Democrats Learning to Love the I-Word — But Will Words Bring Action?

The White House is re-centering
its message around economic and fiscal concerns ahead of tomorrow's
State of the Union address, with a new package of job-creation measures
expected to vault to the top of the agenda and a three-year "spending freeze" pitched to deficit-wary conservative Democrats.

Infrastructure: Democrats love it. But how will they fund it? (Photo: ShipDTS)

Yet despite data showing that
transit stimulus spending's effect on employment was nearly twice as
large as that of road projects, it's far from clear that the Obama
administration's pivot to the economy will prove a boon to merit-based
infrastructure investment.

One thing is clear: Democrats are finally catching on to broad public support for
building more efficient and sustainable infrastructure.  As Robert
Menendez (D-NJ), chief of the Senate majority's campaign committee, put
it to CNN on Sunday (emphasis mine):

At the same time, White House adviser Valerie Jarrett was telling NBC:

Of course, talking about a better built environment for the nation is
one thing; delivering is a messier and far lengthier endeavor.
Infrastructure encompasses more than just transportation networks, to
be sure -- but looking at the specific challenges of federal transport
funding, there remains but a small window for the Democrats to align
their fondness for the I-word with the White House's austere new
message on spending.

Part of the problem with federal transportation spending is that, in budget-wonk parlance, it manages to be both mandatory (set aside in a special trust fund replenished by the gas tax, not Congress) and discretionary (distributed every year according to obligation ceilings set by Congress).

So
will transportation funds be hit by the White House's proposed
"spending freeze," thus limiting the amount of available money for the
U.S. DOT's newly revamped transit funding plan? The freeze would take effect based on funding levels in the 2011 White House budget, which is set for release next week and could well provide more money for sustainability efforts at the U.S. DOT.

Even if the U.S. DOT budget gets a boost before a freeze kicks in, however, that tricky highway trust fund (which also funds much of Washington's transit spending) remains short of cash. If Congress and the administration can resolve their ongoing stalemate
over financing the next six-year transport bill before October, when
the fiscal year ends and the freeze kicks in, federal funding would be
on a more certain footing.

But if the next federal transport
bill is delayed into 2011 or beyond, which remains a very real
possibility, money will likely have to be transferred from the
government's general fund into highway and transit accounts.

The size of such a transfer is tough to predict -- Senate legislation offered in July would have spent
$22 billion to keep transportation accounts solvent for 18 months --
but Democrats would face strong resistance to borrowing the money for a
highway trust fund rescue after diverting $15 billion from the Treasury
over the past two years.

So it's easy to envision a scenario
where another highway trust fund rescue requires cuts to other
transport programs, putting federal investments in infrastructure on an
even less sure footing than they are now.

And given the
negative consequences of waiting too long to solve the current
transportation funding crisis, Democrats and the Obama administration
could make the tough decisions on taxes now, while backing up their
rhetoric on infrastructure with more merit-based grants, or kick the can down the road again.

The
predicament brings to mind House Speaker Nancy Pelosi's (D-CA) comments
to Washington Post blogger Ezra Klein back in July: Washington, she
said, is the "city of the perishable." Wait too long to act decisively
on a difficult issue, and you risk losing the chance to address it at
all.