Ports-to-Plains Alliance Webinar 113012

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Jack Schenendorf, Ports-to-Plains Alliance Transportation Consultant, in Washington will address the following topics:

The 2012 elections, the politics of 113th Congress, and the new leaders handling transportation.
Fiscal cliff: how bad is it and what is likely to happen?
Transportation's fiscal cliff: what are we going to do about it?
MAP-21 implementation and reauthorization in 113th Congress.

Jack Schenendorf’s practice concentrates on transportation and legislation with a particular focus on legislative strategy, legislative procedure, and the federal budget process. For nearly 25 years, Mr. Schenendorf served on the staff of the Committee on Transportation and Infrastructure of the U.S. House of Representatives. He was Chief of Staff from 1995 to 2001.

Jack represents the Ports-to-Plains Alliance in Washington, DC. In addition he has represented Associated General Contractors, American Association of State Highway and Transportation Officials, Association of Equipment Manufactures, United Airlines and others

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Ports-to-Plains Alliance Webinar 113012

  1. 1. Beyond the Elections: Looking ForwardHow Is the Future of Transportation Stacking up? Ports-to-Plains Alliance Webinar November 30, 2012
  2. 2. Four-Part Presentation• Election Analysis• The Fiscal Cliff• Transportation’s Fiscal Cliff• Transportation Agenda—Lame Duck & 113th Congress 2
  3. 3. Election Analysis 3
  4. 4. Executive Branch• President Obama Wins• Electoral Vote – Obama: 332 – Romney: 206• Popular Vote – Obama: 51% – Romney: 48%• Mandate??? 4
  5. 5. Exit Polling GenderCategory Obama Romney % TotalMale 45 52 47Female 55 44 53 In which age group are you?Category Obama Romney % Total18-24 60 36 1125-29 60 38 830-39 55 42 1740-49 48 50 2050-64 47 52 2865 or over 44 56 16 What was the last grade of school you completed?Category Obama Romney % TotalNo high school diploma 64 35 3High school graduate 51 48 21Some college or associate 49 48 29degreeCollege graduate 47 51 29Postgraduate study 55 42 18 5
  6. 6. Exit Polling (cont’d) Age by raceCategory Obama Romney % TotalWhite 18-29 44 51 11White 30-44 38 59 18White 45-64 38 61 29White 65+ 39 61 14Black 18-29 91 8 3Black 30-44 94 5 4Black 45-64 93 7 4Black 65+ 93 6 1Latino 18-29 74 23 4Latino 30-44 71 28 3Latino 45-64 68 31 3Latino 65+ 65 35 1All other 67 31 5 Gender by raceCategory Obama Romney % TotalWhite men 35 62 34White women 42 56 38Black men 87 11 5Black women 96 3 8Latino men 65 33 5Latino women 76 23 6All other races 66 31 5 6
  7. 7. Exit Polling (cont’d)2011 total family income:Category Obama Romney % TotalUnder $30,000 63 35 20$30,000 - $49,999 57 42 21$50,000 - $99,999 46 52 31$100,000 - $199,999 44 54 21$200,000 - $249,999 47 52 3$250,000 or more 42 55 4How often do you attend religious services?Category Obama Romney % TotalMore than once a week 36 63 14Once a week 41 58 28A few times a month 55 44 13A few times a year 56 42 27Never 62 34 17ReligionCategory Obama Romney % TotalProtestant 37 62 29Catholic 50 48 25Mormon 21 78 2Other Christian 50 49 23Jewish 69 30 2Muslim - - 1Other 73 24 7None 70 26 12 7
  8. 8. Exit Polling (cont’d) Population of areaCategory Obama Romney % TotalOver 500,000 69 29 1150,000 - 500,000 58 40 21Suburbs 48 50 4710,000 - 50,000 42 56 8Rural 37 61 14 Gender by marital statusCategory Obama Romney % TotalMarried men 38 60 29Married women 46 53 31Not married men 56 40 18Not married women 67 31 23 Are you currently married?Category Obama Romney % TotalYes 42 56 60No 62 35 40Married with childrenCategory Obama Romney % TotalMarried with children 45 54 27All others 53 45 73 8
  9. 9. U.S. Senate• Dems Strengthen Control – Many thought Reps would gain seats, possibly recapturing control of Senate• 112th Congress – Dem: 53* – Rep: 47• 113th Congress – Dem: 55* – Rep: 45 * Includes 2 Independents (112th: VT, CT) (113th: VT, ME) 9
  10. 10. U.S. Senate (cont’d)• How emboldened / assertive will Senate Dems be? – E.g., Filibuster reform – ―We’ll force House Republicans to take it.‖• Or will Senate Dems be more cautious, with an eye on 2014? – Dems defending more seats (20 to 13) – Many of the most vulnerable Democratic senators are in some of the most conservative states • Alaska, Arkansas, Louisiana, Montana, North Carolina, South Dakota, West Virginia 10
  11. 11. U.S. House• Reps Retain Control; Dems Gain Seats• 112th Congress – Rep: 242 – Dem: 193• 113th Congress – Rep: 234 – Dem: 201• Net Dem Gain of 8 Seats 11
  12. 12. U.S. House (cont’d)• Majoritarian body – Reps should be able to work their will• Key number on partisan votes: – 112th Congress: 24 – 113th Congress: 16• Will President Obama and Senate Dems try to isolate and marginalize House Reps with an eye toward recapturing the House in 2014? Or will the President provide the leadership to bring about bicameral, bipartisan agreements on major issues like the fiscal cliff and long-term budget crisis? 12
  13. 13. House / Senate Turnover 13
  14. 14. Key Changes Re Transportation• Executive Branch – LaHood rumored to be leaving, but he may be around for a while• Senate – Sen. Vitter replaces Sen. Inhofe as Ranking Member on EPW Committee – Sen. Demint replaces Sen. Hutchison as Ranking Member on Commerce Committee• House – Cong. Shuster replaces Cong. Mica as Chairman of T&I Committee 14
  15. 15. The Fiscal Cliff 15
  16. 16. Let’s Start With The Fiscal Context…. 16
  17. 17. Running High Current Deficits 17
  18. 18. Long-Term Spending Skyrockets….Source: Concord Coalition 18
  19. 19. As A Result, Federal Debt Explodes… 19
  20. 20. Debt Is A Security Issue As Well 20
  21. 21. To Summarize……..• We have short and long-term fiscal challenges – Short-term: High current deficits Growing debt and debt service – Long-term: Unsustainable entitlements Continued High Deficits Mushrooming debt and debt service costs• The time to act is now – Increase revenues OR cut spending OR both• Fixing the short and long term problems is often referred to as the ―Grand Bargain‖ – Partial fix: ―Down payment on Grand Bargain‖ – Two pieces: Entitlement reform and tax reform 21
  22. 22. Grand Bargain Is Critical In the Words of the Concord Coalition…“If we fail to quickly address the growing imbalance betweenfederal commitments and available revenues, we will squander theonly opportunity to get our finances in order before the aging ofAmerica makes our fiscal situation far more difficult. Doing sowould be to ignore every principle of public finance, generationalequity, and long-term economic stewardship.Ultimately, the choice rests with us. We can demand that ourleaders undertake the kinds of reforms, including long-termentitlement reforms, that are needed to put the budget on asustainable trajectory -- and face up to the required sacrifice. Orwe can continue to pretend that our choices have no consequences-- and let our children pay the price in lost opportunities, lower livingstandards, and a less safe and secure place in the world.” 22
  23. 23. The Risk of Fiscal Crisis “Rising Debt increases the likelihood of a fiscal crisis during which investors would lose confidence in the governments ability to manage its budget and the government would lose its ability to borrow at affordable rates. -Doug Elmendorf, Director of the Congressional Budget Office “Our national debt is our biggest national security threat.” -Admiral Mike Mullen (ret.), Chairman of the Joint Chiefs of Staff “One way or another, fiscal adjustments to stabilize the federal budget must occur … [if we don’t act in advance] the needed fiscal adjustments will be a rapid and painful response to a looming or actual fiscal crisis.” -Ben Bernanke, Chairman of the Federal Reserve23
  24. 24. Now To The Fiscal Cliff… 24
  25. 25. What Is The Fiscal Cliff?• Tax Inceases (effective January 1, 2013) – Expiration of Bush tax cuts ($156 billion) – Expiration of payroll tax holiday ($125 billion) – No patch for Alternative Minimum Tax (AMT) ($88 billion) – Expiration of business expensing and other ―tax extenders‖ ($88 billion) – New health care taxes ($36 billion) – Estate tax increase ($10 billion)• Spending Cuts (effective January 2, 2013) – Sequestration--$1.2 trillion over 10 years – $110 billion cut in FY 2013, applied uniformly across accounts • From failure of Super Committee—considered ―too draconian‖ to take effect • $55 billion defense spending • $55 billion non-defense spending 25
  26. 26. ―Fiscal Cliff‖ In Perspective• Also, overall Federal spending still increases in FY 2013 – Sequester simply reduces the size of the increase 26
  27. 27. Why Is Action On Fiscal Cliff Needed…. • Economy is fragile • Combination of big tax hike and deep spending cuts could push economy into recession • Unemployment could exceed 9 percent 27
  28. 28. But What Will Really Happen If We Go Over The Fiscal Cliff?• Nothing dramatic on day one, at least in theory*• Congress could fix in early 2013, with tax changes retroactive to start of year• *Psychology / Planning could cause problems regardless• Who gets blamed politically? 28
  29. 29. Lame Duck Options• Grand Bargain – Sets federal budget on long-term, sustainable course – Addresses tax reform (additional revenues) and entitlement reform (reduced benefits) – Replaces across-the-board sequestration with more targeted cuts• Grand Bargain Lite – Puts in place enforceable targets and process for Grand Bargain in 2013 – Either ―kicks can down road‖ on fiscal cliff or makes minor adjustments (e.g., more revenue from rich, more targeted cuts instead of sequestration)• Down Payment on Grand Bargain – Simpson-Bowles kinds of reforms / more revenue from rich / replace sequestration• Kick can down road plus – Extend everything a few months – More revenue from rich• Kick can down road – Extend everything a few months – Will President sign bill extending Bush tax cuts for rich?• Go over fiscal cliff – Act early in 2013 29
  30. 30. Transportation’s Fiscal Cliff 30
  31. 31. MAP-21• Reauthorized program through 9/30/2014• Significant policy reforms• Did NOT address long-term financial viability of HTF 31
  32. 32. HTF Financing New HTF Offsets Revenues• Revenue provisions: GF Infusion Rolled Cigarettes – Extends HTF taxes $18.8 billion $0.1 billion • Motor fuel to 9/30/2016 Pension LUST Xfer • Heavy vehicle use tax to 9/30/2017 $2.4 billion Reform $20.3 billion – Transfers $2.4 billion from LUSTTF to HTF – Infuses $18.8 billion in general funds into HTF • $16.6 billion into Highway Account • $2.2 billion into Transit Account• Offsets ($20.4 billion over ten years) – Pension funding stabilization--$20.3 billion over 10 years – Roll your own cigarette tax--$0.1 billion over 10 years 32
  33. 33. Source: AASHTO 33
  34. 34. Source: AASHTO 34
  35. 35. What’s At Stake w/o Increased Investment• Freight transportation will become increasingly inefficient and unreliable• The ability of American businesses to grow, create jobs, and compete in the global marketplace will be undermined• Americans will spend more time stuck in congestion and have greater difficulty reaching job opportunities 35
  36. 36. Options• Additional Revenue For HTF for FYs 2015 – 2018 – General Fund – Motor Fuels Excise Taxes – Other Tax on Oil – Carbon Tax – Production Royalties• Alternative Financing – Tolling – PPPs – VMT Tax – Other 36
  37. 37. Transportation’s AgendaLame Duck & 113th Congress 37
  38. 38. HTF Solvency• Hitch A Ride On Grand Bargain / Fiscal Cliff Deal – Lame duck and/or 2013• Stand-alone effort as part of reauthorization 38
  39. 39. Precedents For Hitching A Ride• President Reagan supported highway user fee increase in lame duck• Highway user fees addressed in previous ―budget deals‖• Simpson-Bowles and Gang of Six proposals addressed HTF revenues 39
  40. 40. 4.3cents The Omnibus Budget Reconciliation Act of 1993 (OBRA 93) increased the gas tax by 4.3 cents per gallon and deposited the increased revenues into the General Fund for deficit reduction purposes. (Clinton) The Taxpayer Relief Act of 1997 redirected these revenues to the HTF effective October 1, 1997. (Clinton)5 cents 2.5 The Omnibus Budget Reconciliation Act of 1990 (OBRA 90) increased the gas tax by 5 cents per gallon, effective 12/1/1990. Half of revenues were deposited in HTF; the other half went to 2.5 deficit reduction. (Bush I) The Omnibus Budget Reconciliation Act of 1993 (OBRA 1993) redirected the deficit reduction portion into the HTF effective 10/1/1995. (Clinton) 0.1 cent The Superfund Amendments and Reauthorization Act of 1986 increased the gas tax by 0.1 cents per gallon, with all of the increased revenues going to the Leaking Underground Storage Tank Trust Fund (Reagan). 5 cents The Surface Transportation Assistance Act of 1982, which was enacted in a lame duck session, increased the gas tax by 5 cents per gallon and deposited the increased revenues into the HTF (Reagan) 1 cent The Federal-Aid Highway Act of 1959 increased the tax by 1 cent per gallon and deposited the increased revenues into the HTF (Eisenhower). 3 cents The Highway Revenue Act of 1956 set the tax at 3 cents and deposited the revenues from the tax into the HTF (Eisenhower).
  41. 41. Implementation of MAP-21• Start of 113th Congress – Assault on contract authority? – Budget cuts as result of sequestration or substitute for sequestration?• Obama Administration implementation of MAP-21 reforms 41
  42. 42. MAP-21 Reauthorization• MAP-21 must be reauthorized in 113th Congress – MAP-21 expires 9/30/2014• Reforms – Has DOT implemented them properly? – Have they worked?• Earmarks back in play? – Bicameral, bipartisan commission?• Financing, financing, financing 42
  43. 43. Competitiveness…Economic Growth…Jobs 43

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