleet equipped by the end of 2017, and that’s the intention.”

Bill Carey is the editor in chief of Avionics Magazine. He can be reached at bcarey@accessintel.com or 301-354-1818.

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