WASHINGTON (Reuters) - President Barack Obama on Monday proposed an ambitious long-term transport spending plan in his 2012 budget as a way to boost U.S. economic competitiveness and spur job growth.
While cutting other spending, Obama aggressively accelerated efforts to upgrade aging roads, bridges and introduce high-speed rail with a six-year, $556 billion package.
“It’s really about a big vision, a bold vision, an innovative vision,” Transportation Secretary Ray LaHood told reporters.
The total is 60 percent richer than the last transportation blueprint enacted by Congress, which expired in 2009.
Congress is working on its own transportation spending priorities with proposals expected soon. LaHood expressed optimism recently legislation could be approved this year.
In a sign of the intense opposition to Obama’s transportation policies, House of Representatives Republicans on Friday proposed eliminating Obama’s high-speed passenger rail effort.
Republicans hold the majority in the House and are seeking deep cuts across the board to narrow the budget deficit, which is forecast to reach $1.48 trillion this fiscal year.
The Obama proposal relies heavily on competitive grants and sidesteps earmarks in order to depoliticize how projects are financed. According to LaHood, the plan will consolidate 55 smaller highway programs into five different areas.
“This budget does all that I’ve talked about in bold terms ... without passing any debt on to future generations,” LaHood said, adding the federal government will ensure “the dollars we give out do not exceed dollars coming in.”
According to department documents, the proposal’s high price would be paid by a “Transportation Trust Fund.” Essentially, the administration would expand the current Highway Trust Fund to also back transit, high-speed rail, and a national infrastructure bank. But LaHood said Obama has not suggested where to find revenues for the bigger account.
Obama is not seeking to raise gasoline taxes nor does he embrace calls by some experts to charge motorists a fee for each mile they drive.
Obama’s plan includes a $53-billion proposal to advance high-speed rail over six years and a proposal to spend nearly 17 percent of the overall $556 billion transportation package in the first year.
It would also create an infrastructure bank capitalized at $30 billion over six years to finance the biggest projects with the help of states and private investment.
Obama pushed the infrastructure bank idea last year, but it got a cool reception in Congress and a government poll released this summer showed analysts, transportation agencies and states’ leaders were unclear about how it would operate.
Under Obama’s plan the bank would reside within the Transportation Department and be run by an executive director and a board of officials from federal agencies. At first, it would only finance transportation projects.
General Electric Chief Executive Jeff Immelt said last month that prospects are slim for an infrastructure bank, because of deficit concerns.
Proponents of an infrastructure bank have said investments from private equity and pension funds and other sources would complement federal capital. Projects could generate revenue through tolls or other fees that would provide long-term, low-yield returns for investors.
Australia’s Macquarie Group is the global leader in private infrastructure investment, according to Infrastructure Investor magazine rankings. Others include Goldman Sachs and Alinda Capital Partners, the largest U.S. manager of pension funds for infrastructure investment.
The American Society of Civil Engineers estimates it will cost more than $2 trillion to bring roads, bridges, and other infrastructure to a state of good repair.
Increased spending would potentially benefit companies like heavy equipment makers Caterpillar Inc and Deere & Co, sand and gravel producer Vulcan Materials, industrial conglomerate General Electric, engineering firm Parsons Corp, steelmakers and prefabricated materials manufacturers. LaHood is scheduled to visit Caterpillar on Tuesday.
The previous transport bill, a five-year, $285 billion package, expired in September 2009. Since then, Congress has funded road and transit projects through short-term extensions.
Editing by Anthony Boadle, Tim Dobbyn and Eric Walsh