Opinion: It’s Infrastructure Decision Time
By John Simourian
Chairman
Lily Transportation Corp.
This Opinion piece appears in the March 15 print edition of Transport Topics. Click here to subscribe today.
I’ve just returned from my third trip to China in the past five years and continue to be amazed by — and envious of — the high-growth economy there.
A year ago, China responded to the worldwide economic crisis by announcing it would lay off 40 million workers. Thirty days later, however, China reversed its decision, concerned about the global recession’s effect on its huge export markets, and said it would invest $600 billion in transportation infrastructure to stimulate domestic consumption enough to replace losses in exports.
Driving around Shanghai last month, I saw new eight-lane highways and large suspension bridges, as well as new buildings for the 2010 World Expo, which opens May 1. These projects all were built in the past 12 months.
Dow Chemical CEO Andrew Liveris recently commented, “Infrastructure investment by the Chinese government was rapid and has created huge domestic demand.”
Now, contrast that planning and activity with the pace of decisions and size of programs by the U.S. government.
A year ago, the $787 billion stimulus plan was announced to create jobs and keep the unemployment rate from exceeding 8%. It’s been a terrible disappointment. No new jobs were created because the funds have gone primarily to transfer payments that do nothing for jobs and growth. Unemployment remains high because only $27.5 billion in the stimulus plan was for the construction and repair of bridges and roads, and even that amount is spread over three years.
This colossal failure to concentrate on the unemployment issue as the key to solving our economic crisis is the main reason for the anger in this country and the birth of the Tea Party movement. But Washington doesn’t get it.
To be fair, Washington does know that building bridges and roads will put people back to work and kick-start our economy. In 2008 and early 2009, our federal leaders were briefed by the Department of Transportation, American Society of Civil Engineers, American Association of State and Highway Transportation Officials, Ernst & Young and the Urban Land Institute on the urgent need for the United States to invest a minimum of $150 billion to $200 billion per year in our transportation infrastructure in the next five years.
The government was advised further that this investment would create 6 million to 7 million jobs, both direct and indirect, and start the classic economic cycle of investment, jobs and consumption, in which jobs multiply, the stock market rises, home prices stabilize and then increase, people begin to feel good and increase spending, gross domestic product grows and tax revenues rise.
That process allows the government to pay down debt and eventually do what it is supposed to do: field the best national security forces, provide guidance for economic growth and provide the finest education programs.
Key constituents of our economy endorse major investment in transportation infrastructure: the U.S. Chamber of Commerce, AFL-CIO, American Trucking Associations, National Industrial Transportation League, Intermodal Association of North America and Transportation Intermediaries Association, as well as the Washington Post and U.S. News & World Report.
With all this support, why hasn’t Washington emulated the Chinese? Listen to Secretary of Transportation Ray LaHood: “The biggest dilemma for all of us here is finding $400 [billion] to $500 billion dollars.”
In other words, the only thing standing between our current jobless economic recovery and a growth economy is the funding. It’s that simple.
But because of our already $12 trillion debt load, Washington is loath to add more. Consequently, what we see are timid proposals from Sen. Harry Reid (D-Nev.) to add $20 billion to the Highway Trust Fund and from Sen. Max Baucus (D-Mont.) and Sen. Chuck Grassley (R-Iowa) to provide $85 billion for job creation, which is primarily a combination of tax credits and unemployment benefits.
These proposals do not add jobs.
Despite Washington’s refusal to consider a federal fuel tax increase, increasing that tax is the only viable game in town. That alone can provide $150 billion to $200 billion a year to create 7 million to 8 million jobs.
If the tax is indexed to the price of oil with a permanent, fixed price for fuel, it will be sensitive to the consumer’s pocketbook and generate the tax revenue to fund the infrastructure. Additionally — and most significantly — the fixed-price feature will be the catalyst to attract investment into alternative energy and fuel-efficient motor vehicles, putting us on the road to energy independence.
To those in Washington who say taxes are off the table, I say: “Do you want to stagnate in the current jobless economy or to move America forward boldly into economic recovery, robust growth and 21st-century leadership?”
Today, the decision to move America forward is for our leaders in Washington. But if Washington simply continues to muddle along, in November the decision will be ours.
Lily Transportation Corp. is based in Needham, Mass., and is an asset-based dedicated logistics provider. The author founded the company in 1958.
