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To Jolt Economy, Obama and Congress Eye Billions in Infrastructure Spending

Posted December 9, 2008

Chicago is the nation's rail hub, boasting 1,200 trains a day, 2,800 miles of track, 78 rail yards, and, often, frustrating and costly congestion. Bottlenecks can be so bad that freight trains, which take two days to make the 2,200-mile trip from the Port of Los Angeles, can spend almost as long inching across the Windy City.

Now, a cash-strapped Chicago program to fix that problem may be an unlikely beneficiary of the nation's troubled economy. It is one of many large infrastructure projects being discussed as a key part of a multibillion-dollar economic stimulus package being assembled in Congress and expected to be approved early in Barack Obama's presidency. The president-elect has vowed to create 2.5 million jobs in two years. His pledge has advisers, congressional leaders, and economists armed with sophisticated computer models wrestling with how to make investments with an immediate payoff in terms of new "made in America" jobs.

The result is shaping up to be a massive infusion for public works projects, reminiscent of efforts following the Great Depression. And it has triggered a lobbying spree as potential recipients extol the advantages of specific projects, whether it be a new Tappan Zee Bridge in New York, a refurbished Interstate 70 to zip motorists across Missouri, or improved port and rail facilities in the San Francisco Bay area.

In Chicago, it's a little-known initiative with a catchy slogan, "Keeping the 'Go' in Chicago," that could gain. Formally the Chicago Region Environmental and Transportation Efficiency Program, or CREATE, it's a public-private partnership that has drawn up $1.5 billion of projects—only a few of which have been completed—to speed up rail traffic and relieve street congestion.

The full recovery package Obama wants will include not only money for infrastructure, his aides say, but also middle-class tax relief and help for struggling states. Its price tag and composition, however, remain under debate. The goal is to spend money quickly to spur aggregate demand—what's spent on goods and services—over the next two years, amid fears of a prolonged recession.

One key voice in what may wind up being a coast-to-coast rebuilding binge is Democratic Rep. James Oberstar of Minnesota, the chairman of the House Transportation and Infrastructure Committee. He is high on CREATE, saying it would unclog a national chokepoint and cut transport costs, traffic delays, and pollution. "Infrastructure," he promises, "is going to be the cornerstone of this stimulus initiative."

Rebuild America. Top Democrats have thrown out numbers as high as $700 billion for the overall package. Oberstar, for his part, just devised a $45 billion proposal called "Rebuild America" to fix roads, bridges, airports, railways, transit systems, wastewater treatment facilities, and the like. It would cover 100 percent of the cost of projects including resurfacing highways, repairing runways, cleaning up brownfields, and sprucing up the National Zoo in Washington. Major beneficiaries would be highways and bridges ($18.25 billion), environmental infrastructure ($9 billion), transit ($6.5 billion), the Army Corps of Engineers ($5 billion), federal buildings ($2.5 billion), rail ($2 billion), and aviation ($1 billion). Priority would be given to "ready-to-go" projects that could award contracts in 90 to 120 days.

Oberstar says his plan would generate $223 billion in economic activity and create or sustain 1.25 million jobs—jobs he says can't be outsourced to call centers in Bangalore, India, and are desperately needed because unemployment among construction workers has soared to more than 1 million.

Obama also met with the nation's governors, who are touting $136 billion in potential projects, though only $57 billion of those projects could break ground within 120 days. At the same time, the U.S. Conference of Mayors is pushing a slate of 4,591 infrastructure projects costing $24.4 billion. And at the American Association of State Highway and Transportation Officials, John Horsley says there are even more that are ready to go. "These aren't a gleam in someone's eyes," he says. "These are projects that are engineered, planned, and have gone through a systematic selection process."

Obama transition officials have made it clear to Horsley and others that pork, however, is a no-no. As one Capitol Hill Democrat puts it, "We need something that's stimulative and that produces jobs right now and leaves us with a stronger economy down the road. We're not building 'Bridges to Nowhere.' "

Watchdogs are skeptical. "We're staring down the barrel of a trillion-dollar deficit in the current fiscal year," says Steve Ellis of Taxpayers for Common Sense, who questions the wisdom of bailing out states by supersizing the national debt. It's also unclear whether GOP lawmakers will sign on. "Folks are hurting," says the top House Republican, Ohio's John Boehner. "But the American people know that more Washington spending isn't the answer." Whether he hops on board the train or not, federal dollars—and carloads of them—are about to leave the station.