The recent government shutdown gave heavy-hitting trade association executives, along with former and current politicians, the opportunity to publicly admonish the current state of national politics, but some key government officials and industry groups took the time to shine the spotlight on what many in Washington, D.C. see as the next crucial step for Congress to take, properly funding the national transportation program.
On Oct. 21, Governor Bill Graves, now president of the American Trucking Association (ATA), told members at their annual meeting that recent political blockages were, “foolish, ill-advised, reckless and detrimental,” adding in a separate interview that, “our number-one issue is getting a package of infrastructure investment." Data shows that trucks carried 39 percent of all U.S. freight ton mileage, giving the ATA strong reasons for wanting a robust transportation program.
In 2012, Congress passed a national transportation bill that only funded the highway programs through fiscal year 2014. While that bill kept the U.S. Department of Transportation from shutting down entirely, the secretary at the time, Ray LaHood, recently called that bill “chintzy” and added, “The business community is fed up with the inaction of Congress when it comes to infrastructure. The business community knows that America has fallen way, way behind. There's a long, long list of bridges that need to be replaced or repaired. There's a long, long list of roads that need to be fixed up."
Chairman Bill Shuster, R-Pa., head of the House Transportation and Infrastructure Committee that will craft most of the next national infrastructure bill, is aware of the need for more and stable funding, but is also not blind to the political gauntlet he must face with such polarizing viewpoints present in Congress. Speaking on recent passage of the Water Resources Reform and Development Act of 2013, Shuster commented on the next transportation bill, stating, “It’s going to be tougher than this bill, but we’ve got to figure out how to move forward on that.”
There are several forces working against a smooth process for a transportation authorization bill. First, the vast divide that exists between the ideologies of Republicans and Democrats in present day Washington, D.C. keeps most members of Congress from being able to coalesce around a common breakfast order, let alone a package of varied funding solutions that needs to generate an estimated $550 billion per year to cover what experts say are our real infrastructure needs.
Second, it is no secret that there is a break in the Republican Party. The economic downturn created massive changes in Congress through stunning election results and the introduction of Tea Party-backed legislators. This puts Chairman Shuster in the position of needing to convince anti-spending conservatives within his own party that infrastructure is the one thing on which they need to find a way to spend money.
Third, the Senate is controlled by the Democrats and the House by the Republicans. This means having to merge two bills together in a conference that will more-than-likely approach transportation funding solutions using similar concepts, but having critical implementation differences. These differences could turn out to be non-starter negotiation points for either side. Several examples of these bipartisan congressional working groups coming together only to fail have come out of the recent budget and sequestration battles.
Fourth, no one from either political party in either chamber of Congress is willing to publicly say they support raising the federal gas tax. Everyone knows it needs to be done, but no one wants to be the elected official that raised taxes on struggling Americans and U.S. businesses in a still down economy. And who can blame them? Further, there are other issues to be piled on top of just these four so the pressures on legislators to work through these impediments are immense.
As the debate heats up in 2014, aftermarket businesses should stay connected to what is being said as far as transportation is concerned. Most members of Congress have not decided on what they believe is a final funding solution for repairing the nation’s crumbling infrastructure and therefore are open to hearing the views of key stakeholders and their constituents on the subject. Stay tuned to the Capital Report and other AAIA publications to follow this important issue.
One of the best-kept secrets in Washington, D.C. is the dire state of funding for the nation’s transportation infrastructure. It is a secret, because it seems that so few people outside of the beltway surrounding the city, I-495, know just how bad the situation has gotten.
While many people are aware that the current funding source, the gas tax, is inadequate to handle the long-term infrastructure improvement needs of the nation, the budget sequester and the general uncertainty for funding any program at the federal level, threaten to make matters worse. And when you can’t fix roads or bridges, or get goods across border checkpoints, or into ports, you can’t do business.
The amount of money the U.S. Department of Transportation (DOT) has to do its job means a great deal to the health of the economy. The movement of goods, services and people is largely dependent upon the funding of transportation programs and infrastructure.
A slash to funding for the Federal Highway Administration (FHWA) means it becomes tougher to complete roadway projects. That in turn extends the congestion that keeps your customers from receiving products and pushes commuters out of their cars and onto alternatives. A cut to the Federal Motor Carrier Safety Administration (FMCSA) could keep the commercial vehicle drivers that transport or deliver your products off of the road.
The problem of no funding for transportation and infrastructure doesn’t stop at the doors of the DOT. It translates into real downstream effects for businesses that could result in the slowing of the automotive aftermarket supply chain.
The transportation funding problem in the United States didn’t always exist. To paraphrase a member of Congress speaking at a recent breakfast that I attended, it used to be that funding for roads and bridges was the easiest part of the federal budget. The Highway Trust Fund (HTF), the pot of money where gas tax revenue is collected, was flush for many years. But the combination of inflation, growing spending and the political inability to raise the gas tax meant that by 2008 the HTF was facing insolvency. An infusion of cash back into the account along with some creative accounting kept the HTF afloat until Congress was finally able to pass the next federal transportation bill, “Moving Ahead for Progress in the 21st Century” (MAP-21) late last year.
Getting MAP-21 passed was a bloody battle of partisan politics and special interest groups who all knew they were fighting to keep the same sized wedge of what was going to be a much smaller pie. Traditionally, transportation bills cover five to seven fiscal years at a time. MAP-21 covers two – FYs 2013 and 2014. Many programs were eliminated, nearly everything was consolidated and great reforms were put into place to force more efficient use of the little funding that was available. While much of that is good progress, cuts to an already strained program only compounded the problem.
With the sequester going into effect on March 1, the DOT was forced to identify another $1.9 billion in reductions. The majority of the funding reductions will come from emergency Hurricane Sandy aid to the northeastern United States, but every DOT agency is expected to take a shave off of the top.
Even more uncertain is the future of transportation funding in the federal budgets for next fiscal year. The Senate has a proposal to fund MAP-21 at its full authorized amount, but with no reserve funds to help if it runs dry. The House of Representatives’ current proposal is very grim, with no funding outside of annual revenues. That could translate to an all-out stop of transportation and infrastructure construction and improvement programs, which could put the brakes on the domestic economy. The budget process has a ways to go until anything is decided, but the final result will be critical to the future of domestic growth.
The absence of a solution to the transportation funding deficit is something that should concern us all in every aspect of life and business. The automotive aftermarket could feel the ramifications of drastic funding cuts throughout the entire supply chain.
I think that if every business weighed the impact of a weak transportation and infrastructure program, it would be clear that the nation’s ability to move goods, services and people depends on the health of our roads, bridges, ports and borders. The need to develop a sound long term funding scheme for the nation’s infrastructure should no longer be an “inside the beltway” issue, but a priority for everyone in our industry.