Special Briefing: The $2.3 Trillion American Jobs Plan and State and Local Infrastructure Needs

A Special Briefing on the $2.3 Trillion American Jobs Plan and State and Local Infrastructure Needs was held on May 20th as part of the series of one-hour webinars hosted by Penn IUR and the Volcker Alliance. The session focused on President Joe Biden's proposed 15-year financing strategy, and the plan's potential to rejuvenate the economy as the nation recovers from the Covid-19 pandemic.

Panelists included U.S. Deputy Transportation Secretary Polly Trottenberg; National Urban League President and CEO Marc Morial; Reason Foundation Transportation Policy Director Robert Poole; and Volcker Alliance Director Richard Ravitch, the former New York Lieutenant Governor who also headed the Metropolitan Transportation Authority. Volcker Senior Vice President William Glasgall and Penn IUR Co-Director Susan Wachter moderated the discussion.

Trottenberg, formerly transportation commissioner for New York City, said the American Jobs Plan would provide more than $600 billion for roads and bridges, as well as big investments in mass transit and passenger rail. It would also invest in deploying electric vehicles and decarbonizing the transportation system, with much of the climate investment targeted to underserved communities.

"The American Jobs Plan, of course, is bigger than just transportation," she said. "It's replacing lead pipes all over the country, bringing affordable broadband all over the country, looking at affordable housing and at what we would call `the human infrastructure.' I know there is some debate about whether human infrastructure qualifies as infrastructure, but anyone who experienced what we did in this past year of Covid and saw how vital our front-line workers, our care givers—that human element—is in keeping our country and cities and states thriving, know that the human element is an important piece of the picture."

Congress may be poised to reverse a half century of underinvestment in infrastructure, and to pay for the $2.3 trillion program largely through tax increases, Rep. Earl Blumenauer, D.-Ore., said in the briefing.

"This is the first time since I've been in Congress we've got an administration that is committed to actually doing something with infrastructure and stepped up with proposals that they would be willing to enact to pay for it," said Blumenauer, who sits on the House Committee on Ways and Means and has served in Congress since 1996. He said the nation’s failure to invest in roads, schools, water systems and other public works has been particularly harmful to poor communities and people of color.

Trottenberg said there is "goodwill' for renewing the nation's infrastructure on both sides of the aisle in Congress.

"Is this one of those magical moments where a lot of things come together? I'm really hoping that it is," Trottenberg said. "Perhaps we really have a political moment where we can get at that $1 trillion backlog we have in terms of infrastructure investment, but do it in a way that's enhancing resiliency, enhancing sustainability, and enhancing equity."

Morial said Biden's proposals echo the Main Street Marshall Plan developed at the National Urban League during the Obama years. "Looks like the president xeroxed our plan," he said. "This is a 21st Century plan for 21st Century problems."

The slow economic recovery from the Great Recession pointed to the need for "something bigger" to rebuild the economy today, he said.

Morial said the "absolute chaos" that followed the May 11 closure of the Interstate 40 bridge in Memphis, underscored the economic importance of the highway system. But "Infrastructure today is bigger than surface transportation," he said. "Broadband is to now what roads were in the early 20th century; Broadband is today what the Interstate Highway System was to the '50s and the '60s." The National Urban League's blueprint for broadband "includes investments in both the network and in affordability and also economic participation by black people and women owned business enterprises."

Poole of the Reason Foundation said the plan should incorporate provisions to spur private investment and limit the cost to taxpayers, as the country looks to replace the gasoline tax as a way to pay for highways.

"There's a lot of good things in the president's plans, but I think three key elements are missing, and they all three fit together: User Fees, long term financing and private capital."

People understand the idea of "users pay and users benefit," Poole said, suggesting that the U.S. could be working toward a day when people think of paying for roadways similarly to the way as they pay for utilities like gas and water.

Reliable tolls could provide revenue for long term revenue bonds, he said. "Long term financing is basic government policy." Bondholders such as public pension funds, insurance companies and institutional investors would have an incentive to maintain the roads, he said, which would help address the deferred maintenance problems that plague the nation's infrastructure today.

Poole also suggested removing the $15 billion cap on tax-exempt private activity bonds and allowing their use to finance reconstruction, as well as new projects; streamlining the process of financing projects through the Transportation Infrastructure Finance and Innovation Act, so organizations that apply don't have to wait a year for approval; and expanding an existing three-state pilot program to improve Interstates to fifty states.

"These changes would cost taxpayers very, very little, there's very little budget impact, but they could generate billions of dollars in investment," Poole said.

Rep. Blumenauer said he has previously championed increased user fees, but that approach would be insufficient to address the current crisis.

"Putting a tax on gallons of gas consumed is not sustainable. And the president has made a commitment, which I understand, that he is not going to raise taxes on people who make under $400,000, and I would personally think we should take it off the table." Blumenauer said. "We need to make sure we look comprehensively at the proposals that the Biden administration has made."