Obama Proposes $50 Billion to Build Roads, Bridges

This story appears in the Dec. 14 print edition of Transport Topics.

President Obama last week proposed directing about $50 billion in unspent money from the federal government’s bank bailout program to build roads and bridges, as a way to counter high unemployment.

The proposal was one of several job-creation ideas Obama put forward in a Dec. 8 speech. Congress must approve the plan for it to become law.

The Labor Department reported Dec. 4 that the unemployment rate was 10% in November.

“We’re proposing a boost in investment in the nation’s infrastructure beyond what was included in the Recovery Act, to continue modernizing our transportation and communications networks,” Obama said. “These are needed public works that engage private sector companies, spurring hiring all across the country.”

A day earlier, Transportation Secretary Ray LaHood said the money could come from the $700 billion Troubled Asset Relief Program.

LaHood said there was “about $200 billion left in TARP, and that’s how we’ll probably pay for it.” He cautioned that “not all of that’s going to transportation — not that we haven’t pushed for it, but we have a lot of issues still.”

Obama said that TARP, the bank bailout effort passed late last year, had a surplus of about $200 billion, and he proposed using those funds for infrastructure, a variety of tax credits and other economic relief.

Senior administration officials told reporters that the infrastructure component probably would be about $50 billion, which would be an addition to the $48 billion for infrastructure in the February stimulus legislation.

Obama said that “more than 10,000” projects have been funded through the stimulus and that more projects “will all be ramping up in the months ahead.”

“We’re going to see even more work — and workers — on recovery projects in the next six months than we saw in the last six months,” he said.

“Even so, there are many more worthy projects than there were dollars to fund them. I recognize that, by their nature, these projects often take time, and will therefore create jobs over time,” Obama said, “but the need for jobs will also last beyond next year, and the benefits of these investments will last years beyond that.”

The proposal drew praise from transportation industry groups and advocates.

American Trucking Associations said that the $50 billion proposed “could, in a very short time span, create at least 1.4 million good jobs while also making our highways safer and less congested.”

Pennsylvania Gov. Edward Rendell (D) told Transport Topics in an interview that he was “very, very happy with the proposed funding using TARP funds.”

Rendell, co-chairman of Building America’s Future, a bipartisan transportation advocacy coalition, said that the need was even greater.

“We could do, in my estimation, up to $100 billion of infrastructure projects, in the areas that the president talked about today, plus water and wastewater, which he didn’t talk about,” he said.

John Horsley, executive director of the American Association of State Highway and Transportation Officials, said that “if the administration and the Congress want to create thousands of jobs quickly, the best way to do it is by investing in ‘ready-to-go’ transportation projects.”

Horsley said that “25% of the jobs saved or created under the American Recovery and Reinvestment Act are a direct result of the $48 billion allocated to transportation projects.”

For the administration’s plan to go forward, Congress would need to pass legislation allowing the TARP funds to be spent differently than it was intended.

House Majority Leader Steny Hoyer (D-Md.) said that it “makes sense to use some of those resources that were trying to stabilize Wall Street to now try to invest them in growing Main Street,” and he indicated the House may take up jobs legislation before recessing Dec. 18 for the holidays.

However, Republicans in Congress criticized the proposal.

“We can’t keep spending money that we don’t have,” House Minority Whip Eric Cantor (R-Va.) said.

Sen. John McCain (R-Ariz.) said Democrats want to use the TARP savings as “a slush fund.”

“There are plenty of ways to stimulate small businesses, including three quarters of the stimulus money we have not spent yet, without adding billions and billions in debt through TARP, which is basically a line of credit,” McCain said.

In addition to the infrastructure spending, Obama proposed tax cuts, including: eliminating the capital gains tax for small businesses, creating a small-business job-creation tax cut, and extending the expensing and depreciation provisions from the stimulus through 2010.

The plan also calls for new incentives for home retrofits to improve energy efficiency and expansion of stimulus-funded clean energy programs.

Bloomberg News contributed to this report.