U.S. Chamber urges political attention on infrastructure

U.S. Chamber urges political attention on infrastructure The U.S. Chamber of Commerce predicted Tuesday that the country will narrowly avoid a recession this year, but stressed that future economic expansion depends on modernizing and rebuilding the long-neglected infrastructure base.
   Economic growth will average about 2 percent in the first half of the year — an improvement over expected weak results for the fourth quarter of 2007 — and increase to 2.5 percent in the second half as the housing sector bottoms out, the largest business federation in the world said in its annual outlook for the coming year.
   The chamber predicted that the unemployment rate would rise slightly above the current 5 percent. On Friday, the government reported that unemployment jumped from 4.7 percent to 5 percent in December — the highest rate in two years. Inflation will remain moderate, making future interest rate cuts less likely later in the year, the business group forecast.
   In the near term, though, many economists are predicting the Federal Reserve will cut interest rates again at its next scheduled meeting.
   Four ways federal and state governments can quickly spur investment in critical infrastructure is to reduce red tape for private sector investment, stop diverting money from dedicated transportation trust funds for other purposes, end congressional pork-barrel spending and raise the federal fuel tax, Chamber President Thomas Donahue said at a briefing with reporters.
   The Chamber announced its multimillion-dollar Rebuild America initiative last summer to help spur infrastructure investment by issuing report cards on infrastructure conditions and needs in each state, educating citizens and politicians about the costs associated with sub par infrastructure, working to unlock pent-up private investment by removing legal and regulatory obstacles, and lobbying for increases in public funding of infrastructure in reauthorization bills.
   Infrastructure is a long-term issue that needs immediate attention, Donahue emphasized.
   “If tomorrow we run out of money for Social Security, by Sunday we’d have it fixed. If you run into a brick wall on infrastructure — on railroad capacity, or port capacity or broadband capacity, or electric power — it doesn’t get fixed overnight,” he said.
   Although the chamber opposes tax increases, Donahue said the gas and diesel tax are user fees that can be appropriately raised if the money is constructively used for its intended purpose of maintaining and upgrading the highway system. The federal government typically diverts a portion of the harbor maintenance trust fund to the general treasury and state governors frequently shift federal money for national highway system bridge repairs to other state bridge projects. Donahue criticized the state of Texas for recently raiding its road fund to help pay for hospitals.
   That’s because under Texas law a quarter of state gas tax revenues goes to schools and the highway fund also supports appropriations for at least four other state agencies besides the Texas Department of Transportation.
   Congress is gearing up to consider reauthorization of the surface transportation program in 2009 and a key component of any legislation will be finding alternative funding sources to support the Highway Trust Fund, which is projected to have a $5 billion shortfall by then. Bruce Josten, the chamber’s executive vice president, suggested that prospects for funding increases were good because some in Congress see infrastructure investment as part of a possible economic stimulus package now being considered.
   Public-private partnerships can address many of the infrastructure needs, Donahue said. Public ports, which are projected to face a doubling of cargo volume in a dozen years, should vigorously consider bringing in private investment to support their growth, he suggested.
   “If we let some people in Europe invest in roads in the U.S., they can’t take them home,” he quipped.
   The chamber also said a carbon tax, with proceeds dedicated primarily to infrastructure, should be considered as an alternative funding mechanism. The carbon tax would broaden the amount of people paying into the system and bring in more money compared to a simple fuel tax. But Donahue said he would be reluctant to endorse such a measure unless he was confident the money would go to infrastructure and there was some independent body to protect and distribute the funds.
   “We don’t like to raise revenues unless they vigorously increase our productivity,” he said.
   Donahue acknowledged that infrastructure is not sexy enough of an issue to get much attention on the presidential campaign trail this year, “but whoever gets into office is going to have to begin to deal with the American people on this issue,” he said. ' Eric Kulisch