Budget Wars in Washington—Will Infrastructure Investment Make the Cut?

The next several weeks in Washington promise to offer extremely important insights into the future of public transportation spending in this country. Watershed moments are ahead for most every item on the SPUR agenda. Here’s a quick primer of why and of what’s at stake for advocates of smart growth:
 
In October 2010, we anticipated that infrastructure spending would anchor the legislative agenda for 2011. Such nuts-and-bolts spending has often provided an area of consensus in a divided legislature, and the Obama Administration has repeatedly endorsed national infrastructure investment as vital for immediate job creation, as well as long term U.S. economic growth and competitiveness. The recent election of a wave of deficit hawks to the House will challenge this idea.
 
Last week President Obama upped the ante when he released his Fiscal Year 2012 budget. Most striking is that amidst nearly across-the-board cuts, transportation and clean-energy technology stand out as areas where significantly increased investments are proposed. According to the Department of Transportation, the overall funding request is a 66% increase above FY 2010 – the last enacted appropriated level. Equally exciting for livable streets and transit advocates is the parallel proposal of the Administration to authorize a six year budget for reauthorization of highway and public transportation spending—$119 billion—beginning with $22 billion in 2012.
 
Specific highlights of the proposed 2012 budget:
 

• $556 billion six-year surface transportation reauthorization “to improve the Country’s highways, transit, and rail infrastructure and to ensure that these systems are safe.” (Most surface transportation acts are major multi-year bills: the next will cover a six year time span. The last such bill expired in 2009. Since then, all U.S. transportation programs have been funded through a series of stop-gap measures.)
• $50 billion “Up-Front” economic boost that would foster job creation in infrastructure (note the care with semantics: the White House wants to avoid the appearance of a second stimulus)
• $5 billion to establish an Infrastructure Bank intended to leverage a combination of public and private funds to fast-track and guarantee financing for infrastructure projects determined to be of regional importance. (Scaled down from the President’s original $50 billion proposal, this innovative model could prove a pilot for future public infrastructure finance.)

 
These investments are part of what Obama calls our generation’s “Sputnik moment”; recalling the shock in the 1950’s when the Soviet Union orbited a satellite and gave Americans a wake-up call to increase investments in science to remain competitive. The Obama Administration has proposed a parallel program for spending on high-speed rail and renewable energy technologies. Republicans assert that “investment” is Democrat-speak for more deficit spending.

In this divided Congress, a natural tension has arisen between those who support strategic investment and those who feel the priority should be deficit reduction. The debate has begun in earnest on the House floor this week.
 
Fiscal conservatives feel they have three paths to scuttling Obama’s proposed budget
 
1. The Fiscal Year 2011 budget, passed with severe cuts at the end of last week and now being debated in the U.S. Senate
2. Debate on increasing the debt ceiling--conditioning an increase in the debt limit on a major spending cuts
3. The Fiscal Year 2012 budget that was just announced
 
So Washington right now is a virtual three ring circus.
 
For interested observers, the third “ring,” the 2012 budget wars, may well prove to be most consequential.
 
As Fiscal Year 2011 is nearly half-over, the major impact of the FY11 budget debates this week will be in setting the tone for the more consequential contest over FY12.
 
The debate is certain to be significant. The stakes are remarkably high. The government has been running on a series of temporary spending measures known as Continuing Resolutions (which continue spending at previously appropriated levels until consensus is reached) since Washington’s failure to enact a consensus budget last fall. The most recent CR expires on March 4, and without a compromise in Congress by that date, the government will effectively shut down. When that occurred under strikingly similar circumstances in 1995, public opinion turned against the Newt Gingrich-led House and support returned for beleaguered President Clinton, who subsequently cruised to re-election.
 
Here’s a prediction how these budget debates will play out in Washington:

• Fiscal conservatives in the House, wanting to show how serious they are about cutting spending, will pass a FY11 budget with strikingly deep cuts (this happened late last week, as predicted)
• The Senate will restore some cuts and accept others, and conservative Democrats votes in the Senate up for election in 2012 will be decisive.
• Faced with the Senate’s more moderate measure, Republicans will threaten to shut down the government. But they won’t. The lessons learned from 1995 will cause all parties to avoid shutting down the government.
• Conference committees, where a final budget is worked out, will be extremely contentious. If they can work out a compromise, it will set a tone for endless political skirmishing in Washington until November 2012.

The terms of actual spending and investment policy for the next two years will be impacted by the 2012 budget—which won’t be passed until September but will be debated all summer. Nowhere has President Obama made more bold pronouncements than in transportation and energy.

The Caltrain, San Francisco. [Photo by flickr user smif]

SPUR’s issues will be at the center of the debate. We have consistently supported increasing the proportion of investment in multi-modal transit, especially rail. The President’s strong opening gambit sends the signal that he is serious about making progressive transit a priority. The lines are drawn. The issues are clear. Now comes the battle in which the future direction of so many important programs will be determined.