National Governors' Association Winter Meeting Remarks

Washington, D.C.
February 23, 2003

Introduction

Good afternoon. I want to thank Governor Johanns, Governor McGreevey and Ray Scheppach [Sha-Pak] for the opportunity to speak to this Committee about the importance of funding our national transportation system.

As chief executive of your states, you all are faced with some very difficult decisions on how to maximize infrastructure investment during difficult economic times and how to allocate those resources across the various modes of transportation.

These decisions will have a dramatic impact on your ability to attract tourists and business investment and improve the lives of your residents.

I can assure you that the chief executives of our nation's companies and millions of small business owners share your concerns as well as your commitment to seeing that our transportation system receives much-needed improvements.

Transportation is a global issue—affecting every sector of society. The safe and efficient movement of goods and people shapes our cities and states, forms the foundation of our economy, and enables us to enjoy the highest standard of living in the world.

The highly competitive business models of our global, just-in-time economy depend on a secure, dependable and integrated transportation system.

Unfortunately, we're at risk of losing that system.

Without additional investment in our infrastructure, our system of commerce is impaired; our mobility restricted; our safety threatened; our environment endangered; and our way of life compromised.

From time to time, we are reminded in real terms of just how essential our transportation system is.

Last weekend, millions of people in the Northeast and Mid-Atlantic states were immobilized and millions of dollars in retail sales lost because of the terrible snowstorm that shut down our airports, roads, and mass transit systems.

Some of you even had to declare states of emergency to help bring your transportation systems back to life.

Last fall, produce, parts and goods sat on cargo ships resting offshore during a 10-day lockout at 29 West Coast ports, costing the economy $20 billion.

And, of course, there was 9/11, when our entire aviation system was paralyzed and our borders barricaded, causing auto plants in the Midwest to close and send workers home.

These incidents—regardless of whether or not they could have been anticipated or prevented—underscore the tremendous value of our transportation system to all segments of society.

The Chamber welcomes the continued support of the National Governors' Association in ensuring that the country takes the necessary steps for building a transportation system geared to meet our needs.

Our joint efforts to date have produced desired results. For instance, in part because of our lobbying on Capitol Hill, Congress recently approved a 2003 fiscal year budget that maintains the current spending level of $31.6 billion for surface transportation.

Though we were disappointed in some of the transportation funding levels contained in the president's 2004 fiscal year budget proposal, we look forward to working with the NGA to increase those levels and win reauthorization of TEA-21 and AIR-21.

As you know, TEA-21 and AIR-21will define the nation's commitment to infrastructure improvements for years to come.

For the next few minutes, I'd like to outline the reasons why the Chamber believes infrastructure investment is essential to our economy and way of life, and entertain some ideas on how we can maximize investment.

Reasons Why Investment Is Important

Sustained investment in our nation's $1.75 trillion dollar transportation system is important for four major reasons.

First, our transportation system is incapable of handling higher and higher volumes of freight and people.

For example, since 1970, vehicle miles traveled has soared 123% while road capacity has increased just 5%.

$20 billion in capital investment is needed annually just to maintain the physical condition of transit assets and the operational performance of subways, rapid buses, and other transit systems.

Ninety-five percent of U.S. overseas trade moves by water, yet our ports and waterways are not sufficiently equipped to handle the new, mega containerships.

We had better start increasing capacity, because over the next two decades, imported cargo moving through U.S. ports is expected to triple.

By the way, I'm pleased to report that the Chamber, in conjunction with several of our partners, will soon release the results of a 14-month long study that assesses the capabilities and operational effectiveness of our ports and intermodal systems.

This report will highlight many troubling shortcomings in the system and will include a set of recommendations for both the private and public sectors that we believe are critical to U.S. trade competitiveness in the global economy.

We'll hope that you and your staff use this resource to get Congress to pay closer attention to our ports and their associated rail and road systems.

Second, infrastructure investment is important to our environmental clean-up efforts. Let me illustrate what I'm talking about.

Improving traffic flow at the nation's 167 most congested highway bottlenecks would reduce gasoline and diesel consumption by nearly 20 billion gallons over the next 20 years.

Stated another way, those improvements over the next two decades could reduce carbon monoxide by 45%, carbon dioxide by 71%, and smog-producing compounds by 44%.

That sort of savings in consumption would also help our energy situation, but that's for another speech.

The president has proposed an Infrastructure Preservation and Maintenance program that expedites funding at major highway congestions points, and the Chamber will work to build support for that program.

Third, a robust transportation system is essential to our national security.

Outfitting the nation's border crossing points, airports, railways and seaports with top of the line technology is critical to our nation's safety and well-being.

And don't forget that our military depends on a robust transportation system to move equipment and troops for the purpose of protecting freedom and free enterprise all over the world.

And finally, increased infrastructure investment will provide a tremendous boost to our sluggish economy.

§ Unlike other government expenditures, infrastructure investments have a unique multiplier effect on the economy.

For every $1 billion invested in transportation, the nation's economy generates more than $2 billion in economic activity and 42,000 new jobs.

A study by Standard and Poor's shows that every dollar of government spending on defense and infrastructure generates $1.80 in additional gross domestic product during the next 12 months.

That's a bigger bang for our buck than a cut in payroll taxes or a temporary cut in personal income taxes.

Given the tremendous long-term economic, environmental and security benefits of a modernized transportation system, the Chamber will continue to pursue an aggressive transportation policy agenda in Washington.

First, we will continue to fight to ensure that Congress fully dedicates federal transportation trust fund dollars for their intended purpose of fixing our roads, airports, ports and waterways.

For years, the Highway Trust Fund has been raided for non-surface transportation projects, which partly explains the deteriorating highway system we have today.

This problem will become exacerbated by the growing budget crunch. I know many of you are under similar pressure in your states.

Faced with either cutting funding for education or health care or stealing money from your state highway trust fund, it's often politically more palatable to do the latter.

But ultimately, we create more problems than we solve when we fail to provide for the future of our transportation system.

Second, the Chamber continues its work to establish a streamlined, environmentally-responsible approval process that doesn't allow the anti-growth crowd to hold projects hostage.

Something is terribly wrong with the system when it takes 15 years to build a single runway, as was the case at San Francisco's airport.

Similar examples of regulatory overkill may exist in your state, and I strongly encourage you to review all existing rules that may be handicapping your state's ability to become a leader in transportation.

And finally, we will engage in an all-out battle to ensure reauthorization of TEA-21 and AIR-21, legislation that will appropriate surface and aviation transportation dollars for the next several years.

This will be a lively debate, given the rising federal budget deficit and the urgency to contain spending.

Some will question outright the need for full transportation funding. Those who are committed to investment will offer new ideas on methods of funding.

Many of you are struggling with these issues on the state level, and state and local chambers are working with you to find ways to generate the revenue required to meet your growing transportation needs.

Some of you—even those with an anti-tax record—are in support of state and/or federal fuel tax increases to fund infrastructure improvements.

I can't possibly appreciate the circumstances that may lead to such a decision. In a particular state, perhaps an increase in the state fuel tax is entirely unavoidable.

But given the sluggish economy, we think before Congress considers a federal user fee increase, it should ensure that all available resources are being used in the most efficient manner.

For instance, we need to charge the use of ethanol and other alternative fuels at the same rate as gasoline and place those revenues into the Highway Trust Fund.

And we need to fully utilize the more than $15 billion surplus sitting in the trust fund.

The Chamber is prepared to listen to alternative funding methods—depending on how the economy progresses.

But we'll cross that bridge when we come to it. First, we must convince Congress and others that full funding is necessary for economic growth and prosperity.

To accomplish this objective, we've created the Americans for Transportation Mobility, or ATM coalition.

For those of you who aren't familiar with ATM, it's a broad-based organization of transportation users and providers, state and local chambers, state and local government officials, and labor unions. We're at 380 members—and counting.

Its purpose is to build public and political support for a safer and more efficient transportation system.

Every state is represented in the coalition, and we hope that if you're not already an ATM member that you consider joining because we're going to need all the strength we can muster to come out ahead later this year.

Conclusion

Ladies and gentlemen, these are difficult times. We have lots of needs and not enough money to pay for them all.

But we have to keep our eyes on the prize – economic growth. We have to prioritize policies that will create greater prosperity, and investment in our infrastructure is one such item.

I can guarantee you that very few things attract businesses and capital and create jobs like a modern transportation system.

Transportation is not just an economic issue – it's a quality of life issue. Hopefully, I've been able to illustrate today that transportation investment is essential to improved safety, increased freedom and mobility, and a healthier physical environment.

By working together in support of increased transportation investment, I believe the Chamber, ATM and the NGA can give our citizens a better quality of life and our country an economic advantage over our competitors.

Thank you very much for this opportunity.