Obama cites infrastructure, trade goals in State of Union speech
U.S. President Barack Obama said in his televised State of the Union address to the nation that three issues of great importance to the freight industry — investment in transportation infrastructure, trade and energy — were among his top economic priorities for the upcoming year.
Addressing these areas, he said, would create opportunities for middle-class workers and help close the wealth gap that has grown over the past decade as the richest Americans have benefited the most from the rise in corporate profits and the stock market while wages have remained stagnant for the majority.
Obama repeated his call to reform the tax code by closing loopholes for corporations to keep profits overseas, create incentives for companies that create jobs at home, and use taxes from repatriated money to pay for infrastructure.
"We can take the money we save with this transition to tax reform to create jobs rebuilding our roads, upgrading our ports, unclogging our commutes because in today's global economy, first-class jobs gravitate to first-class infrastructure. We'll need Congress to protect more than 3 million jobs by finishing transportation and waterways bills this summer. But I will act on my own to slash bureaucracy and streamline the permitting process for key projects, so we can get more construction workers on the job as fast as possible," he said.
The president has already worked to cut red tape. Just this month, the Federal Highway Administration issued new rules describing how it would expedite environmental reviews to get projects started faster, including eliminating full-scale reviews for projects on rights-of-way for existing infrastructure that has already undergone a review.
In 2012, the Obama administration placed 50 projects considered important to economic growth on the fast track for permitting.
Obama has spoken more than any other president in recent memory about the need to rehabilitate the nation's infrastructure, but his administration has not proposed any funding mechanism to make it happen. The Highway Trust Fund no longer has a sustainable source of funding to cover federal highway aid to states. in recent years, traffic volume has increased at the same time people are driving more fuel-efficient vehicles, leading to a decline in federal fuel tax receipts. The gas tax, 18.4. cents per gallon, and the diesel tax, 24.4 cents per gallon, have not been increased since 1993, and inflation has eaten away a third of the buying power for construction projects. Congress has bailed out the HTF with more than $50 billion in general fund revenue for the past four years, but there is no guarantee under existing tight budgets that such infusions will continue, and the money falls far short of the actual needs to repair aging roads and bridges or add capacity to relieve congestion.
The two-year MAP-21 surface spending bill, which included $21.2 billion in general fund transfers to supplement user-fee receipts, expires at the end of September, and the Congressional Budget Office projects the trust fund will be in the red. Spending authority for federal aid to reimburse states for highway projects will plummet from about $40 billion today because any balance in the trust fund has to go to pay off previous obligations to states that have undertaken highway improvement projects.
Obama has previously proposed $50 billion in front-loaded transportation infrastructure investment aimed at deferred maintenance to spur job creation, but the money would come from general taxes or borrowing, not user fees or other dedicated revenue stream. He has also called for the creation of a national infrastructure bank to provide seed money for local public-private partnerships that meet rigorous benefit-cost standards.
Groups such as the American Trucking Associations and the U.S. Chamber of Commerce have called for an increase in the fuel tax as the quickest and most efficient way to raise needed revenues for the national highway system, but lawmakers and the Obama administration have opposed tax increases either either because of concerns about expanding the size of government or burdening people in the low and middle classes during difficult economic times.
"While we appreciate President Obama making reference to the need for infrastructure investment, we remain disappointed in the continued lack of specificity when he discusses funding,” Bill Graves, the head of the American Trucking Associations, said in a statement. “While it is critically important to the nation that Congress and the administration come together on a multiyear highway bill this year, we believe that until the administration puts forward a serious, user-based funding proposal, we will risk going over the Highway Trust Fund 'fiscal cliff' in the near term and be woefully underfunded to meet the longer term needs of the nation.”
The American Road and Transportation Builders Association, whose members would benefit from any increase in public works spending, issued the following statement: "It is commendable that President Obama once again used his State of the Union address to talk about the need to repair the nation's transportation infrastructure. Now, we would like to see specific plans about how Congress and the President plan to tackle the underlying problem: the need for new, long-term revenue."
Obama stressed that his administration has done a lot to help small businesses grow by making more loans available and increasing research and development for high-tech manufacturing, and that major trade deals being negotiated among a dozen Pacific nations and separately with the European Union to reduce tariffs and other barriers will be a further catalyst for small businesses.
"We need to work together on tools like bipartisan trade promotion authority to protect our workers, protect our environment, and open new markets to new goods stamped 'Made in the USA.'" China and Europe aren't standing on the sidelines. Neither should we," he said.
House and Senate leaders presented Trade Promotion Authority legislation earlier this month. TPA is a negotiating tool given by Congress to the executive branch to help fast-track trade deals with other countries. It is viewed as a way to reduce apprehension that any agreement could be undone by the legislative branch. Under TPA, Congress lays out mutually agreed-upon negotiating goals and principles for the administration, and then agrees to only vote on the entire package for ratification, forfeiting the right of members to make amendments.
The Trade Benefits America Coalition, representing more than 170 associations and companies, and individual coalition members such as the Business Roundtable and the National Foreign Trade Council, again urged Congress and the administration to enact TPA as soon as possible to help conclude the Trans-Pacific Partnership and U.S.-EU free trade agreements, and the multi-lateral agreement on services under the World Trade Organization's auspices. They said TPA would enable help bring about greater market access for American goods and services.
On the energy front, Obama said natural gas — "if extracted safely" — can serve as bridge fuel to power the economy, and that he'll cut red tape to help companies build factories powered by gas. U.S. oil and gas production is undergoing a renaissance thanks to new finds and extraction methods, but Obama said the energy benefits had to be balanced with protection of environmental resources. He said he would push to further reduce the U.S. contribution to climate change.
The President also said the Environmental Protection Agency would set new fuel efficiency standards for trucks to further reduce emissions and oil imports.