Economy & Budget

A transportation train wreck

Everyday 8.5 million residents of the Tri-State area use New York City's mass-transit system. They rely on the Metropolitan Transportation Authority's (MTA) buses, trains and subways to get them to and from work, visit loved ones, or simply enjoy everything this great city has to offer. Likewise, the 49 million tourists the City welcomes every year use the City's transit system to explore the five boroughs, visit our world-class museums or see the sights.

The images and iconography of New York City's transit system are equally well traveled. Whether it's the main concourse at Grand Central Terminal or the iconic letters and numbers that guide travelers through the subway, when one rides our transit system there is a distinct feeling that you are a part of something that is central to New York City's character. But, what most riders don't realize is that this system is as much a part of New York State as it is the City; when you ride a MTA bus it's likely that the bus was built in Oriskany, NY, in the state's Central Region. Or, the subway car you take downtown was built with parts from Auburn and Hornell, NY. This experience that seems to be inseparable from the character of New York City is really about much more. It is about a state and city in the business of getting people to work. Whether that be on the factory floor of a bus manufacturer upstate or on the 7 Line headed from Woodside, Queens to Manhattan, the MTA is among the state's most important job creators and enablers. In fact, the MTA's 2005-2009 Capital Program resulted in $41 billion in economic activity and created 325,000 jobs throughout the state.

Over the past few weeks, Congress has debated the long overdue surface transportation reauthorization, The American Energy and Infrastructure Jobs Act (H.R. 7). This bill provides the guiding authorization for funding our highways, bridges and mass-transit systems, in addition to setting key safety regulations and environmental rules. Unfortunately, this bill was written and brought to the floor in the most partisan of manners, making it what Transportation Secretary Ray LaHood, a former House Republican, called "the worst transportation bill" in decades.

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This time it's different: A transportation bill for America's future

In February 2011, Chairman John Mica (R-FL) brought his Transportation and Infrastructure Committee to Columbus, Ohio as a part of his series of hearings that sought to hear public official and stakeholders’ ideas for improving and reforming our nation's surface transportation programs. What we heard time and time again was that that regulatory overreach and redundant spending programs were crippling our economy, stifling job creation, and wasting our limited federal resources. Businesses, state and local officials, and transportation experts pleaded for us to reform transportation programs, cut through bureaucratic red tape, and help them get people back to work.

One year later, we are poised to vote on the American Energy & Infrastructure Jobs Act, which is a reauthorization and reform of federal transportation programs, combined with an expansion of domestic energy production. This critical initiative will help build our nation’s infrastructure, reform transportation programs, ease rising gas prices, strengthen the economy, and create jobs here in America.

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A highway bill should be a two-way street, not road to nowhere

Let’s be honest - the House highway bill is headed toward a dead end. The formal debate will stretch out for a few weeks while the Republican majority works to get the votes to pass a bill that will never become law. While the policy is bad - Transportation Secretary Ray LaHood called it the worst highway bill he has seen in 35 years – it is the “my way or the highway” process that has put it on a road to nowhere. As this exercise shows, sometimes breaking with established norms is a terrible mistake. 

I have served on the Transportation and Infrastructure Committee during my entire tenure in Congress, and even as the House turned more partisan, the Committee prided itself on bi-partisanship. While we did not agree on everything, Republicans and Democrats worked together to advance the infrastructure needs of the country, routinely conferring on major legislation and working out as many issues in possible in advance. As the saying goes, “there are no Republican or Democratic roads.”

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President's plan for entitlement spending misses mark

The numbers in President Obama’s proposed budget are staggering, but the lack of reform is even more staggering. The president is proposing a fourth consecutive year of deficits in excess of $1 trillion. In 2012, spending will exceed 24 percent of GDP, well above the historical average of 20 percent, and the deficit will reach 8.5 percent of GDP.

Gross federal government debt will increase from $15.4 trillion today to $25.9 trillion in 2022. In 2022, we will be spending almost as much on interest ($850 billion) as we will on Medicare ($908 billion).

However, the deficits won’t be the result of low taxes. In fact, the president is proposing a 10-year net tax increase of more than $1.5 trillion that will increase federal tax burdens to 20.1 percent of GDP in 2022, significantly above the historical average of 18 percent, and the budget will still be out of balance. 

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Obama's debt-busting budget

On Monday, President Obama released his $3.8 trillion fiscal year (FY) 2013 budget proposal containing many similarities to his FY 2012 budget that was overwhelmingly rejected by the Senate by a vote of 97-0. If Congress were to adopt the president’s budget, we are looking at dangerous levels of debt, exceeding 100 percent of Gross Domestic Product (GDP) every year for the next 10 years. 

Failing to fulfill his promise to cut the deficit in half by the end of his term, Obama instead proposed a fourth consecutive year of deficits greater than $1 trillion. Under President Obama’s watch, the government has accumulated the three largest annual budget deficits in our nation’s history.  Over $4.6 trillion has been added to the national debt since Obama took office, which is the most rapid increase of any president ever.

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House transportation bill bad for for infrastructure, economy, jobs

The House of Representatives did not win over many hearts this Valentine’s Day with its proposed transportation bill, the misnamed American Energy and Infrastructure Jobs Act (H.R. 7). City dwellers of all political stripes oppose the way it strips public transit of a steady funding stream. Architects, planners and commuters decry its emphasis on easily-congested highways to the detriment of smart growth strategies. Environmentalists and the Episcopal Church oppose back-door efforts to open huge swaths of our country to drilling, including offshore areas and the fragile Arctic National Wildlife Refuge in Alaska.  We should add to this list of opponents anyone who wants to see the United States continue on its fragile path to economic recovery. This bill—along with several of the amendments that have been submitted for attachment to it—seems designed to stop job creation in its tracks and turn many of the good transportation jobs we already have into low-quality ones.

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A salable solution for corporate tax reform

In his recent State of the Union address, President Obama revisited a key proposal from his 2008 campaign: to reform a corporate tax code that he says encourages U.S. firms to invest and expand overseas. Few would disagree that corporate tax reform is needed, but the universal system Obama has proposed is the direct opposite of the territorial system favored by many large U.S. corporations. Not surprisingly, Obama’s calls for reform have failed to gain any traction on Capitol Hill. However, it is possible to achieve the President’s goals while also satisfying big business and both political parties.

A true universal system, such as the President proposes, would tax the worldwide profits of American corporations regardless of where those profits are held. (Currently, corporate offshore income is taxed only when it comes home to the U.S. This lures companies to keep profits overseas, reducing tax revenues and discouraging domestic investment.) A territorial system, conversely, would tax only those profits earned in the United States.

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Getting a grip on deficit hysterics

Promoting fears about the budget deficit is a major industry in Washington. The central theme is usually that we have out of control spending which will make us just like Greece in only a few short years. The policy take away from this story is that we have to cut Social Security and Medicare, and the sooner the better. This is just the idea put forth by Rep. Tom Cole (R-Okla.) in a recent piece that appeared here on the Congress Blog.

Everything in this picture is wrong. The basic story of out of control deficits as an ongoing problem is nonsense. While people may have complained about the deficits in the Bush presidency, the debt-to-GDP ratio was actually falling by the end of his administration and was projected to continue to fall for the foreseeable future, even without the ending of the Bush tax cuts.

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Obama’s overreach burdens U.S. recovery

“If it moves, tax it. If it keeps moving, regulate it.  And if it stops moving, subsidize it.”  Barack Obama was just 25 when President Ronald Reagan uttered those memorable words, but he evidently took them literally. President Obama has set a new standard for boundless government hyperactivity: taxing job creators, over-regulating domestic energy, and subsidizing economic failures like Solyndra.

When Democrats controlled Congress, President Obama grew government the old-fashioned way. He raised taxes on tanning beds, medicine and medical devices as a warm up, and then turned to the $500 billion tax hike included in his healthcare bill. These taxes are literally loss leaders compared to his oversized budget plans. With four consecutive years of trillion-dollar deficits, a budget written in red ink for the next decade, and no plan to tame the entitlement juggernaut, the real taxes hikes have yet to arrive.

When his legislative hammerlock was broken, the president moved from taxation to regulation. In Obama’s eyes, Congress has changed from a superhighway to a speed-bump. Take, for example, the new head of the Consumer Financial Protection Bureau, Richard Cordray. Lacking the requisite votes in the U.S. Senate, President Obama just decided to appoint Cordray while Congress was still in session, trampling on the Senate’s advise and consent role.

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Big Sugar's Valentine's Day surprise

As couples across Indiana, and across the country, celebrate Valentine’s Day this week by presenting chocolates, candies, and other sweets to their sweethearts, we are reminded once again of the sour affect that the U.S. sugar program has on businesses and consumers.

The federal government’s sugar support program is a complicated system of marketing allotments, price supports, purchase guarantees, quotas, and tariffs. This Depression-era program actually raises the price of sugar paid by U.S. manufacturers and consumers, reducing domestic food production, employment in confectionery businesses, and opportunities for U.S. exports.
 
In sugar land, prices are set by the government, not the market. Each year, the U.S. Department of Agriculture determines “marketing allotments” to assure domestic producers at least 85 percent of the domestic sugar market. The government also limits imports, to help keep prices inflated far above world levels. If U.S. sugar prices fall below the official level, a price-support system of “loans” to processors ensures that 'Big Sugar' gets its federal share. The recipients get their loans in taxpayer dollars, but can repay them in (what else?) sugar.

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