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

1. Beyond the Elections: Looking Forward
How Is the Future of Transportation Stacking up?
Ports-to-Plains Alliance Webinar
November 30, 2012

2. Four-Part Presentation
• Election Analysis
• The Fiscal Cliff
• Transportation’s Fiscal Cliff
• Transportation Agenda—Lame Duck & 113th Congress
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3. Election Analysis
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4. Executive Branch
• President Obama Wins
• Electoral Vote
– Obama: 332
– Romney: 206
• Popular Vote
– Obama: 51%
– Romney: 48%
• Mandate???
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5. Exit Polling
Gender
Category
Obama Romney % Total
Male 45 52 47
Female 55 44 53
In which age group are you?
Category Obama Romney % Total
18-24 60 36 11
25-29 60 38 8
30-39 55 42 17
40-49 48 50 20
50-64 47 52 28
65 or over 44 56 16
What was the last grade of school you completed?
Category Obama Romney % Total
No high school diploma 64 35 3
High school graduate 51 48 21
Some college or associate
49 48 29
degree
College graduate 47 51 29
Postgraduate study 55 42 18
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6. Exit Polling (cont’d)
Age by race
Category Obama Romney % Total
White 18-29 44 51 11
White 30-44 38 59 18
White 45-64 38 61 29
White 65+ 39 61 14
Black 18-29 91 8 3
Black 30-44 94 5 4
Black 45-64 93 7 4
Black 65+ 93 6 1
Latino 18-29 74 23 4
Latino 30-44 71 28 3
Latino 45-64 68 31 3
Latino 65+ 65 35 1
All other 67 31 5
Gender by race
Category Obama Romney % Total
White men 35 62 34
White women 42 56 38
Black men 87 11 5
Black women 96 3 8
Latino men 65 33 5
Latino women 76 23 6
All other races 66 31 5
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7. Exit Polling (cont’d)
2011 total family income:
Category Obama Romney % Total
Under $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 4
How often do you attend religious services?
Category Obama Romney % Total
More than once a week 36 63 14
Once a week 41 58 28
A few times a month 55 44 13
A few times a year 56 42 27
Never 62 34 17
Religion
Category Obama Romney % Total
Protestant 37 62 29
Catholic 50 48 25
Mormon 21 78 2
Other Christian 50 49 23
Jewish 69 30 2
Muslim - - 1
Other 73 24 7
None 70 26 12
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8. Exit Polling (cont’d)
Population of area
Category Obama Romney % Total
Over 500,000 69 29 11
50,000 - 500,000 58 40 21
Suburbs 48 50 47
10,000 - 50,000 42 56 8
Rural 37 61 14
Gender by marital status
Category Obama Romney % Total
Married men 38 60 29
Married women 46 53 31
Not married men 56 40 18
Not married women 67 31 23
Are you currently married?
Category Obama Romney % Total
Yes 42 56 60
No 62 35 40
Married with children
Category Obama Romney % Total
Married with children 45 54 27
All others 53 45 73
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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)
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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
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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
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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?
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13. House / Senate Turnover
13

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
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15. The Fiscal Cliff
15

16. Let’s Start With The Fiscal Context….
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17. Running High Current Deficits
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18. Long-Term Spending Skyrockets….
Source: Concord Coalition
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19. As A Result, Federal Debt Explodes…
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20. Debt Is A Security Issue As Well
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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
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22. Grand Bargain Is Critical
In the Words of the Concord Coalition…
“If we fail to quickly address the growing imbalance between
federal commitments and available revenues, we will squander the
only opportunity to get our finances in order before the aging of
America makes our fiscal situation far more difficult. Doing so
would be to ignore every principle of public finance, generational
equity, and long-term economic stewardship.
Ultimately, the choice rests with us. We can demand that our
leaders undertake the kinds of reforms, including long-term
entitlement reforms, that are needed to put the budget on a
sustainable trajectory -- and face up to the required sacrifice. Or
we can continue to pretend that our choices have no consequences
-- and let our children pay the price in lost opportunities, lower living
standards, and a less safe and secure place in the world.”
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23. The Risk of Fiscal Crisis
“Rising Debt increases the likelihood of a fiscal crisis during which investors would
lose confidence in the government's 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 Reserve
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24. Now To The Fiscal Cliff…
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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
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26. ―Fiscal Cliff‖ In Perspective
• Also, overall Federal spending still increases in FY 2013
– Sequester simply reduces the size of the increase
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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
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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?
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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. Transportation’s Fiscal Cliff
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31. MAP-21
• Reauthorized program
through 9/30/2014
• Significant policy reforms
• Did NOT address long-term
financial viability of HTF
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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
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33. Source: AASHTO
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34. Source: AASHTO
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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. 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. Transportation’s Agenda
Lame Duck & 113th Congress
37

38. HTF Solvency
• Hitch A Ride On Grand Bargain / Fiscal Cliff Deal
– Lame duck and/or 2013
• Stand-alone effort as part of reauthorization
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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. 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. 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
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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
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43. Competitiveness…Economic Growth…Jobs
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