Obama pitches road, rail outlays

$302 billion plan is billed as job engine

Mark Fuhrmann (left), a metro transit official in St. Paul, Minn., talks with Transportation Secretary Anthony Foxx and President Barack Obama during a tour of the city’s light-rail center Wednesday.
Mark Fuhrmann (left), a metro transit official in St. Paul, Minn., talks with Transportation Secretary Anthony Foxx and President Barack Obama during a tour of the city’s light-rail center Wednesday.

ST. PAUL, Minn. - President Barack Obama said Wednesday that he will ask Congress for $302 billion to update aging roads and railways, arguing that the taxpayer investment is a worthy one that will pay dividends by attracting businesses and helping put people to work.


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The president made his pitch in St. Paul, Minn., the twin city to Minneapolis, where an interstate highway bridge collapsed in 2007 - killing 13 people and injuring 145 - and became a symbol for crumbling U.S. infrastructure.

“Nobody knows better than Minnesotans, when we’ve gone through a winter like this, roads are wrecked,” Obama told an audience in a railroad depot. “Roads and bridges should not be a partisan issue.”

Funding for surface transportation programs expires later this year, and the White House said 700,000 jobs could be at risk unless Congress renews them.

“At a time when companies are saying they intend to hire more people this year, we need to make that decision easier for them,” Obama said, by rebuilding aging transportation systems, power grids, communications networks and other projects that ease commerce.

“The bottom line is there’s work to be done, workers ready to do it,” he said, adding that one of Congress’ major responsibilities is to help states and cities pay for such projects.

Transportation Secretary Anthony Foxx warned Wednesday of a “transportation cliff ” coming in August or September when the Highway Trust Fund, which finances federal highway and transit projects, is forecast to go broke.

The trust fund will need an influx of $100 billion over the next six years just to maintain transportation spending levels. But Obama and Congress have been unwilling to raise federal gasoline and diesel-fuel taxes that have been the main source of federal transportation funding for decades.

AAA, the automobile association, on Wednesday criticized Washington’s refusal to increase fuel taxes to pay for projects.

In the budget he sends Congress next week, Obama will propose that half of the $302 billion he’s seeking come from an overhaul of the corporate tax system.

On Wednesday, Rep. Dave Camp, R-Mich., chairman of the tax-writing House Ways and Means Committee, announced a corporate tax overhaul plan that would dedicate $126.5 billion in corporate tax revenue to the Highway Trust Fund over the next eight years.

In the State of the Union address last month, Obama pledged to use money from a tax overhaul to “create jobs rebuilding our roads, upgrading our ports, unclogging our commutes, because in today’s global economy, first-class jobs gravitate to first-class infrastructure.”

On Wednesday, Obama again stressed the job-creating power of federal transportation projects.

White House officials said Obama’s plan would use savings from business-tax changes for a one-time, $150 billion infusion of cash into the trust fund to make it solvent. Officials said the White House is open to other ideas, but stressed that something must be done soon.

Obama hasn’t given specifics of the tax changes he would seek, but Josh Earnest, a White House spokesman, said the president wants to end tax advantages for companies that move jobs overseas and tax the share of private-equity managers’ profits in buyout deals, known as carried interest, at ordinary income rates.

Earnest said the administration recognizes that major tax changes don’t stand much chance of moving through Congress this year.

“There is not a lot of optimism on Capitol Hill for any kind of legislative proposal that seems complicated,” Earnest said. “We’re realistic about the prospects of a difficult piece of legislation like this.”

Republicans on Capitol Hill on Wednesday morning said they want to see more details from the president about the changes he is seeking to business taxes. Republicans in the past have balked at administration proposals to use revenue from ending tax provisions.

“So, a tax hike?” one senior Republican aide on Capitol Hill quipped when asked about the transportation proposals.

The primary sources of revenue for the Highway Trust Fund are the federal 18.4-centper-gallon gasoline tax and 24.4-cent-per-gallon diesel tax, which haven’t been increased in 20 years. While highway construction costs have risen over the decades, revenue going into the fund has declined. Among the reasons for the decline are that vehicles are getting more miles per gallon and people are driving less on a per capita basis.

The fund experienced its first shortfall in 2008. Since then, Congress has shifted tens of billions of dollars from the general treasury to make up continuing shortfalls. Some of the transfers have been paid for through spending cuts or tax increases elsewhere in the federal budget, while others have not.

Earlier this month, the nonpartisan Congressional Budget Office estimated that the trust fund will not have enough money to meet its obligations to states by the end of the federal budget year Sept. 30.

Even if Congress transfers enough money into the fund to keep transportation aid flowing, it’s generally acknowledged that current spending levels are insufficient to keep up with repair and replacement of the nation’s aging infrastructure.

House Speaker John Boehner, R-Ohio, who discussed the transportation funding with Obama in a private meeting Tuesday, said Wednesday that there are no plans to shift more general revenue to the trust fund.

“There’s no conversation about bailouts,” he said.

“We’ve got to find a funding mechanism to fund our infrastructure needs,” Boehner said, adding that leaders have been looking for at least a year and a half for a solution. “I wish I could report to you that we’ve found it, but we haven’t.”

Three blue-ribbon commissions have called for raising the gasoline tax and indexing it to inflation. But congressional leaders and the White House have shied away from a fuel-tax increase, which is considered a politically dangerous move.

Kathleen Bower, AAA’s vice president of public affairs, called a gas tax increase “the most viable, responsible and effective near-term solution” for keeping the trust fund solvent.

The association will continue to discuss long-term funding remedies, such as a corporate tax overhaul or other fixes, Bower said, but added that “immediate action is necessary” on a short-term funding solution for the transportation system.

Obama also announced Wednesday that the Transportation Department is making $600 million in competitive grants available to help local governments pay for infrastructure projects.

The money is part of a program, Transportation Investment Generating Economic Recovery, that originally was part of the economic stimulus package passed in 2009. The grant program was funded in the bipartisan budget deal Obama signed Jan. 17.

Obama spoke Wednesday at Union Depot, which was shuttered in 1971 as railroad passenger service in the U.S. declined.

As Obama’s first transportation secretary, Ray LaHood in 2009 and 2011 traveled to the depot in St. Paul, the first time when it was in shambles and seeking federal support for a $243 million renovation and the second time in 2011 after a renovation was underway.

The depot is in the city’s downtown and now includes retail and event space as well as a station opening later this year for the region’s light-rail transit system.

Information for this article was contributed by Nedra Pickler, Joan Lowy and Stephen Ohlemacher of The Associated Press; by Michael D. Shear of The New York Times; and by Angela Greiling Keane, Derek Wallbank and Jonathan Allen of Bloomberg News.

Front Section, Pages 1 on 02/27/2014

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