States vie for $69B in infrastructure funds

State transportation officials across the nation are clamoring for $69 billion in infrastructure projects in the jobs bill that President Obama will outline Tuesday, underscoring criticism that his first stimulus gave short shrift to job-creating highway and transit construction.

The American Association of State Highway and Transportation Officials identified 9,500 “ready-to-go” highway, bridge, transit, port, rail and aviation projects that it says will create hundreds of thousands of jobs - much like the list of “shovel-ready” projects that the association pushed in the run-up to the $787 billion stimulus bill Mr. Obama signed in February.

Last time, state officials requested $64 billion in infrastructure spending but were allotted $34.3 billion, about 4 percent of the $787 billion.

In the nine months since the last stimulus went into effect, work has begun on 7,886 projects totaling $18.6 billion, about 54 percent of the total funds available, according to the House Transportation and Infrastructure Committee.

“There is still a need to invest more in transportation projects if that’s what it takes to create jobs and bring unemployment down,” said John Horsley, president of the association. He noted that the unemployment rate in construction trades exceeds 18 percent.

The union movement, a key ally of the Obama administration, is adding to pressure for more infrastructure spending. AFL-CIO President Richard Trumka last week said stimulus projects would feed an industrial supply chain from engineers to manufacturers to construction workers that will “create U.S. jobs and develop badly needed U.S. industrial capacity.”

Critics from both sides of the aisle said the first stimulus added to the heap of public debt and did not spur enough job growth. Mr. Obama is expected to respond Tuesday by announcing infrastructure projects as a chief component of the stimulus measures. He will make the speech at the Brookings Institution, a liberal-leaning think tank in Washington.

Congressional Democrats are compiling a stimulus package that includes highway projects, more aid to states, and another extension of both unemployment benefits and health insurance subsidies for the unemployed.

The proposals could cost as much as $500 billion, much of it in the form of emergency deficit spending.

The jobs bill faces severe challenges as lawmakers already struggle with record deficits of $1.4 trillion in fiscal 2009, bringing the national debt to $12 trillion. Skepticism remains about whether the government can spend the money fast enough to jolt employment and whether shoveling money to states for road work adds jobs to the national economy.

Brian Riedl, the lead budget analyst at the conservative Heritage Foundation, argues that infrastructure spending is a zero-sum game.

“Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy,” he said. “No new spending power is created; it is merely redistributed from one group of people to another.”

The White House and Democratic leaders are talking about paying for some of the proposals out of the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program, or TARP. The plan encountered skepticism on both sides of the aisle.

Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat who unsuccessfully pushed for more infrastructure spending in the last stimulus, said he was open to the idea of borrowing again from TARP but cautioned that it would not fully offset more stimulus spending in the budget.

“The dollar amount to be considered an offset would be dramatically reduced, like cut in half,” Mr. Conrad said.

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