Chao Calls Penn Station's Transit Woes `Absolute Priority'

(Bloomberg) -- Fixing the decaying Hudson River tunnel and transportation snarl in the Northeast Corridor is an “absolute priority” for President Donald Trump’s administration, U.S. Transportation Secretary Elaine Chao said Wednesday.

“Please be assured that Gateway is an absolute priority in terms of our focus,” said Chao, referring to the $24 billion project to improve New York’s Penn Station and build two new tunnels connecting it to New Jersey. Chao, speaking at a hearing before the Senate Committee on Environment and Public Works, said “we understand what is happening there.’’

Chao made the comments in response to a question about the project from Senator Cory Booker, a New Jersey Democrat who said the region is “teetering on the edge of a traffic Armageddon.” Penn Station has experienced derailments, flooding and extensive commuter delays in recent weeks.

Chao’s testimony comes amid calls from leaders in business, government, organized labor and trade associations to produce a plan for Trump’s pledge to invest $1 trillion in U.S. infrastructure. Chao said the administration doesn’t have a specific list of projects right now to be funded as part of the plan. Asked about potential funding options, she said “nothing is off the table.”

Trump has told Bloomberg he would be open to considering an increase in the federal gas tax, for example, and National Economic Council Director Gary Cohn has suggested using taxes on corporate profits returned to the U.S. from overseas, known as repatriation.

Statement of Principles

Chao reiterated previous comments that the administration plans to release a statement of principles for its infrastructure plan by the end of May and a complete proposal to Congress probably by the third quarter.

Representative Bill Shuster of Pennsylvania, the Republican chairman of the House Transportation and Infrastructure Committee, said he thinks a bill needs to be passed this year.

“We’re going to be in an election year next year, and that pressure builds,” Shuster told reporters in Washington on Wednesday. “I think both Democrats and Republicans want to move an infrastructure bill in a bipartisan way.”

Though Trump’s campaign pledge of infrastructure spending has marked a rare point of agreement with Democrats, differences remain over how to pay for it. Senate Democrats have proposed $1 trillion in new spending without relying on corporate tax credits to attract private investment. Congressional Republicans have emphasized leveraging private investment to avoid debt.

Chao has said that the plan will include $200 billion in federal funding that will be used to leverage $1 trillion in infrastructure investments over the next 10 years.

Democrats and some Republicans including Wyoming Senator John Barrasso, chairman of the Environment and Public Works Committee, also have called for more federal spending. They say using public-private partnerships and other ways to attract private investment for infrastructure won’t work in rural and low-income areas where tolls or other needed revenue streams aren’t feasible.

Senator Sheldon Whitehouse, a Democrat from Rhode Island, raised the prospect of bipartisan cooperation on an infrastructure plan despite the controversies swirling around the Trump administration.

“One can foresee considerable tumult ahead in Washington in a whole variety of areas,” Whitehouse said at the hearing Wednesday. “But I think in the relative bipartisan calm and quiet of our interest in infrastructure and the traditions of this committee, you can find considerable support.’’

To contact the reporters on this story: Mark Niquette in Washington at mniquette@bloomberg.net, John McCormick in Washington at jmccormick16@bloomberg.net.

To contact the editors responsible for this story: Joshua Gallu at jgallu@bloomberg.net, John Voskuhl