Obama budget has $556 billion, 6-year transport plan

By @ibtimes on

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.

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.

Obama's pointman on the issue, Transportation Secretary Ray LaHood, expressed optimism recently that 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 bring down the budge deficit, which is forecast to reach $1.48 trillion this fiscal year.

The Obama proposal recommends greater infrastructure investment and aims to depoliticize how road, rail and transit projects are financed.

It will hold states and localities accountable for real results and make federal funding decisions based on more sound and inclusive transportation plans, the budget plan said.

The proposal would streamline and eliminate duplicate federal programs, but had few details on how to pay for transportation spending.

It recommends no increase in gasoline taxes -- the chief revenue source for most U.S. transportation projects -- nor does it embrace calls by some experts to charge motorists a fee for each mile they drive.

INFRASTRUCTURE BANK

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 because of the substantial upfront capital required and uncertainty about the role of private investment.

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 that 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. Other projects would offer tax advantages as the primary benefit of investment.

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.

(Reporting by John Crawley and Lisa Lambert; editing by Anthony Boadle and Tim Dobbyn)

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