The System Shapes the Future, Remarks

32nd Annual Kentucky Transportation Conference

Remarks by
THOMAS J. DONOHUE
President and CEO, U.S. Chamber of Commerce

Frankfort, Kentucky
January 21, 2010

As Prepared for Delivery

Introduction

Thank you very much, Skip, and good morning everyone.

Let me begin by thanking Skip and Stan for inviting me here today. I know everyone is excited about the energy, leadership, and passion Stan brings to his new position. He will do great things for your organization as president.

I also tip my hat to Stan's predecessor, Jack Fish. After 32 years of building this association into a powerhouse from the ground up, I understand he's retired and is taking a well deserved cruise.

This is a tremendous gathering of mayors and county executives, road builders and suppliers, shippers, and representatives from all modes of transportation. It's your biggest event of the year.

Last week the U.S. Chamber had its biggest event of the year—our State of American Business address.

We assessed the state of the economy—not very good, but getting a little better—and unveiled our priorities for the New Year. For 2010, we can sum up those priorities in three words: jobs, jobs, jobs.

I outlined our detailed and serious plan to put Americans back to work—and put our country on a course of creating 20 million new jobs over ten years.

Our plan includes doubling exports in five years and then doubling them again ...

Investing in energy and green technologies ...

Revitalizing our capital markets ...

And alleviating the uncertainty surrounding proposed legislative, regulatory, and tax changes that has frozen business investment and job creation.

Now, I could give a speech on each one of those topics, but I won't. However, I would be happy to address any of them—or anything else that's on your minds—during the discussion period.

For now, I want to discuss a key component of our plan—the one on which all the others depend—investment in a sound infrastructure system, from roads and bridges to airports and sea ports ... from the electricity grid to broadband ... from water and rail ways to public transportation.

America's competitiveness, safety, and mobility require a sound infrastructure system. It's the platform on which our economy rests.

The system shapes the future. If we let it crumble beneath us, our economy will go down with it.

The Need is Urgent

I don't need to remind you of what dire shape our system is in.

Look at three areas especially critical to Kentucky—roads, bridges, and inland waterways.

Roadway conditions are a significant factor in about one-third of traffic fatalities. Poor road conditions cost U.S. motorists $67 billion a year in repairs and operating costs.

More than 600,000 bridges—or about 12% of all bridges—are structurally deficient. Nearly 15% are functionally obsolete.

Of the 257 locks still in use on the nation's inland waterways, 30 were built in the 1800s and another 92 are more than 60 years old. They were only designed to last 50 years.

Kentucky got an unwelcome reminder of this recently when a 50-ton lock crumbled into the Ohio River.

The figures are grim across all categories.

Freight railroads will need nearly $150 billion in investment to carry the volume of freight forecast for 2035.

Anyone who flies knows our airports are a mess. Our air traffic control system is badly outdated. Flight delays result in more than $9 billion in lost productivity. On-time records are at near historic lows.

Transit use increased 25% between 1995 and 2005 and has surely gone higher with spiraling gas prices. Yet, investment is not keeping pace.

Cargo volumes at ports are expected to double by 2020, with some ports facing a tripling or quadrupling of container volumes. They are ill-equipped to handle such increases.

Our whole trading system—which contributes so much to our economy—relies on these ports.

Our water system is also showing its age. Our system is so bad every year it leaks the equivalent of all the water used by the state of California.

On energy, we haven't built a new oil refinery or nuclear power plant in a quarter-century. Our electricity grid is ancient.

With regard to technology, the United States is lagging behind other developed countries in broadband penetration.

The list goes on and on.

The United States is falling behind on maintaining and expanding our infrastructure as our global competitors race ahead building brand new stuff.

It's hard to say anything good has come out of this horrible recession, but if not for the economic slowdown we would have hit a wall on infrastructure. Not enough capacity.

And once we start growing to our potential again, we will certainly hit that wall unless we act now.

The great irony is that infrastructure should be a no-brainer. It creates jobs. It builds lasting assets. It enhances our global competitiveness. It improves our quality of life.

Support for a common vision seems strong: a well-funded, well-maintained, connected system that:

• facilitates personal and freight mobility
• improves safety
• reduces congestion and pollution
• enhances our ability to export and compete
• provides the power and information we need for a successful economy,
• and creates badly needed jobs over both the short and long term.

If ever there is an issue that should enjoy bipartisan support, it should be infrastructure investment.

Unfortunately, some of our elected officials would rather make it another political football.

I'm telling you today that if elected officials are out there saying that these critical investments are "wasteful spending" they are dead wrong.

That's an anti-business, anti-jobs, anti-growth message that the U.S. Chamber won't stand for.

The fact is that these investments provided a needed lifeline for the transportation construction industry and their suppliers.

Of the $36 billion in infrastructure stimulus money, about 75% has been allocated to more than 11,000 projects.

Those projects have created or sustained more than 250,000 jobs directly and generated another 760,000 indirectly.

So if we have a common vision—and we know that infrastructure investments have positive short- and long-term impacts on jobs and growth—the question is: How do we get there from here?

Fulfilling the Vision

We need three things to fulfill the vision: a sense of urgency; more money; and an end to needless delays and obstructions.

The Need for Urgency

To say that Congress has a lot on its plate right now is an understatement. It's a three-ring circus! It's the busiest I've ever seen it in my 35 years in Washington.

Some argue that Congress should postpone work on major infrastructure bills until it's finished with health care and climate change, or even after the mid-term election. Bad idea!

This is part of Congress' fundamental business. There's no excuse for delay. We're shortchanging job creation, safety, mobility, and our competitiveness.

But look where we stand now ... We've known since 2005 that the highway and transit bill was going to expire in September 2009, but Congress has chosen to kick the can down the road.

Meanwhile, the Highway Trust Fund teeters on the edge of bankruptcy.

Likewise, the FAA has been operating under a series of extensions since its authorizing legislation expired in September 2007.

It's time again for reauthorization of the Water Resources Development Act. Are we ready?

The bottom line is who can function intelligently with so much uncertainty?

What do you do if you're a governor? What contract are you comfortable signing if you're not sure the federal match is coming, when it's going to come, or how much is going to come?

We have absolutely screwed up one of the most obvious things we can do to create jobs and put our economy on a more sound long-term footing.

And even when we do get some money for the system—as we did with the stimulus bill (which we supported, by the way)—we muck it up with things like "Buy America" rules.

It sure sounds great, doesn't it? "Buy America." But it's not.

There's a lot of that stimulus money we haven't been able to spend, particularly in water projects, because we can't get the components.

That's because where we have to buy them and how the rules are applied to local governments.

We need to pound a sense of urgency into the heads of our elected officials ... and maybe with one of your Louisville Slugger baseball bats!

The Need for More Money

As with most things in Washington, it all comes down to money. In an age of historic deficits spiraling out of control, where is it going to come from?

One thing we know for certain is that we need a revolution in how we plan, fund, and build these systems. It cannot be business as usual.

When it comes to money, every option should be on the table.

Clearly, more public money will be needed, and so for highways and transit we should seriously consider an increase in the federal gas tax.

Although Congress is considering all manner of huge tax increases this year, the prospect of a gas tax increase sends most politicians into apoplexy.

But they're forgetting one very important thing—it's not a tax, it's a user fee. You use the roads, you pay for them. What could be fairer?

And let's also not forget that the fee hasn't been raised in 17 years. The Highway Trust Fund is essentially bankrupt. Cars are more fuel efficient and people are driving less in a down economy.

But more money has to come with better policy, so Congress needs to change the way it invests user fees when it does SAFETEA-LU reauthorization.

Congress should adhere to the following principles:

• Make sure federal investments achieve national interests
• Programs put performance and results ahead of political expediency
• Earmarks should be limited, and revenues must be dedicated to the Highway Trust Fund and not diverted to non-infrastructure projects
• There have to be new opportunities for private investment
• And we need a road map for future revenue models.

If these conditions are met, the Chamber would support a sensible increase in the gas tax.

As the private sector recovers, it will be prepared to make far greater investments in all kinds of infrastructure.

One reputable study estimates that there is currently in excess of $180 billion in equity capital available for infrastructure projects and that private investment could support more than 1.5 million jobs over 10 years.

Even in Washington, that's real money!

Business will make these investments if and when government removes the legal and regulatory roadblocks that now stand in the way.

Look, this is a pretty simple deal—you get what you pay for. No one is giving roads, bridges, dams, and modern air traffic control systems away. They have to be paid for.

This is primarily a problem of political will … and the Chamber is here to make sure members of Congress summon the courage to do the right thing, and do it quickly.

An End to Needless Delays

Third, we need an end to all the needless delays holding up important infrastructure projects.

We need an end to frivolous lawsuits ... we need an end to excessive environmental reviews ... we need consistency and expediency in the siting and permitting process.

It takes too long to build anything substantial in this country—and everyone knows it.

For example, the Federal Highway Administration found that it takes about 13 years for major projects to go from initiation to completion.

We just overlay and overlay and overlay rules, regulations, permitting, and lawsuits on top of each other to the point where everything is tied up in knots. It's damn near impossible to do much of anything.

We're making a serious mistake because we need those jobs.

The "Not In My Backyard" folks are doing a real disservice to their fellow citizens.

You know, there've been 380 energy projects that have been stopped in just the past two-and-a-half years in this country—and a third of them were solar, wind, or alternative energy.

And many of them were stopped by some environmental groups!

The Chamber is prepared to work with governments at all levels to remove these unnecessary barriers.

Let's Rebuild America

The Chamber is not just talking about infrastructure, we're doing something about it in a big way.

Our Let's Rebuild America program is educating the public about the importance of infrastructure investment, mobilizing grass roots support at the state and local level, and building the best arguments through sound research.

We've got a busy 2010 ahead. We could use your help.

We'll continue to aggressively press Congress to address the reauthorization of the highway and transit bill, as well as WRDA and the FAA.

This year, Kentuckians need to remind their members of Congress why infrastructure is vital to your business and community.

It's constituents' stories that get the attention of politicians and force them to move items to the top of the agenda.

Conclusion

We have a huge and important task before us, and one that must compete for attention and resources with other important priorities.

In addition, money is scarce and the economy is still climbing out of recession.

We must build support for a multimodal and intermodal U.S. transportation system to enhance connectivity, increase productivity, and mitigate congestion.

We need to identify transportation assets in the national interests and ensure that they are modernized and maintained.

We need to encourage research, development, and the application of new technologies to foster better project design, construction, maintenance, financing, and operations.

We need to ensure that public funding is spent efficiently and effectively and is focused on national needs.

We need to consider all funding and financing options and ensure that the costs are borne primarily by users of the system.

We need to encourage private investment and public-private partnerships.

And we need to streamline all the red and green tape and lawsuits.

It's a tall order that will require a sustained, aggressive grass roots efforts.

It will require arm twisting, a constant drumbeat of our messages, and raw political power.

The U.S. Chamber and KBT are in the game. We need to redouble our efforts. We need to attract and mobilize new supporters.

We need to raise and spend the money necessary to cut through the din in Washington and the state capitals.

We need the best arguments and research so our messages resonate.

Most of all, we need to stand together and deliver.

Businesses, families, and our economy rely on a well-maintained infrastructure system. It's the heart of our economy.

If we want jobs, prosperity, and to remain number one in the world, we've got to get this right.

Thank you very much and I would be happy to answer your questions.

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