President’s economic advisors find long-term transportation investment plan boosts the economy
Following up on his Labor Day announcement of a $50 billion transportation plan to invest in roads, rail (including high-speed rail), transit, airports, and air traffic control, last week, President Obama brought together members of his cabinet, industry leaders, governors, and mayors to discuss the economic impact of transportation investments.
At the meeting the President said that his up-front $50 billion investment is connected to a six-year re-authorization of the surface transportation program, which expired last year, and the creation of a National Infrastructure Bank to leverage private capital and select projects with the most economic benefit. Senior administration officials suggested the up-front $50 billion from Congress could be paid for by closing loopholes in the tax code related to oil and gas production or through other cost-cutting measures.
Earlier this month, MPC sent President Obama a letter supporting his infrastructure plan. MPC supports an aggressive, multi-year construction and rehabilitation plan with carefully targeted investments in projects that compete best in satisfying clearly articulated national goals for energy security, safety, affordability, environmental sustainability and economic competitiveness.
At the meeting, the President released An Economic Analysis of Infrastructure Investment conducted by the Department of the Treasury, with the Council of Economic Advisers. The report makes the case for a long-term transportation investment plan. Their analysis found that well designed infrastructure investments can increase economic growth, productivity, and land value; save families money; and create jobs, especially middle-class jobs.
A recent analysis by the Congressional Budget Office found that additional infrastructure investment is among the most effective way to create jobs and grow the economy. In addition to construction jobs, infrastructure investments allow goods and services to be transported more quickly and at lower costs, resulting in both lower prices for consumers and higher profitability for businesses.
An interesting finding from the study is that the average American family spends more than $8,600 a year on transportation, 30 percent more than they spend on food. Building a transportation network that improves transportation choices, for instance, supporting mass transit, while reducing congesting enables families to waste less of their time in traffic and spend transportation dollars on other needs, improving their quality of life.
MPC research documented that sitting in excess traffic on our roads costs the Chicago region $7.3 billion a year in wasted fuel, time, and environmental costs – a significant, but often overlooked “congestion tax.” Eliminating excess road congestion in our region would create an estimated 87,000 jobs that today are lost due to transportation costs.
Not just about more money
Simply increasing funding does not guarantee the most effective and efficient use of resources, more critical than ever in this economic climate. Right now, most federal funding for infrastructure investments is not distributed based on criteria or measurable goals. The President called for investing rationally in infrastructure based on performance criteria to deliver long-term economic benefits that justify the up-front investments. Performance-based investment is central to the President’s proposed National Infrastructure Bank, which will leverage private and other non-federal government resources to make investments using a merit-based process. A National Infrastructure Bank would develop a framework to analytically examine potential infrastructure projects using cost-benefit analysis.