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Oberstar: Mass Transit Got the Shaft to Make Room For Tax Cuts

I wondered last week why the $825 billion House stimulus bill gave the short end of the stick to mass transit, despite vows from President Obama and other Dems to wean the country off its obsession with gas-guzzling car travel. After all, the House bill contains only $10 billion for transit compared with $30 billion for road-building -- a $20 billion-plus cut from the infrastructure stimulus proposal put forth last month by Rep. Jim Oberstar (D-MN), chairman of the House transportation panel.

It looks like Oberstar himself shed some more light on the question two days ago, while Washington was in the thick of inauguration fever. In a speech to the U.S. Conference of Mayors, Oberstar explained why ground-breaking infrastructure projects got sliced: to make room for tax cuts. Here's how he put it:

That is why we set forth this $85-billion initiative from our committee. It's been reduced in the final going. We expect that it'll come out somewhere around $63 billion, but $30 billion for highways.

The reason for the reduction in overall funding -- we took money out of Amtrak and out of aviation; we took money out of the Corps of Engineers, reduced the water infrastructure program, the drinking water and the wastewater treatment facilities and sewer lines, reduced that from $14 billion to roughly $9 billion -- was the tax cut initiative that had to be paid for in some way by keeping the entire package in the range of $850 billion.

But I'll say that our portion is the one that really creates the jobs. Our portion of it is the one that's going to put people to work because unlike anything else, these jobs can't be outsourced to Bangalore, India.

Trading high-speed rail for more tax cuts? Hmmm ...


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It also goes against the exact auto industry the Big 3 Bailout is trying to save. Remember the talk of the failing of the Big 3 would cost America 5M jobs...

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More sausage being made.

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True, this is sausage being made- but not that Transportation has been majorly sliced off, will it make it back in? I think probably not.

Oberstar's assessment is disappointing and probably right on the money. I wonder the good Oberstar could have done in a position like Sec. of Transportation, instead of Re-thug LaHood?

In total agreement that a major push for rail would be an excellent source of jobs. Disappointing- but I'll hold out hope that this sausage will still have some tasty bits.

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Oberstar's claim that roadbuilding is where the jobs are created is wrong. or at the very least open to serious dispute.

See this -www.transact.org/library/factsheets/transportation%20and%20jobs.doc

Besides, if the administration is serious about a green economy, we need MORE transit - both intercity AND intracity - not more sprawl-inducing highways. (not to mention - esp in light of Pres Obama's move to rein in lobbyists - a lot of backroom dealing by the hugely powerful road builders lobbies).

I hope there's a large and visible movement to oppose this.

They want to pull money out of the stimulus for tax cuts - then take it out of the highway side of the equation, not out of transit!

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I agree, I think this is crap and that mass transit should be in there. If you check Whitehouse.gov, I no longer see addressing sprawl as a priority either. I've already emailed the White House, any joiners?

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Another available course of action -- Transportation For America.

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I thought Oberstar was referring to rail, not roads, as the job creator. Rail creates quite a few jobs, definitely more than roadwork, if I remember the stats correctly.

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Okay, no rail stats found. However, Transportation makes 19% more jobs than highway/road/bridge work, which I believe is what Oberstar was referring to.


Please keep the bridge funding- as a Minnesotan, we DESPERATELY need it. How many bridges have closed in MN this year? 5? 6? 120 needed to be replaced by 2018. Ugh!

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I'm not understanding why they wouldn't just leave it in at full funding? Who set the $850B ceiling? I know they liked having the symmetry of $550B of spending and $275B in tax cuts, but that's an artificial limit that's been set. Why not add it back in?

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Indeed, I wonder if LaHood is behind this, or perhaps more correctly, his lack of being behind this-- is behind this.

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Obama has to ween himself off of bipartisanship for the mere sake of bipartisanship. Krugman and others have argued pretty convincingly that tax cuts will have little stimulative effect. Thus, including tax cuts in a stimulus package is pure politics - a way to get some rethugs on board.

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This bill in its current form is a travesty for the future of transportation.

Mass transit (rail, light rail, subway and streetcar) should be a top funding priority. If they want to repair bridges and existing roads, fine. But NEW highway construction is a road to nowhere. It only encourages sprawl and has no future in a post-oil economy.

Thanks so much for covering this, Elana and TPM.

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Intuitively, if people don't have work and thus don't have income, reducing the rates at which their non-income might have been taxed at is hard to call a "stimulus".

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Over at Open Left, they're saying that mass transit funding may increase.

And of course we're already hearing talk about raising the $850 billion ceiling. So this is still in flux, and it's probably time to hit the phones.

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Boy o boy, I hope Chris Bowers is right on this one. Thanks for posting the link. Nice to see broadband and my Sen. Klobuchar leading the fight (I'm so hot then cold with her- I swear).

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You know, as pre-emptive attacks go, this is a pretty good one. There's enough of a public disdain for tax cuts that pretty much anything that got cut to make room for them has a fighting chance of being restored.

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Public disdain for tax cuts - really? I find that hard to believe.

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Look at recent polling data on whether people think that the stimulus should be composed of tax cuts or infrastructure spending. You might be surprised.

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that would show they prefer one for the other, not a disdain.

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Senator's who have supported rail legislation in the past (give them a call):

Sens. Sherrod Brown (D-OH), Bob Casey (D-Pa.), Hillary Clinton (D-N.Y.), Chris Dodd (D-Conn.), Dianne Feinstein (D-CA), Daniel Inouye (D-HI), Frank Lautenberg (D-N.J.), Joe Lieberman (I-CT.), Bob Menendez (D-N.J.), Chuck Schumer (D-N.Y.), Olympia Snowe (R-ME), Debbie Stabenow (D-MI), and Sheldon Whitehouse (D-R.I.), John Kerry (D-Mass.), Arlen Specter (R-Pa.)

New York City Mayor Michael Bloomberg and Pennsylvania Governor Ed Rendell both voiced their support for the high-speed rail initiative.

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Also, Olympia Snowe, Kay Baily Hutchinson, Conrad Burns, and even Trent Lott (the last two now irrelevant) also have supported rail legislation in the past- to give this more bi-partisan flavor. Odd they'd cut something that both sides support to some degree.

This link provides a good list of Senators who voted for and against High-Speed Rail in 2001.

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Putting together a good transportation stimulus package ain't rocket science. If Obama means what he says about attacking the power of entrenched interests, then he needs to fight for a package that follows these simple rules:

1. No more than 50% of the total for roads and bridges -- and 100% of that should be dedicated to the repair of existing infrastructure. No new road capacity or new bridges to nowhere.

2. Fifty percent or more for rail/transit/bike/ped investments that will give working families the option of getting from Point A to Point B without a car.

These simple rules will create more jobs, reduce household expenses of middle income families, reduce CO2 emissions and keep American energy dollars at home.

The only interests who would oppose this common sense approach are the asphalt lobby, state highway department bureaucrats and stuck-in-the-1950s members of Congress.

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"2. Fifty percent or more for rail/transit/bike/ped investments that will give working families the option of getting from Point A to Point B without a car."

I think people are ready for it. I know I am (car-owner, half-urban/half-rural existence here).

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Actually, I think the idea is that this package's main goal is economic stimulus, not an infrastructure package. New rail is difficult to plan and build, basically it's taking what is in America a dying industry and trying to revive it.

Don't get me wrong, I think this would be a good and forward-looking thing to do. But it would involve a great deal of red tape, community committees, debate over how and when and where, etc.

Meanwhile, there are thousands of road projects that have been ready to go for a long time, and have been held up because of funding (anyone out there who lives in Chicago can attest to the moonscape that are Chicago roads, someone was mentioning Minnesota, etc. etc.) These things will pump money into people's pockets and companies' balance sheets immediately, and therefore will have a larger immediate effect on the economy.

Usually, I'm against tax cuts and agree that they don't have as stimulative effect...in THEORY and in GENERAL. It's not like I'm disagreeing with Krugman...except for this particular case.

That's because some of these tax cuts adress the specific crisis we're in in a very clever way. There is a provision in the tax code currently that allows businesses to write the last 2 years' worth of losses off of their taxes. The tax cut extends that to 5. With the rash of bankruptcies coming down the pike (Circuit City is just the tip of the iceberg, and 30,000 jobs were lost when they liquidated) I have a feeling that although these cuts might not stimulate the economy, they might keep businesses from being sucked into the black hole of bankruptcy and therefore will keep more jobs.

God I almost sound like a Republican, I know...but its just that sometimes I think people forget that the aim of this plan is not infrastructure building or environmental improvement, but stimulating the economy. People, mostly in good faith, are looking for the best ways to do this.

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You are an excellent spokesperson for the status quo. Let's "stimulate the economy" in the short term by continuing to spend taxpayer dollars on roads that maintain our dependence on foreign oil and encourage climate change pollution. And when gas goes back up to $4 a gallon, middle income families will have no choice but to pump a large part of their paycheck into the gas tank.

Why can't we be smarter than that, for once?

Why can't we understand that the best thing for the economy is long-term investment that makes us economically and environmentally healthier?

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I agree fully with you, maybe that didn't come across. In any other time, this would be the priority, and the best long-term strategy.

I think, however, that most economists have made it pretty clear that the crisis we're in is severe and deep, and is trumping most other priorities at the moment, and that is goal of the bill (at the expense of a smarter, long-term strategy)

Whether you think the cost of trading long-term strategy for short-term stimulus is worth it is a matter for debate, with arguments to be made on both sides.

I just wanted to make sure the terms of that debate are clear, and it's not just a matter of a bunch of stupid people not being able to see what's best for the future and clinging to the 'status quo', as you seem to want to frame it.

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I would only note that the Obama folks are no longer calling it a stimulus bill, but an economic recovery package -- precisely because the crisis is so severe and deep. Congress quickly passed a garden variety stimulus package last year, to almost no effect. This time the focus shouldn't be on a quick jolt to stimulate immediate consumption, but rather on a significant investment in productive capacity that will both create jobs now and provide long-term returns for decades to come. And for that reason, investment in new road capacity is not a wise course of action. But that's how we've done it since Eisenhower's interstate highway act of 1956 and the status quo is a difficult thing to change.

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Point taken.

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By the way, I don't understand why you put "stimulate the economy" in scare quotes in your response.

Are you implying that you doubt these projects will actually stimulate the economy? In that case, there is a lot of econometric evidence that says they do which I could link you to. Or is it that you think stimulating the economy should not be a priority at all? Do you not believe that we're in a crisis, or not think it's severe enough to justify an attempt at stimulus?

I'm not trying to be snarky, just want to know where you're coming from

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For reasons just stated above, I think we need to do more than just stimulate the economy. The crisis calls for more than that.

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You make some very good points. People talk about building rail with an "If you build it they will come" reverence. Well, the government has been pouring money into Amtrak for years and except for a few lines, mostly they haven't come. This is not to say that investing in rail is a bad idea. It's just that it has to be carefully targeted to areas that it won't become a white elephant. That takes a lot of study time, and time is something we don't have a lot of right now with regard to an economic package. If there are good rail line plans ready to go, then by all means fund them, but I don't think there are that many that are close to being ready. Rail investment can always come later, and I'd rather put it off than create billions of dollars of rail lines to haul empty cars around at 200 mph.

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First, the topic of this thread was originally mass transit, which is within cities, not intercity rail -- like Amtrak -- which is between cities. There are many cost-effective investments in mass transit that can quickly create jobs and reduce both oil dependence and global warming pollution.

Second, Amtrak hasn't succeeded because "free market" conservatives have demanded that it eventually operate without government subsidies while forcing it to compete for passengers with cars and airlines -- which are heavily subsidized. We, as a nation, need to decide which modes of transportation are most desirable from an economic, social and environmental standpoint and adopt public policy that supports those modes.

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Your first sentence is wrong. Oberstar mentions Amtrak specifically in his statement. But let's talk about mass transit, and let's address your next sentence:

There are many cost-effective investments in mass transit that can quickly create jobs and reduce both oil dependence and global warming pollution.

Where? It's easy to say "there are many"...tell me where? You can't just hire a bunch of people, give them some railroad ties and rail and say "go build mass transit". It's not that simple. You have to decide where the ridership is. You have to figure out how it intersects with the existing system. You have to plan where the stations should be. You have to study how it fits with existing roadways so as not to create deadly "traps" where you will have train-car collisions. You have to consider locations of firehouses and hospitals so as not to impede emergency equipment. You have to do environmental impact studies. The planning phase alone will take 2-3 years, minimum. Then you have to acquire the land - another 2-3 years. I doubt there are more than a tiny number of major projects in which you could put a shovel into the ground in less than 5 years. Hardly the economic stimulus we need now.

Lastly, Amtrak hasn't succeeded because no one in their right mind is going to spend 12 hours on a train from NY to Chicago when you can fly in less than 2. Even with high speed rail the trip would still be 6 hours or more. There are only a small number of corridors where high-speed rail makes sense.

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The price signals also need to be right. And yes, that means gas prices that look more like Europe and Japan than like Iran, the Arabian Peninsula and Venezuela. That means gas taxes, the revenues of which go to fund mass transit and yes, intercity rail. Any federal subsidies for Big Oil need to go bye bye. Ditto for air transport, which is fantastically destructive in terms of GHG emissions and other, um, "externalities".

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You have to owe taxes before you can write anything off them.
If you're operating at a loss already, your EBITDA is already negative.
This will not help you a single iota, as it doesn't address payroll taxes.

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Point taken, if you're operating at an absolute loss this is true. But I think you'd be surprised at how many balance sheets I see of companies who have a positive EBITDA but are extremely cash-strapped. I'd still rather see direct government expenditures as a stimulus, but as tax cuts go, these aren't horrible.

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You guys are talking like rail transit is a matter of moving people. But what about goods? It's environmentally and costwise a lot cheaper to move a lot of goods off trucks onto rail lines for goods moving over a certain distance (I don't recall what the actual mileage is). More goods by rail means less trucks and less air pollution from trucks and reduced costs. That alone makes rail transit look awfully good.

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Are you guys afraid that whatever doesn't go into the stimulus package will never be addressed ever again?

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Regarding transportation policy, yes.

The surface transportation bill is due for reauthorization this year. This is a major chance to shift priorities away from an almost exclusive focus on roads to create a more balanced transportation system. But if the economic recovery bill is larded with road spending and short on transit/bike/ped, then the bill could be delayed indefinitely and the old spending patterns could be frozen in place for several years to come.

We need to get this right.

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I'm afraid that tax cuts have poor stimulative effect compared to many other forms of spending, mass-transit among them.
To butcher a phrase - they fall under the heading of spending not wisely, but too well.

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I just hope any new high-speed rail project is not the clusterfuck that the Acela was.

http://www.nytimes.com/2005/04/24/national/24acela.html

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In the midst of this discussion, it's worth remembering what Obama said during the general election campaign. He said middle class tax cuts were part of his agenda. Well, here we are.

There is going to be a stimulus bill. Obama promised tax cuts. Like it or not, the stimulus bill needs to have tax cuts in it to get anywhere in the Senate. Moreso, Obama wants the stimulus bill to pass with more than a bare majority and that means buying off the GOP with tax cuts.

The merit of tax cuts as the most efficient means of spurring economic activity is certainly debatable. As with others, my strong preference would be for improvements in mass transit and rail, as well as power generation and distribution. All that said, it shouldn't surprise anyone that we're talking about tax cuts instead.

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Not a good sign of brilliant decisions to come. How am I going to spend my tax refund? Bank it in preparation for paying increased taxes on behalf of banks that were too big to fail, banks I would never have considered using. Shoot, my bank is so small that it doesn't even have ATM services. So, how much will the shipping and handling costs be for taking the money from me so that I can give it back?

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End the filibuster. Period. It is absurd that at a time of such great crisis a minority composed of idiots can block what needs to be done.

The transportation issue is obvious. Repair roads and bridges, yes. Build mass transit which, in addition to providing jobs, vastly improves productivity and reduces carbon emissions. This shouldn't even be subject to debate.

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Question, how much money can be spent on mass transit within the next 18 months. Right of way procurement takes years.

The economy of the future is going to be based on fiber optics and alternative energy production. The road building is nice, but we really ought to focus on buying things that are actually going to be primary to economic recovery.

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There's another side to the transit issue. Lots of us are using it now, and it's really overcrowded.

I get crammed into the 6 train in Manhattan every morning, and things are so tight that I'll be physically touching three or four people as I ride to work. We need more trains running down the track. That doesn't take more infrastructure, it just takes more money to pay people to drive them, and to do the extra maintenance on trains that MTA already owns. Because they used to run more trains down the track, and they stopped because of budget constraints. Mostly due to a shrinking tax base because our hometown industry, finance, melted down. Because, you know, the free market solves all problems. That's why we gotta give the market more money, in tax breaks. So it will solve our problems.

It's easy to talk about mass transit, but if this is really what society wants average people to do, service has to be something a normal person would be willing to put up with.

But I guess if those finance folks get their tax breaks, they'll be more likely to hire cars and drivers, and that will open up space for the rest of us on the subways. Right? Just gotta wait for that trickle down to hit.


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I've never heard anything other than that the lex avenue line is saturated with trains at commuting hours, which is why the second avenue project (definitely infrastructure) is so crucial. I personally believe there are some ways throughput could be increased on existing lines, but it's not as simple as paying more people to drive the trains. You're probably feeling more crowded lately because ridership across the system is at a 50-year record.

"they'll be more likely to hire cars and drivers, and that will open up space for the rest of us on the subways. Right? "

This is a joke I guess, but it's important to understand that the amount of travel that personal cars on NYC streets support is nothing compared to the subway, which moves 5 million people each workday. Fluctuations that are proportionally large for the former are practically insignificant for the latter. Anyway Manhattan streets are at their maximum daytime capacity, so there will be no movement in that direction.

You should read Streetsblog and Second Avenue Sagas if you're interested in the policies and politics that affect your subway ride.

http://www.streetsblog.org/
http://secondavenuesagas.com/

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The New York City area has plenty of projects that are "shovel ready", and would soak up every dollar in the mass transit section of the proposed infrastructure program, and then some.
The Second Avenue subway project in New York is a perfect example of a project that has been shovel ready...for decades, and several times over. A bond issue specifically devoted to the Second Avenue subway was passed in the 1950s. The authorities diverted the money to other projects. Construction in disparate segments actually began in the 1970s, and stopped during the city's fiscal crisis of that time. When construction came up on the agenda about a decade ago, the MTA (which runs NYC's transit operations) did all the preliminary work over again FROM SCRATCH--all the easements, the titles searches, the utilities which needed to be relocated, everything (probaby a boondoggle). The Second Avenue Subway has actually been on the boards, in one form or another, for literally a century, to replace the former Second and Third Avenue elevated lines. (NYC actually now has scores of miles LESS rapid transit lines than it did in the 1940s, due to demolition during the past decades of elevated rail lines in Manhattan, Brooklyn and the Bronx.)
A second example: the underground rail freight tunnel between New Jersey and Brooklyn, championed in recent years by Rep. Jerrold Nadler. This project was actually the original raison d'etre for the formation of the NY/NJ Port Authority in the early 1920s, which went on to build auto bridges and tunnels, the former World Trade Center and on and on, but never realized the original project (which is badly needed, economically, environmentally and to reduce road truck traffic).
Third example: the extension of the subway system from Brooklyn to Staten Island. Construction actually began in the 1920s and then placed on the shelf.
Fourth example: the Long Island Rail Road connection from Brooklyn to lower Manhattan.
Fifth example: a project which has just passed enviromental reviews, additional rail tunnels to supplement the dangerously overused Amtrak and New Jersey Transit tunnels between New Jersey and Manhattan.
The Second Avenue subway project is fully planned and shovels are actually turning, in a dilatory manner. If not literally "shovel ready" tomorrow, the other projects I have mentioned could reach that status relatively soon, not years and years from now.
I am certainly not slighting the many meritorious projects from other parts of the country. I am just pointing out some of the most outstanding (and/or egregious) examples of worthy rail infrastructure projects in just one area of the country which need funding (and without massive federal aid, will probably never be realized).
BTW, I just read that under pressure from Sarkozy's government, the Ile de France region, which contains Paris, has approved eighteen rail and light rail projects to be realized in the next seven years. In the area of light rail and rail, "USA" translateds to "NCD" (no can do).

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There are shovel ready or near shovel ready projects for all sorts of things besides wasteful new highway spending. Los Angeles has been slowly trying to revive it's rails in the midst of automobile sprawl, and has projects in various stages included some being worked on as we speak. We also have a backlog of over a billion dollars in needed sidewalk repair, and at the current rate LA invests in sidewalk repair (almost nothing) it would take 69 years to finish the work. There is plenty of work lined up to be done besides highway expansions and bridges to no where. Priority #1 should be fix what is broken down and could hurt or kill people. Then it should be sound long term solutions that build us out of our mess instead of investing in the unsustainable (environmentally and economically) strategies that got us into this mess in the first place.

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The tax cut to the middle class was a promise. It must be kept.

As far as weaning Americans from "gas guzzling" cars, that has many solutions. CNG, compressed natural gas cars and hybrid cars that plug into a solar array are two high technology ways. The electric grid needs to be weaned from coal before plug-in electric cars make sense to the environmental needs. Since Obama says he believes in good science rather than ideology, he will pay attention to good scientists and engineers.

BTW, I have used mass transit. Anything else is better.

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"BTW, I have used mass transit. Anything else is better."

BTW I've driven the 405 freeway in Los Angeles and anything else is better. I've actually also ridden a bicycle illegally on the 10 and 405 freeways at rush hour as well, and it was much faster then the cars and felt safer then Santa Monica Blvd. Also the problem with cars goes beyond gas guzzling, it's a huge land space usage issue in urban areas especially at peak times, and traffic is a nightmare in high populous areas.

Give everyone an electric car and an energy efficient grid, great no exhaust or foreign oil, but what do you do with the traffic jam, where do you park all the cars, and what of the people who can't or don't want to pay for car ownership in the first place. We have an extensive roadway and highway system, it's time for some equity in mass transit.

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High tech isn't going to solve every problem. Cleaner cars are necessary but not enough. Less driving and more transit is imperative. We've done little but build roads since 1956. Let's invest in transit and bike/ped and build out the other half of the transportation system.

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Thousand dollar rebates are going to have minimal, if any, effect on the economy. We need to accept that there is going to be some pain involved with getting this fixed. We have been undermining our economy for a long time; a quick fix isn’t possible. The sad fact of the matter is that much of what is proposed will only pass more debt to our children and grandchildren (something the baby boomer generation has been particularly adept at).
We must address the long-term problems of our economy by building the infrastructure for the future. That infrastructure must include mass transit on a local, state, and national scale.
Everyone says that Americans won’t use trains. Of course they won’t, as long as the trains are inconvenient, rare, and expensive. The taxpayers routinely fund hundreds of billions for the building and maintenance of roads and airports; yet the spending of a small fraction of that on railroads generates much resentment. Why?
High speed rail, with speeds approaching 300 MPH will allow us to travel the country as fast or faster than airplanes (especially if you include the inconvenience involved with getting to the airport, security, getting luggage, etc.). Regional rail should link the cities and suburbs in a convenient manner.
Local lines shouldn’t just run out to the suburbs like the legs of a spider. Instead it should look more like the spider web, and link the suburbs to each other, as well as the city. This would serve everybody, not just the commuters.
Projects such as these would use American-made steel, concrete, and labor (for construction workers of every hue). High speed trains would be a nice contract for any manufacturing company (Boeing, GE, Electric Boat, GM, etc.). And our transportation could be improved in a way that would lessen our dependence on oil, and the countries that produce it.

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