Biden’s Buttigieg Pick Signals Optimism on Infrastructure
(Bloomberg) -- President-elect Joe Biden introduced Pete Buttigieg to lead the U.S. Transportation Department, pledging that the job will be essential to achieving his campaign pledge to “build back better.”
“Pete’s going to help build back better with jobs and hope with vision and execution,” Biden said at an event in Wilmington, Delaware. “We selected Pete for Transportation because the department is at the intersection of some of our most ambitious plans.”
The appointment is spurring optimism for a major infrastructure program, but any such effort will run into the same roadblocks that have blocked it for years: funding and politics.
Buttigieg, the former mayor of South Bend, Indiana, said his experience in that Midwestern city showed him the importance of transportation in a community’s well being.
“America has given this administration a mandate to build back better,” Buttigieg said. “Step one of building back better is literally to build.”
If confirmed by the Senate, Buttigieg will take over an agency that has a nearly $90 billion budget and is well-placed to take the lead in convincing Congress to approve a large enough infrastructure package to fulfill Biden’s campaign pledges.
But Washington has been mostly spinning its wheels on infrastructure spending in recent years, despite support by President Donald Trump. Any new effort faces similar problems, according to transportation analysts.
“Between the pay-for problems and general Republican reluctance to get on board with some of the major climate provisions, those are impediments to bipartisan support,” said Jeff Davis, senior fellow at the Eno Center for Transportation.
Biden ticked off the nation’s critical infrastructure needs, such as rebuilding roads, installing charging stations for electric vehicles and shoring up communities for the impact of climate change.
Buttigieg and Biden will be facing an almost immediate cliff in highway funding -- one of the major elements of any infrastructure plan -- which is currently set to run out in October 2021.
The DOT Highway Trust Fund’s balance has fallen 56.5% so far this year, according to the Federal Highway Administration. The fund, which is used to distribute money to states, is supported by the 18.4-cents-per-gallon federal gasoline tax.
Early in his term, Trump proposed a $1 trillion infrastructure plan -- funded mostly by private investment -- that never won approval.
Trump’s proposal called for federal spending of $200 billion over 10 years would used to lure as much as $800 billion in private, state and local spending. At the plan’s core was the assumption that private companies would enter into “public-private” partnerships with local and state governments.
Such investments aren’t feasible in the immediate future because the sources of revenue for those partnerships, such as tolls on roadways, have fallen sharply during the coronavirus pandemic, Davis said.
Senator Susan Collins, the Maine Republican who chairs the transportation appropriations subcommittee, said there “may well be” a chance to doing a big infrastructure package with the Biden administration next year.
“This is an issue that really has bipartisan support,” said Collins, who will have pivotal role in closely divided Senate on the Biden agenda.
AFL-CIO President Richard Trumka said labor is ready to “revitalize the transportation systems” with Buttigieg.
“With good jobs and better lives as our mission, the AFL-CIO and our affiliated unions look forward to partnering with Buttigieg as transportation secretary,” the labor leader said in a statement.
Ann Wilson, senior vice president government affairs of the Motor and Equipment Manufacturers Association, said she is “somewhat optimistic” Congress will be able to reach an agreement on infrastructure in 2021, citing momentum among Congressional leaders in both parties in negotiations this week about a Covid relief measure of an example of Congress’ ability to cut a deal when necessary.
Many lawmakers, particularly Republicans, have been reluctant to spend more tax money on infrastructure or to raise the gas tax, making it difficult to reach agreement on any such plan.
“After spending like drunken sailors under President Trump, many Republicans are going to feel the need to reclaim some fiscal restraint moral high ground. And that comes at a bad time for Joe Biden,” Davis said.
While its chances of it becoming law aren’t clear, the House of Representatives passed a $1.5 trillion infrastructure plan in July that could serve as a template for the Biden administration.
The plan, led by Representative Peter DeFazio, the Oregon Democrat who is chairman of the Transportation and Infrastructure Committee, would invest in traditional infrastructure such as highways, bridges and transit. But it also includes funding for high-speed internet, clean energy programs such as electric buses and water treatment systems.
The House plan passed on a largely party-line vote but was never taken up by the Senate. The new Congress being seated in January would have to take it up again for it to go anywhere.
Infrastructure spending does have strong support from some traditionally conservative business groups, such as the U.S. Chamber of Commerce.
“Infrastructure is a long overdue priority, you know,” Neil Bradley, the chamber’s executive vice president and chief policy officer, said on Bloomberg Television on Tuesday. “The incoming Biden team tells us they’re going to make that a priority in the first six months of next year, and I think this is confirmation that they are indeed are going to put a lot of resources and the right personnel behind it.”
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