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[09/14/1994 - 01/02/1996]
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122241550
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[09/14/1994 - 01/02/1996]
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Presidential Electronic Mail from the Automated Records Management System (ARMS)
Automated Records Management System (ARMS) Email from the Office of Policy Development (OPD) Bucket
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Withdrawal/Redaction Sheet
Clinton Library
DOCUMENT NO.
SUBJECT/TITLE
DATE
RESTRICTION
AND TYPE
001. email
Sharon A. Barkeloo to Alan B. Rhinesmith and Kenneth Schwartz at
09/16/1994
b(6)
20:38:59.09. Subject: Transit FFGAs. [partial] (1 page)
COLLECTION:
Clinton Presidential Records
Automated Records Management System [Email]
OPD ([NEXTEA or ISTEA])
OA/Box Number: 250000
FOLDER TITLE:
[09/14/1994 - 01/02/1996]
2015-0463-F
ab1503
RESTRICTION CODES
Presidential Records Act - [44 U.S.C. 2204(a)]
Freedom of Information Act - [5 U.S.C. 552(b)]
P1 National Security Classified Information [(a)(1) of the PRAJ
b(1) National security classified information |(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRA|
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA]
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information |(a)(4) of the PRAJ
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advice between the President
information |(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRAJ
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy [(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRAJ
b(7) Release would disclose information compiled for law enforcement
purposes |(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed
b(8) Release would disclose information concerning the regulation of
of gift.
financial institutions [(b)(8) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(9) Release would disclose geological or geophysical information
2201(3).
concerning wells [(b)(9) of the FOIA]
RR. Document will be reviewed upon request.
RECORD TYPE: PRESIDENTIAL (EXTERNAL MAIL)
CREATOR: [email protected]@INET@EOPMRX
CREATION DATE/TIME:14-SEP-1994 15:33:48.56
SUBJECT: Lets quit screwing around
TO: deich_m
(deich_m@A1@CD)(OPD)
READ:14-SEP-1994 15:33:48.63
TEXT:
I finally figured it out. We are small thinkers.
If you want something really big, lets put together a package to reauthorize
ISTEA in the 1996 Budget. Thats where the money is.
You then have a the opportunity to annouce a program that is more than $150
billion dollars over the next 6 years.
You stick in a gas tax increase to keep the HTF going, add some of the
reforms we have come up with to increase private interest, propose a budget
act amendment to free the trust fund so you can spend what you take in (ala
Air Traffic Control Corp. + Every highway guy, transit dweeb, governor,
mayor, and authorizing Committee member will love us.), maybe throw a bone to
Pena on the NTS -- while cutting down on the time DOT has to screw it up.
Our little Bank isn't going to change anything and won't have much of a
political BOOST.
Think about it.
ATTACHMENT 1
ATT CREATION TIME/DATE:14-SEP-1994 15:31:00.00
ATT BODYPART TYPE:D
TEXT:
RFC-822-headers:
Received: from gatekeeper.eop.gov by PMDF.EOP.GOV (PMDF V4.3-10 #6879)
id <[email protected]>; Wed, 14 Sep 1994 15:30:17 -0400 (EDT)
Received: by gatekeeper.eop.gov (5.65/fma-120691); id AA06820; Wed,
14 Sep 94 15:30:13 -0400
Received: by mail02.prod.aol.net (1.38.193.5/16.2) id AA13731; Wed,
14 Sep 1994 15:30:12
X-Mailer: America Online Mailer
END ATTACHMENT 1
RECORD TYPE: PRESIDENTIAL (EXTERNAL MAIL)
CREATOR: [email protected]@INET@EOPMRX
CREATION DATE/TIME:15-SEP-1994 12:42:06.14
SUBJECT: Re: RE: Lets quit screwing ar...
TO: DEICH_M
(DEICH_M@A1@CD)(OPD)
READ:15-SEP-1994 12:42:06.21
TEXT:
Not really. THe point is we're just spending the ISTEA money that would get
spent anyway, but it sounds real big. While we are at it we do some actual
reform.
ATTACHMENT 1
ATT CREATION TIME/DATE:15-SEP-1994 09:01:00.00
ATT BODYPART TYPE:D
TEXT:
RFC-822-headers:
Received: from gatekeeper.eop.gov by PMDF.EOP.GOV (PMDF V4.3-10 #6879)
id <[email protected]>; Thu, 15 Sep 1994 08:58:12 -0400 (EDT)
Received: by gatekeeper.eop.gov (5.65/fma-120691); id AA10661; Thu,
15 Sep 94 08:58:08 -0400
Received: by mail02.prod.aol.net (1.38.193.5/16.2) id AA27025; Thu,
15 Sep 1994 08:58:07 -0400
X-Mailer: America Online Mailer
END ATTACHMENT 1
Withdrawal/Redaction Marker
Clinton Library
DOCUMENT NO.
SUBJECT/TITLE
DATE
RESTRICTION
AND TYPE
001. email
Sharon A. Barkeloo to Alan B. Rhinesmith and Kenneth Schwartz at
09/16/1994
b(6)
20:38:59.09. Subject: Transit FFGAs. [partial] (1 page)
COLLECTION:
Clinton Presidential Records
Automated Records Management System [Email]
OPD ([NEXTEA or ISTEA])
OA/Box Number: 250000
FOLDER TITLE:
[09/14/1994 - 01/02/1996]
2015-0463-F
ab1503
RESTRICTION CODES
Presidential Records Act - |44 U.S.C. 2204(a)|
Freedom of Information Act - [5 U.S.C. 552(b)|
P1 National Security Classified Information [(a)(1) of the PRA]
b(1) National security classified information |(b)(1) of the FOIA]
P2 Relating to the appointment to Federal office [(a)(2) of the PRAJ
b(2) Release would disclose internal personnel rules and practices of
P3 Release would violate a Federal statute [(a)(3) of the PRA|
an agency [(b)(2) of the FOIA]
P4 Release would disclose trade secrets or confidential commercial or
b(3) Release would violate a Federal statute [(b)(3) of the FOIA]
financial information [(a)(4) of the PRAJ
b(4) Release would disclose trade secrets or confidential or financial
P5 Release would disclose confidential advice between the President
information |(b)(4) of the FOIA]
and his advisors, or between such advisors [a)(5) of the PRA]
b(6) Release would constitute a clearly unwarranted invasion of
P6 Release would constitute a clearly unwarranted invasion of
personal privacy |(b)(6) of the FOIA]
personal privacy [(a)(6) of the PRA)
b(7) Release would disclose information compiled for law enforcement
purposes [(b)(7) of the FOIA]
C. Closed in accordance with restrictions contained in donor's deed
b(8) Release would disclose information concerning the regulation of
of gift.
financial institutions |(b)(8) of the FOIA]
PRM. Personal record misfile defined in accordance with 44 U.S.C.
b(9) Release would disclose geological or geophysical information
2201(3).
concerning wells [(b)(9) of the FOIA]
RR. Document will be reviewed upon request.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Sharon A. Barkeloo (BARKELOO_S) (OMB)
CREATION DATE/TIME:16-SEP-1994 20:38:59.09
SUBJECT: Transit FFGAs
TO: Alan B. Rhinesmith
(RHINESMITH_A) (OMB)
READ:19-SEP-1994 09:45:13.18
TO: Kenneth L. Schwartz
(SCHWARTZ_K) (OMB)
READ:17-SEP-1994 08:55:09.95
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:17-SEP-1994 10:49:01.84
TEXT:
[001]
(b)(6)
Since DOT persists in making the argument that they have no choice
but to sign the FFGAs that ISTEA tells them to sign, it follows
that they should issue all of the FFGAs that ISTEA directs DOT to
issue (up to about 38 additional FFGAs). The FFGAs should state
that they are being issued in response to a statutory requirement
and do not assure that any request for funds will ever be included
in Administration budget requests, or appropriated by Congress.
Based on the minimal performance measurement information I have
been able to piece together despite the less-than-collegial
behavior of FTA and DOT policy officials, I recommend that the
1996 budget request for new starts be roughly the following:
1996
Los Angeles (No. Hollywood & Mid City)
$160M
New York-Queens
$76M
Portland-Westside
$108M
Atlanta-North
$44M
Baltimore-Light Rail
$41M
New Jersey Urban Core (Secaucus)
$78M
San Jose Tasman
$40M
Chicago-Circulator
$50M
Houston-Regional Bus
$53M
S. Boston-Piers (Central Artery only)
$0-$32M *
Pittsburgh-Busway
$21-$31M *
Dallas-So. Oak Cliff
$0-$34M *
$671-$747M
* Depending on 1995 conference.
In addition, I recommend that we add the transit new start program
to OMB's high risk list based on (1) the fact that it is starting
more projects than it has resources to complete in a timely
manner, leading to escalating costs and waste of resources; (2) it
cannot (or will not) provide decisionmakers in the Executive
Branch or on the appropriations committees with adequate
information on the cost-effectiveness of projects seeking funds
(as evidenced by DOT's response on Los Angeles-East Central),
arguably contributing to waste of resources; and (3) forecasts
provided by project sponsors to justify the project are often
inaccurate, leading to poor information, leading to waste of
resources; and (4) it is building some projects that just don't
make sense.
That's my recommendation, for what it's worth.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Kenneth L. Schwartz (SCHWARTZ_K) (OMB)
CREATION DATE/TIME:17-SEP-1994 09:02:53.30
SUBJECT: Transit New Starts
TO: Christopher F. Edley, Jr
(EDLEY_C) (OMB)
READ:17-SEP-1994 15:49:30.12
CC: Alan B. Rhinesmith
(RHINESMITH_A) (OMB)
READ:19-SEP-1994 10:20:45.61
CC: Michael D. Deich
(DEICH_M) (OPD)
READ:17-SEP-1994 10:50:44.22
TEXT:
Obviously, Chris, we have considerable frustration building up in
Sharon. Not unusual. As an examiner, there are usually many more
"defeats" than "victories." Along with Rhino, I will try to calm
the waters.
By the way, I agree with Sharon that, taking DOT's argument to its
logical conclusion, the clear implication is that we would have to
fund all of the ISTEA new starts.
ATTACHMENT 1
ATT CREATION TIME/DATE:16-SEP-1994 19:26:00.00
ATT BODYPART TYPE:B
ATT CREATOR: Sharon A. Barkeloo
ATT SUBJECT: Transit FFGAs
ATT TO: Alan B. Rhinesmith
(RHINESMITH_A)
ATT TO: Kenneth L. Schwartz
(SCHWARTZ_K)
ATT TO: Michael D. Deich
(DEICH_M)
TEXT:
With the latest inane missive from Louise Stoll, I have reached my
limit. In case anyone is waiting for a suggestion from me as to
what we should do next (although it is not at all clear to me that
there is much interest in my opinion), I offer the following.
Since DOT persists in making the argument that they have no choice
but to sign the FFGAs that ISTEA tells them to sign, it follows
that they should issue all of the FFGAs that ISTEA directs DOT to
issue (up to about 38 additional FFGAs). The FFGAs should state
that they are being issued in response to a statutory requirement
and do not assure that any request for funds will ever be included
in Administration budget requests, or appropriated by Congress.
Based on the minimal performance measurement information I have
been able to piece together despite the less-than-collegial
behavior of FTA and DOT policy officials, I recommend that the
1996 budget request for new starts be roughly the following:
1996
Los Angeles (No. Hollywood & Mid City)
$160M
New York-Queens
$76M
Portland-Westside
$108M
Atlanta-North
$44M
Baltimore-Light Rail
$41M
New Jersey Urban Core (Secaucus)
$78M
San Jose Tasman
$40M
Chicago-Circulator
$50M
Houston-Regional Bus
$53M
S. Boston-Piers (Central Artery only)
$0-$32M *
Pittsburgh-Busway
$21-$31M *
Dallas-So. Oak Cliff
$0-$34M *
$671-$747M
* Depending on 1995 conference.
In addition, I recommend that we add the transit new start program
to OMB's high risk list based on (1) the fact that it is starting
more projects than it has resources to complete in a timely
manner, leading to escalating costs and waste of resources; (2) it
cannot (or will not) provide decisionmakers in the Executive
Branch or on the appropriations committees with adequate
information on the cost-effectiveness of projects seeking funds
(as evidenced by DOT's response on Los Angeles-East Central),
arguably contributing to waste of resources; and (3) forecasts
provided by project sponsors to justify the project are often
inaccurate, leading to poor information, leading to waste of
resources; and (4) it is building some projects that just don't
make sense.
That's my recommendation, for what it's worth.
END ATTACHMENT 1
Clinton Presidential Records
Automated Records Management System
[EMAIL] and Tape Restoration Project [Email]
This is not a presidential record. This is used as an administrative
marker by the William J. Clinton Presidential Library Staff.
This marker identifies a responsive email, already made available
within another collection.
Collection: 2007-0659-F
Bucket: OPD
Creation Date: 1994-09-19
Subject: draft talking points for Rivlin/Hatfield phone call
Creator: Sharon A. Barkeloo BARKELOO_S OMB
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Sharon A. Barkeloo (BARKELOO_S) (OMB)
CREATION DATE/TIME:20-SEP-1994 09:04:59.71
SUBJECT: Edley talking points for call to Louise Stoll
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:20-SEP-1994 09:32:13.55
TEXT:
PRINTER FONT 12_POINT_COURIER
Transit Full Funding Grant Agreements
Talking points for 9/19/94 Call to Louise Stoll
?
Green light to issue these six FFGAs, assuming the
Department can fund them within its outyear BA and outlay
planning targets:
FFGA
Amount
Atlanta-North
$298M
Baltimore-Light Rail extensions
$85M
Chicago-Central Circulator
$250M
New Jersey Urban Core
$412M
Houston Regional Bus
$500M
Pittsburgh Busway to Airport Phase 1
$97M
?
Los Angeles - I am disappointed that the Department could
not provide better information on the cost-effectiveness of
the Los Angeles East Central-to-Lorena segment. I had
promised to get back to the Director with some additional
analysis, so I still need to talk to her about this project.
[BACKGROUND NOTE TO CHRIS: Although the April 1994 Section
3(j) report to Congress indicated that the entire East/West
Corridor project had a $9-$10 cost per new rider trip, that
estimate is five years old. A more recent estimate (which
has not yet been made public, and would not have to be made
public until February 1995) is $26/new rider trip for the
East Central Corridor, a 12-station line. The shorter
segment we are being asked to commit to fund (the first four
stations of the East Central Corridor) is likely to have a
cost per new rider trip that is lower than $26. DOT has
responded to you that it is unable to estimate how much
lower it is. The way we left it with the Director was that
we would get back to her with better information on the
cost-effectiveness of this project, but that it was probably
a political necessity.]
?
Boston - political decision.
[NOTE TO CHRIS: A maximum of $32 million is needed to
construct the portions of the transitway project that are
common elements with the Central Artery project. This $32
million funding need would be reduced by the amount provided
in 1995 conference. The House earmarked $48 million for the
South Boston Piers project in 1995, but the Senate provided
nothing. This project's estimated $10 cost per new rider
trip is based on possibly optimistic assumptions of future
development in the South Boston Piers area. The downtown
Boston office market was quite strong during the 1980's,
leading to interest in developing neglected areas peripheral
to the Central Business District (CBD), such as the South
Boston Piers area. The timing and intensity of development
projected for this area may be uncertain due to: (1) current
high vacancy rates and real estate market trends. Although
vacancy rates are coming down in Boston as a whole, they are
not declining in the South Boston Piers area. (2) The land
in the Piers area is being broken into small parcels and
developed into warehouses. (3) The construction of the
Central Artery highway project will temporarily cut the
Piers area off from the rest of the CBD and turn it into a
construction zone for the next 10 years. These three
factors suggest that the dense development projected by the
MBTA may occur later than the MBTA anticipates, which argues
for delaying the transit project.]
?
Portland-
Hillsboro - With an estimated cost per new trip of
$75, it would be very difficult to justify this extension,
and any effort to do so would significantly reduce our
credibility. Our General Counsel advises me that the ISTEA
earmark is not legally binding. Also, this project is not
considered necessary to Congresswoman Furse's re-election.
?
Caveats - A green light for the six FFGAs is based on the
following:
1) The individual FFGAs should avoid promising year-by-year
amounts beyond 1996. Instead, say "up to" certain amounts.
2) The FFGAs should state that the Administration cannot
guarantee that the President's Budget will be able to "make
the project well" in the event Congress fails to appropriate
the requested FFGA amounts. This gives grantees fair
warning and gives us more flexibility to deal with budget
crises.
3) Finally, I just want to remind you of the need to
adhere to the Department's outyear BA and outlay planning
targets.
[BACKGROUND NOTE TO CHRIS - The Department's budget request
does NOT meet the outyear planning targets. It exceeds the
target for outlays by $1 billion in 1997, $800 million in
1998, and $740 million in 1999.]
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Sharon A. Barkeloo (BARKELOO_S) (OMB)
CREATION DATE/TIME:20-SEP-1994 14:44:11.73
SUBJECT: Stoll reply to Edley
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:20-SEP-1994 15:31:41.18
TEXT:
Louise's reply is inserted into the text of Edley's e-mail message
to her (after the first 3 sentences of Edley's message).
ATTACHMENT 1
ATT CREATION TIME/DATE:20-SEP-1994 11:32:00.00
ATT BODYPART TYPE:B
ATT CREATOR: Christopher F. Edley, Jr
ATT SUBJECT: Stoll reply
ATT TO: Alan B. Rhinesmith
(RHINESMITH_A)
ATT TO: Sharon A. Barkeloo
(BARKELOO_S)
ATT CC: Kenneth L. Schwartz
(SCHWARTZ_K)
ATT CC: Margaret R. Shaw
(SHAW_M)
TEXT:
somewhat garbled by INTERNET:
END ATTACHMENT 1
ATTACHMENT 2
ATT CREATION TIME/DATE:20-SEP-1994 11:29:00.00
ATT BODYPART TYPE:E
ATT CREATOR: Stoll
ATT SUBJECT: Re[2]: FFGAs
ATT TO: Edley
(EDLEY_C@AI@CD)
TEXT:
It worked.
Tried to return your call last night. Sorry to have missed you.
I am trying to coax better numbers out of FTA re L.A.- will let you know
results later today. Thanks for Boston. The calls made to OMB about Portland
were initiated by Portland's delegation, alerted by Portland's lobbyists,
alerted to "trouble" by the grantee after FTA's regional office called the
grantee to obtain additional information to assist us in our decision making
process here. We are coordinating all grant and FFGA announcements with the
White House, via our congressional affairs office, and have put an extra burden
of doing it according to the rules" on the relevant parties. Hopefully there
will be no glitches. Cheers. Louise
We are very disappointed in FTA's inability to reestimate the Los
Angeles cost per rider. I don't know that Rivlin will be willing
to go forward using the stale (and high) $26 figure. Don't you
have a capability to guesstimate a new number?
Otherwise, you still have a red light on Portland. Boston answer
will be positive -- question is how big, and Alice will decide
today.
IT IS CRITICAL THAT ROLLOUT BE COORDINATED WITH WHITE HOUSE. Are
you absolutely sure that news of decisions will not leak from FTA?
My understanding is that FTA already has gone to Congress
(directly or indirectly) to apply pressure on OMB re: Portland.
This is high stakes. So what is the plan to control the
information?
***
On the broader issue. I suggest we negotiate the content of a
memo that will clarify the respective roles and principles
regarding new starts. We have a disagreement about the
appropriate criteria to be applied to ISTEA projects. We have a
disagreement about timing of FFGA decisions in relation to the
budget process. We have a disagreement, still it seems, on the
applicability of the Executive Order. I'll ask my folks to engage
DOT/FTA on the content of such an "understanding." The ad hoc
quality of all this is problematic, to say the least.
ciao
END ATTACHMENT 2
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Daniel J. Corbett (CORBETT_D) (OMB)
CREATION DATE/TIME:26-SEP-1994 11:10:18.69
SUBJECT: SENATE APPROVES HIGHWAY BILL; STAGE SET FOR CONFERENCE WITH
TO: Sharon A. Barkeloo
(BARKELOO_S) (OMB)
READ:26-SEP-1994 11:12:45.24
TO: Alice R. Davis
(DAVIS_A) (OMB)
READ:26-SEP-1994 13:04:56.97
TO: Alan B. Rhinesmith
(RHINESMITH_A) (OMB)
READ:26-SEP-1994 12:02:25.02
CC: Kenneth L. Schwartz
(SCHWARTZ_K) (OMB)
READ:26-SEP-1994 12:52:06.14
CC: Michael D. Deich
(DEICH_M) (OPD)
READ:26-SEP-1994 12:12:22.44
CC: Christopher F. Edley, Jr
(EDLEY_C) (OMB)
READ:26-SEP-1994 16:01:11.74
CC: Margaret R. Shaw
(SHAW_M) (OMB)
READ:26-SEP-1994 13:19:11.90
CC: CBertram
([email protected]@INET@EOPMRX)
READ:NOT READ
TEXT:
SENATE APPROVES HIGHWAY BILL; STAGE SET FOR CONFERENCE WITH
HOUSE
In an unexpected move, the Senate approved on voice vote Sept. 23
legislation to designate the National Highway System.
The Senate's easy approval of S 1887 now clears the way for a conference
with the House, which passed its own NHS bill (HR 4385) earlier this year.
Although there are vast differences in the two bills, proponents of the NHS
are now encouraged that Congress may succeed in designating the 159,000-mile
system before adjourning for the year.
The Senate action came shortly after Environment and Public Works
Committee Chairman Max Baucus (D-Mont) was able to win a unanimous consent
agreement from lawmakers barring any amendments to the NHS bill when it was
brought up on the floor. Baucus repeatedly had said he would not go to
conference with the House with anything other than a "clean" NHS bill.
Baucus won the unanimous consent agreement after he convinced Sen. John
Danforth (R-Mo) earlier in the week to drop his "hold" against the bill.
Danforth had been seeking to attach a highway safety measure to the NHS bill,
but reportedly decided to instead amend it onto another bill.
In itself, designation of the NHS is not considered particularly
controversial, given that the system is largely made up of existing primary
roads, including the interstates. Once approved by Congress, the NHS will be
given priority in federal funding decisions.
However, while the Senate legislation simply designates the system, the
House measure includes numerous changes to surface transportation policies and
a long list of highway demonstration projects. A conference to reconcile the
two bills is expected to be contentious, aides said.
Projects Key Issue In Conference
If conferees are able to work out their differences by the time Congress
adjourns, lawmakers will have designated the NHS almost a year before the
deadline they gave themselves under the Intermodal Surface Transportation
Efficiency Act of 1991. Under ISTEA, Congress has until September 1995 to
officially designate the system.
However, the Clinton administration and state officials have urged
Congress to act as soon as possible on the measure, saying that delaying
action until next year increases the chance that the deadline will be missed
and billions in highway construction funds will be withheld from the states.
Given that it was brought up under the unanimous consent agreement, the
NHS bill did not generate much debate on the Senate floor. However, when it
was under consideration in the Environment and Public Works Committee, some
lawmakers indicated that they would have liked to have attached their own
highway demonstration projects to the bill. In response, Baucus warned members
that he would only take a "clean" bill to the floor.
Although Baucus managed to pass the bill without add-ons, few observers
believe that senators will not attempt to include their pet projects when the
NHS goes to conference. For its part, the House bill already includes about $2
billion in new highway and transit projects.
Among others, Sen. Harry Reid (D-Nev) is said to have highway projects to
add to the NHS bill. Meanwhile, Sen. Paul Sarbanes (D-Md), chairman of the
Housing and Urban Affairs Subcommittee, is expected to add transit provisions
in the conference (178 DER A-8, 9/16/94).
Besides projects, conferees will have to resolve many other issues,
including the House bill's inclusion of ISTEA technical corrections. Also on
the table will be House provisions that change policies mandating the use of
recycled materials in road pavements and that modify rules on motorcycle
helmet and seatbelt use.
Danforth Finds Another Vehicle
Aides said Danforth had been seeking to attach to the NHS bill other
legislation (S 738) that would establish a program of state grants to
encourage stricter laws on drunken driving, the licensing of teenage drivers,
and repeat traffic offenders. The measure already has passed the Senate but
has not been considered by the House.
However, in recent days Danforth reportedly identified the "one call"
notification bill (S 2101/HR 4394) as another vehicle for his safety
legislation.
The House one-call legislation has been reported from the Energy and
Commerce Committee and is now being considered by the Public Works and
Transportation Committee. Public Works had a hearing on the bill Sept. 22.
In the Senate, the Commerce, Science, and Transportation Committee held a
hearing on S 2101 in August, but so far no other action has occurred on the
legislation.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Randolph M. Lyon (LYON_R) (OMB)
CREATION DATE/TIME:27-SEP-1994 14:28:48.04
SUBJECT: Infrastructure Financing
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:27-SEP-1994 14:33:11.68
CC: Joseph Minarik
(MINARIK_J) (OMB)
READ:27-SEP-1994 14:29:25.39
CC: Ahmad Al-Samarrie
(ALSAMARRIE_A) (OMB)
READ:27-SEP-1994 14:37:39.87
TEXT:
Attached are responses to the three questions raised in your memo.
While these responses reasonably reflect our office's view, they
have not been coordinated with all the interested parties within
OMB so that they cannot be taken as our agency's position. I have
discussed them at some length with Dan Corbett, though, so at
least he's aware of them.
ATTACHMENT 1
ATT CREATION TIME/DATE:27-SEP-1994 13:42:00.00
ATT BODYPART TYPE:p
ATT CREATOR: Randolph M. Lyon
TEXT:
PRINTER FONT 12_POINT_COURIER
MEMORANDUM FOR MICHAEL DEICH
FROM: Randy Lyon
SUBJECT: Infrastructure Investment
(1) What types of infrastructure investments have high returns?
Answer: Certain traffic management practices, such as
computerization of traffic signals and highway repair projects
may have high returns. However, we have not yet been able to
review the studies that support these claims.
o
It is not clear how all key factors are handled by these
studies. For example, highway repairs can create traffic
delays with costs that are significant fractions of
construction costs. If these congestion costs are not
considered, then the total costs of certain options can be
understated; by the same token, longer-lived initial
construction can look more attractive.
o
Also, it is not clear that the high payoff options are in
fact the highest payoff options. For example, while it may
appear beneficial to build all interstates to 40-year lives,
it may be even more effective to build only the right-hand
lane to this thickness and to restrict trucks to this lane
except for passing.
o
Certain air-traffic system investments may also be
attractive. For example, should efforts to install wind-
shear radars be boosted? The financing group has avoided
considering direct Federal investments, such as those
affecting aviation.
2. Should the initiative be paid for from existing
infrastructure funds or new funds?
Answer: The initiative should start with existing infrastructure
funds. Finding new funds on either the mandatory or
discretionary sides will be difficult, and it is not clear that
it will be politically more popular than reducing the waste and
low-priority activity in current infrastructure programs.
o
The Washington Post on Monday, September 26, lamented the
waste in the current highway demonstration projects. More
than a quarter of the $352 million in FY 1995 demonstration
funds is going to West Virginia. According to
Representative Wolf (Washington Post, September 27), more
than 30 percent of the demonstration money has gone to West
Virginia over the past five years.
o
The Safe Drinking Water revolving funds appear at first
glance to be a reasonable investment; however, there are
serious questions about whether this is an appropriate
Federal role. Water can easily be priced so that users pay
for the cost of provision. Conversely, there appear to be
only three reasons for Federal subsidies: (1) subsidies
could help low-income communities; (2) subsidies could
offset costs imposed by upstream out-of-state polluters; and
(3) Federal clean water regulations may impose costs upon
water users that are greater than the benefits they receive,
so that the Government has an equity obligation to offset
the regulations' costs. It is not clear that the revolving
fund program is the most effective approach to handling any
of these possible rationales.
o
All of the existing high-return activities involving traffic
management and interstates could be accommodated within
current highway funding. The Government could provide
information about computerizing traffic signals to help
communities see the potential benefits. If interstates do
not receive appropriate priority, this could be addressed
within a transportation reauthorization bill or via other
mechanisms that do not require new money.
3. If it is impractical to reallocate funds, should new money be
gathered for infrastructure projects?
Answer: No.
o
The timing is not right for this. New money should only be
considered with reforms designed to address inefficiencies;
this way the new money could serve as a sweetener to induce
reforms. For example, a gasoline tax hike could be
considered during an ISTEA reauthorization.
o
The types of spending options identified (traffic management
and interstates) could be readily addressed through existing
programs. If these high-
return or national-
interest
programs cannot be accommodated (e.g., because of
inefficiencies at the State and local level), then this is a
further compelling argument for reforms, not new funds.
o
There are many programs looking for offsets now on the
mandatory side. These include: GATT, welfare reform,
extensions of expiring provisions (including the research
and experimentation tax credit and the targeted jobs tax
credit) and, very likely, health care reform. It will be
tough to find offsets in all of these cases.
END ATTACHMENT
I
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Christopher F. Edley, Jr (EDLEY_C) (OMB)
CREATION DATE/TIME:29-SEP-1994 17:59:41.38
SUBJECT: DOT Financing Demos
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:29-SEP-1994 18:03:41.32
CC: LAWRENCE J. HAAS
(HAAS_L) (OMB)
READ:29-SEP-1994 19:02:25.69
CC: Daniel J. Corbett
(CORBETT_D) (OMB)
READ:29-SEP-1994 18:33:07.12
TEXT:
Michael --
May I assume that you will take care of getting DOT an answer on
the question of communications strategy?
Thanks.
ATTACHMENT 1
ATT CREATION TIME/DATE:28-SEP-1994 22:39:00.00
ATT BODYPART TYPE:B
ATT CREATOR: Daniel J. Corbett
ATT SUBJECT: Innovative Financing Briefing
ATT TO: Christopher F. Edley, Jr
(EDLEY_C)
ATT CC: Kenneth L. Schwartz
(SCHWARTZ_K)
ATT CC: Margaret R. Shaw
(SHAW_M)
ATT CC: Alan B. Rhinesmith
(RHINESMITH_A)
TEXT:
This note is to follow up on our Innovative Finance Briefing with
Jane Garvey from FHWA and John Lieber (OST-Policy), among others.
DOT is ready to roll out about 15 or so projects of the 60
projects submitted by the States. The remaining projects need to
progress further, and in some cases, pass environmental review.
DOT is anxious to have the White House make a decision about White
House involvement in any announcement of the projects. If not,
the Secretary is more than willing to do it, but wants to do it
very soon, because some of the projects sponsors are getting very
anxious.
Basically, DOT looked at a variety of their current policies,
regulations, and guidance and used their "test and evaluation"
authority to waive or exempt from the same. They have guaranteed
me that they are not waiving any statutory requirements, including
any budget act constraints.
The kinds of "adjustments or waivers" include a broader definition
of a "tolled" facility that can use the Section 1012 Loan
authority in ISTEA, allowing private sector funds to act as the
match for projects, and increased use of "phased funding" and
"advance construction" authorities to help advance projects
faster.
After the meeting, Michael Deich's cautioned that, if and when,
DOT wants to make some of the waiver changes permanent, we need to
carefully review these for their broader implications.
Dan
END ATTACHMENT
1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Sharon A. Barkeloo (BARKELOO_S) (OMB)
CREATION DATE/TIME:30-SEP-1994 10:18:48.61
SUBJECT: Are you OK with this version of transit FFGA letter?
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:30-SEP-1994 10:19:12.05
TEXT:
PRINTER FONT 12_POINT_COURIER
Honorable Federico Pe?a
Secretary of Transportation
Washington, D.C. 20590
Dear Mr. Secretary:
I would like to share with you some concerns I have about
the Federal Transit Administration's (FTA) program to construct
new transit systems and extend existing systems, commonly known
as "new starts." I am concerned that this program has become
oversubscribed and that expectations have been created among new
start project sponsors that will be difficult to meet in the
current budget environment. I am also interested in ensuring
that the new start program does not unnecessarily constrain the
President's flexibility in formulating future budgets.
As you know, the Intermodal Surface Transportation
Efficiency Act of 1991 (ISTEA) earmarked more funds for transit
new start projects than it authorized. Specifically, ISTEA
earmarked $6.1 billion, but only authorized $5.0 billion for this
purpose. Subsequent annual appropriations action has worsened
this funding shortfall by providing less than the authorized
level and by earmarking funds for projects in addition to those
earmarked in ISTEA. As an example of how severe the funding
shortfall has become, it would require over $7.3 billion in post-
1995 Federal funding to complete just the transit new start
projects that received earmarks in the 1995 appropriations bill,
or are proposed by FTA for Full Funding Grant Agreements (FFGAs).
This does not include many additional new starts that are just
beginning the project development process.
In addition to the risk of limiting the President's future
budget flexibility, the oversubscription of the new start program
also risks wasting resources. If more projects are initiated
than can be adequately funded, available funds would be rationed
among projects, leading, at best, to escalating project costs
and, at worst, to unfinished holes in the ground.
I understand that FTA is aware of the oversubscription
problem and that FFGAs are one tool FTA is using to manage the
problem. Traditionally, FTA has used FFGAs in an attempt to cap
the total Federal contribution to project costs, and provide a
degree of financial stability to project sponsors. Although the
FFGAs are clearly made contingent on the availability of funds,
FTA has understandably made every effort to honor these FFGA
commitments. For example, in the past, the Executive Branch has
viewed FFGAs as a moral commitment to request the funds promised
by the FFGAs.
As part of FTA's strategy to manage the new start program,
our staffs have recently been discussing the issuance or
amendment of nine FFGAs. In the course of these discussions,
disagreements have arisen about (1) the nature of the Department
of Transportation's (DOT) ability to control the issuance of
FFGAs; and (2) the timing of those FFGA decisions in relation to
the budget process.
DOT staff has argued that the Department has no choice but
to issue the FFGAs that ISTEA directs it to issue. Our General
Counsel would not necessarily agree with that interpretation.
This is a key issue which should be resolved before we decide how
best to proceed.
If it is resolved that DOT has no choice but to issue the
ISTEA FFGAs, then it would no longer be possible or desirable to
request funding in the President's Budget for all projects that
have FFGAs. In other words, the FFGA commitment would be
devalued in order to avoid unnecessarily constraining the
President's budget flexibility. One way to devalue the FFGA
commitment is to state in the FFGA that it is issued in response
to statutory direction and does not imply that the funding
"promised" by the FFGA will ever be requested by the President or
appropriated by Congress. By devaluing FFGAs in this manner, we
would fulfill ISTEA requirements (1) without raising false
expectations of future Federal funding among new start project
sponsors; and (2) while still preserving the President's
prerogative to request funding only for those projects that, when
compared to all other competing funding priorities, appear to be
most justified.
Alternatively, if it is resolved that DOT can control the
issuance of FFGAs, then the commitments made in FFGAs would not
need to be devalued. Proponents of this view could argue that
ISTEA established two processes for funding transit new starts
that are not legally binding because they have subsequently been
pre-empted by a third process. The first ISTEA process was the
section 3(i) criteria, which set forth the means by which new
start projects were to be evaluated and selected for funding.
The second ISTEA process was the section 3031-3035 project
earmarks, which pre-empted the section 3(i) project selection
criteria by earmarking all available funds for specific projects.
The third and real process for funding new starts is the annual
appropriations process, which pre-empts the ISTEA earmarks.
Appropriations earmarks are, of course, legally binding, and
there should be no intention of impounding funds that have
actually been appropriated for projects.
The second disagreement between our staffs relates to the
timing of FFGA decisions in relation to the budget process. To
the extent FFGAs are a commitment, legal or moral, real or
perceived, on the part of the Executive Branch to provide future
Federal funding, they must be made through the budget formulation
process. To do anything else would pre-empt the President's
prerogative to make such decisions based on his own priorities
and in full knowledge of the competing Government-wide funding
needs that must be met within the budget caps. Alternatively, if
FFGAs are devalued so that they no longer represent any sort of
commitment on the part of the Executive Branch, then FFGA
decisions could be divorced from the Administration's budget
formulation process.
It is the Administration's responsibility to recommend how
best to manage the new start program and allocate scarce
resources Government-wide. Thus, the Administration's
recommendations, as contained each year in the President's Budget
and FTA's section 3(j) report to Congress, should be based on the
President's infrastructure investment principles (Executive Order
12893) and the priority of new start spending relative to
competing funding needs. While I prefer that transit projects
recommended for funding in the President's Budget correspond to
those projects that have been issued FFGAs, I would not sacrifice
the President's prerogative to make budget decisions for this
goal.
I think the problem of how to manage the transit new start
program warrants our personal attention, and I would appreciate
your thoughts on how to proceed. I believe we should work to
publicize the oversubscription problem, align the expectations of
project sponsors with budget realities, and present a persuasive
case to Congress for how this program should be managed. Absent
improved management, the new starts program is at high risk for
becoming ever more oversubscribed, thereby limiting the
President's flexibility and possibly crowding out higher priority
spending.
I look forward to discussing this issue with you.
Sincerely,
Alice M. Rivlin
Acting Director
cc:
Official file
DO Records
DO Chron
Mr. Miller (2)
Mr. Damus
Mr. Edley
Mr. Schwartz
Mr. Rhinesmith
Ms. Barkeloo
TCJ Front Office
TCJ:SBARKELOO:sb
9/28/94
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Michael D. Deich (DEICH_M) (OPD)
CREATION DATE/TIME:30-SEP-1994 09:09:47.54
SUBJECT: help
TO: Daniel J. Corbett
(CORBETT_D) (OMB)
READ:30-SEP-1994 09:32:45.58
TEXT:
Dan:
would you please fix the attached (put in right numbers; add language about BR
rather than outlays; whatever help you think it needs)? Thanks.
louise promises language sometime today.
michael
ATTACHMENT 1
ATT CREATION TIME/DATE:30-SEP-1994 09:07:00.00
ATT BODYPART TYPE:p
ATT CREATOR: Michael D. Deich
TEXT:
PRINTER FONT 12_POINT_ROMAN
1. THE ADMINISTRATION'S INFRASTRUCTURE POLICIES TO DATE
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
BUDGET POLICIES. Despite very tight budget caps, the Administration has sought significant spending increases for
infrastructure. The Administration's 1995 budget
requested outlays for infrastructure totalling $3.1 billion, or 10
percent, more than 1993 spending levels. As shown in TAB A, the
Administration's budget requests have especially favored transportation
programs: the FY 1995 budget sought a 17 percent increase over FY 1993
outlays (the proposed spending would have supported "full-funding" of
both federal-aid highways and formula grants for transit capital
spending, and would have provided a 17 percent increase in outlays for
aviation). For environmental infrastructure wastewater treatment and
safe drinking facilities -- Administration 1995 Budget requests were
relatively unchanged from 1993 outlay levels. (As part of NAFTA,
however, the Administration sought $116 million to capitalize the North
American Development Bank, which will be instrumental in providing $2 to
$3 billion in environmental infrastructure for the U.S.-Mexico border
region.) The Administration sought a decrease in water resource
programs (e.g., dams, ports and harbors).
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
For FY 1995, the Congress adopted about 50 percent [OMB?] of
the spending increases sought by the Administration for infrastructure
programs. Overall, 1995 spending appropriations were $X billion, or Y
percent, higher than FY 1993 levels. Nonetheless, the Administration
did not achieve "full-funding" of ISTEA -- 1995 highway outlays will be
$X billion less than authorized and transit spending will be $Y billion
less than authorized. Similarly, 1995 spending for both wastewater
treatment and for safe drinking water will be only Z percent higher than
in 1993.
HORIZONTAL _PITCH 14
PRINTER FONT 10_POINT_ROMAN
PROGRAMMATIC REFORMS. In 1993 and 1994, the Administration pursued a number of major programmatic
reforms of federal infrastructure programs. The most
important of these include:
HORIZONTAL PITCH 11
PRINTER FONT 12_POINT_ROMAN
?Reauthorization of the Safe Drinking Water Act (SDWA). The
Administration proposals would [language from EPA].
?Reauthorization of the Clean Water Act. The Administration proposals
would [language from EPA].
?A proposal to restructure the Federal Aviation Administration as a
public corporation. Legislation will be submitted next year.
None of these proposals has been passed by the Congress. Other
Administration proposals/accomplishments related to infrastructure
programs are noted in TAB B [have list from DOT; NEED LIST from EPA,
BUREC, CORPS].
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
LIKELY INITIATIVES FOR 1995. In addition to further work on the legislation noted above,
the Administration is likely to propose or support a number of more limited
programmatic reforms. These include:
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
?Reissuing Executive Order 12803, which would facilitate private
investment in infrastructure by allowing states and localities to sell
certain federally-funded public infrastructure facilities and use the
proceeds to make additional public infrastructure investments (see TAB
C).
?Supporting legislation that would allow States to set up revolving
funds using their Federal highway funds;
?[What will be EPA's agenda?]
END ATTACHMENT 1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Michael D. Deich (DEICH_M) (OPD)
CREATION DATE/TIME: 5-OCT-1994 13:32:39.34
SUBJECT: RE: memo
TO: Christoph P. Bertram
(BERTRAM_C) (OMB)
READ: 5-OCT-1994 15:36:39.20
TEXT:
Chris:
1) FYI, another draft.
2) I share your skepticism about DOT's congestion plan. I wouldn't be surprised
if it was just dropped from the memo. Whatever the outcome, I think that it's
worth the exercise: it should give us ideas that we want to pursue regardless
of whether the larger initiative goes forward.
3) I'd be delighted to lie profusely on your behalf. REmember to use my BIG
TITLE.
ciao.
michael
ATTACHMENT 1
ATT CREATION TIME/DATE: 5-OCT-1994 13:24:00.00
ATT BODYPART TYPE:p
ATT CREATOR: Michael D. Deich
TEXT:
PRINTER FONT 12_POINT_ROMAN
INFRASTRUCTURE FINANCE WORKING GROUP DISTRIBUTION LIST
Name
Agency
Fax
Mike Cook/Michael Deane
EPA
260-1040
Louise Stoll et al
DOT
366-6031
Jane Garvey/Steve Martin
DOT
366-3244
Jack Donahue
DOL
219-8822
Olena Berg
DOL
219-5526
Dan Corbett
OMB
395-4797
Randy Lyon
OMB
395-1151
Mark Mazur
CEA
395-6809
Brad DeLong/John Greenlees
TRS
622-1294
Mozelle Thompson et al
TRS
622-0265
Mitch Rappaport et al
TRS
622-1772
Michael Deich
NEC
456-2223
September 21, 1994
MEMORANDUM FOR INFRASTRUCTURE FINANCE WORKING GROUP
FROM:
Michael Deich
SUBJECT:
Discussion Paper / Next Steps
OMB/agency budget reviews will begin the week of the Oct 24. Those
reviews will be more productive if they are informed by a Deputies'
decision on the issues before our group. Therefore we should plan on
having a Deputies meeting by October 21 at the latest. I recognize that
this deadline may be hard to meet, but I am confident that we can get
there.
Although our group will continue to disagree on policy issues, I trust
that we will be able to define the issues that the Deputies need to
address; identify the policy options reasonably available to the
Deputies; and articulate the arguments for and against each option. I
have attached another partial draft for your consideration. I ask that
you read the draft in a constructive spirit. Please fax and/or call me
by noon Friday with your suggestions for changes in language and/or the
larger structure of the memo. I intend to rewrite the draft over the
weekend. To make this deadline, I especially need to hear from those
who believe that major changes should be made to the draft.
The remaining large holes in the memo will be filled as follows:
? I will provide the missing section on the congestion relief
alternative.
? Dan Corbett will fix Section I and Tabs A-D, which have changed
little since the last draft. Please take a look at those sections
and provide Dan with the info he needs to cleanup the draft.
? I think that the memo would be more helpful to the Deputies if it
ended with a section briefly noting agency views on the major
issues, e.g., whether to have an initiative, if so, of what kind,
etc. Please let me know if you think it would be
possible/helpfül/worth-the-trouble to include such a section.
TOP ALL
*** DRAFT *** Please do not quote or circulate *** DRAFT ***
At issue in this memo is whether the FY 1996 Budget should include
funding for an initiative that would offer a distinctive Clinton
Administration approach to funding infrastructure. This memo evaluates
options that could support three different approaches to an initiative:
A) broad-based support for public-
sector infrastructure investment;
B) support for limited classes of private-
sector infrastructure
investment;
C) an initiative targetted specifically at improving traffic flows in
the most congested areas.
The Working Group is divided on all of the major policy issues raised in
this memo, including whether any initiative is warranted; how best to
achieve the policy objectives of each option; and how any initiative
should be funded.
Section I of this memorandum provides background on the Administration's
infrastructure policies to date. Section II lays out the rationale for
a major new infrastructure initiative in FY 1996. Section III evaluates
three alternative approaches to an initiative, along with a number of
specific policy tools that the Administration might adopt as part of an
initiative. Section IV considers the funding issues that would be
raised by a new initiative.
I. THE ADMINISTRATION'S INFRASTRUCTURE POLICIES TO DATE
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
I.A. BUDGET POLICIES. Despite very tight budget caps, the Administration has sought
significant spending increases for infrastructure. The Administration's 1995 budget
requested outlays for infrastructure totalling $3.1 billion, or 10
percent, more than 1993 spending levels. As shown in TAB A, the
Administration's budget requests have especially favored transportation
programs: the FY 1995 budget sought a 17 percent increase over FY 1993
outlays (the proposed spending would have supported "full-funding" of
both federal-aid highways and formula grants for transit capital
spending, and would have provided a 17 percent increase in outlays for
aviation). For environmental infrastructure -- wastewater treatment and
safe drinking facilities --Administration 1995 Budget requests were
relatively unchanged from 1993 outlay levels. (As part of NAFTA,
however, the Administration sought $116 million to capitalize the North
American Development Bank, which will be instrumental in providing $2 to
$3 billion in environmental infrastructure for the U.S.-Mexico border
region.) The Administration sought a decrease in water resource
programs (e.g., dams, ports and harbors).
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
For FY 1995, the Congress adopted about 50 percent [OMB?] of the
spending increases sought by the Administration for infrastructure
programs. Overall, 1995 spending appropriations were $X billion, or Y
percent, higher than FY 1993 levels. Nonetheless, the Administration
did not achieve "full-funding" of ISTEA -- 1995 highway outlays will be
$X billion less than authorized and transit spending will be $Y billion
less than authorized. Similarly, 1995 spending for both wastewater
treatment and for safe drinking water will be only Z percent higher than
in 1993.
HORIZONTAL PITCH 14
PRINTER FONT 10_POINT_ROMAN
I.B. PROGRAMMATIC REFORMS. In 1993 and 1994, the Administration pursued a number of major programmatic
reforms of federal infrastructure programs. The most
important of these include:
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
?Reauthorization of the Safe Drinking Water Act (SDWA). The
Administration proposals would [language from EPA].
?Reauthorization of the Clean Water Act. The Administration proposals
would [language from EPA].
?A proposal to restructure the Federal Aviation Administration as a
public corporation. Legislation will be submitted next year.
None of these proposals has been passed by the Congress. Other
Administration proposals/accomplishments related to infrastructure
programs are noted in TAB B [have list from DOT; NEED LIST from EPA,
BUREC, CORPS].
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
I.C. LIKELY INITIATIVES FOR 1995. In addition to further work on the legislation noted
above, the Administration is likely to propose or support a number of more
limited programmatic reforms. These include:
HORIZONTAL_PITCH 11
PRINTERFONT 12_POINT_ROMAN
?Reissuing Executive Order 12803, which would facilitate private
investment in infrastructure by allowing states and localities to sell
certain federally-funded public infrastructure facilities and use the
proceeds to make additional public infrastructure investments (see TAB
C).
?Supporting legislation that would allow States to set up revolving
funds using their Federal highway funds;
?[What will be EPA's agenda?]
II. RATIONALES FOR A NEW INFRASTRUCTURE INITIATIVE
An FY 1996 infrastructure initiative would be designed to advance the
economic and political goals of the Administration in three areas.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
II.A. PROGRAMMATIC REFORM. All agencies agree that existing Federal infrastructure
programs could provide better incentives for States and localities to undertake
more efficient infrastructure investments. Areas needing improvement
include:
HORIZONTAL
PRINTER FONT 12_POINT_ROMAN
?Leveraging federal funds by aligning matching rates with project
benefits. Most federal infrastructure programs rely on states and
localities to select the projects to be built subject only to broad
federal guidelines. States/localities generally pay about 20 percent of
the cost on these federally-subsidized projects. Most evidence
suggests, however, that states/localities generally capture far more
than 20 percent of the benefits from these projects. As a result,
states and localities may bear little of the cost of poor decisions. A
higher local share of
project costs would increase incentives for state and local managers to
build only the most efficient projects. A higher local share also would
allow greater "leveraging" of federal funds, so that fewer federal
dollars supported a greater amount of local infrastructure investment.
?Pricing. Efficient project selection is also hampered by the
inability of infrastructure users -- both actual and potential -- to
make known their willingness to pay for new infrastructure facilities.
When prices reflect costs, the strength of demand is a clear signal of
what should be supplied. But the price of infrastructure rarely
reflects its costs, and this valuable source of information about
consumer needs is lost. Current excess consumer demand is based on
below-cost prices, and therefore cannot be taken as a reliable indicator
that services should be expanded.
?Incentives for greater state/local investment. Empirical evidence
suggests that a significant portion of federal infrastructure spending
simply substitutes for outlays that states and localities would have
undertaken in any event. A new federal program could induce a greater
amount of state and local investment by lowering the federal share of
project costs, by targetting spending on areas where spillovers are
greatest [need examples], and by providing open-ended, rather than
capped, subsidies.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
II.B. GREATER TOTAL INVESTMENT. Significant portions of our transportation infrastructure
are in poor physical condition and/or are highly congested. Similarly, EPA
reports a backlog in the investments mandated by the Clean Water Act and
the Safe Drinking Water Act. While some agencies argue that this
"infrastructure deficit" could be solved simply through more efficient
use of existing resources, other agencies argue that total U.S.
infrastructure investment should increase.
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
Evidence about the economic and social returns to further infrastructure
investment is mixed. The economic agencies find little evidence that
across-the-board increases in infrastructure outlays would increase
private sector economic performance. At the same time, all agencies
agree that certain classes of infrastructure spending would probably
have high social rates of return. The best-available evidence indicates
that high-return infrastructure investments include: repair and
reconstruction of urban roads and the construction of new capacity in
the most congested areas; greater capacity at both airports and in the
air traffic control system. EPA's reading of the evidence suggests that
additional investment in water facilities also would have high social
rates of return. The economic agencies, however, believe that higher
rates of return could be found in nonstructural alternatives to water
pollution control.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
II.C. POLITICAL CONSIDERATIONS. During the campaign, the President emphasized the role of public investment
in economic growth. The Administration has continued
to build a public case for the importance of public investment. The
1994 Economic Report of the President, for example, described at some
length why "the Administration believes the United States has
underinvested in its public infrastructure." During the campaign the
President suggested that the
federal government address this underinvestment by spending an
additional $20 billion more each year to capitalize a "Rebuild America
Fund." Although a plan of this scope is not possible in the current
budget environment, a modest initiative still could serve as a
"signature" Clinton Administration initiative defining a new federal
approach to promoting infrastructure investment. Although the Working
Group has done no political vetting of the idea of an FY96 initiative,
we would make the following general observations:
HORIZONTAL_PITCH 1 11
PRINTER FONT 12_POINT_ROMAN_ITALIC
Arguments in favor of an initiative
PRINTER FONT 12_POINT_ROMAN
?
An initiative could reinforce a number of themes of this
Administration:
-promoting economic growth through greater public investment;
-reinventing government, by "leveraging" federal funds with
greater contributions from state and local governments and/or the
private sector;
-catalyzing state and local efforts to rebuild urban America.
?
While the initiatives already proposed by the Administration are
important, they are probably regarded more as routine
reauthorizations of existing legislation than as signature
initiatives of the Clinton Administration.
?
Although infrastructure constituencies are generally willing to
extend a significant measure of goodwill to the President, they
are disappointed by the Administration's inability to deliver the
more expansive agenda advocated during the campaign.
?
Some pension funds would like to support infrastructure through
economically-targetted investments. An initiative could provide
the needed policy tools.
PRINTER FONT12_POINT_ROMAN_ITALIC
Arguments against an initiative
PRINTER FONT 12_POINT_ROMAN
?
Although they seek greater funding for infrastructure, the Rebuild
America Coalition --the principal umbrella group of infrastructure
advocates -- credits the President with preserving and slightly
increasing infrastructure spending at a time of severe budget
constraints.
?
An infrastructure initiative would take budgetary resources and
political capital away from other Administration priorities.
?
Any infrastructure initiative runs the risk of being characterized
as "pork" spending.
III. OPTIONS. The Working Group examined three approaches to an
initiative:
A) broad-based support for public-
sector infrastructure investment;
B) support for limited classes of private-
sector infrastructure
investment;
C) an initiative targetted specifically at improving traffic flows in
the most congested areas.
For each approach, numerous policy tools were evaluated. A
comprehensive list of those options is provided at TAB D. The list
includes both options that the Working Group does not support,
and options that the Group supports but consider of minor importance to
a larger "initiative." TAB E [from TRS please] explains why the Working
Group opposes the many proposals that have been floated for an off-
budget "Bank."
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
III.A. BROAD-
BASED SUPPORT FOR PUBLIC-
SECTOR INFRASTRUCTURE INVESTMENT
HORIZONTAL_PITCH11
PRINTER RFONT 12_POINT_ROMAN
A broad-based initiative would target all transportation and water-
supply facilities now eligible for federal aid. A broad-based program
would address concerns about underinvestment in "public infrastructure"
generally, and would generate the widest support among infrastructure
advocates. A broad-based program also could provide a model to be
emulated when reauthorizing existing infrastructure programs in FY 1996
and FY 1997. On the other hand, a broad-based initiative would run the
greatest risk of being attacked either as unnecessary in a time of
fiscal constraint or, worse, as "pork." In addition, a broad-based
initiative would be less likely to achieve significant economic
efficiencies compared to current law or to a more targetted proposal.
The four options evaluated below are not mutually exclusive, and could
be combined in any fashion. The options would have quite similar
economic effects; they differ principally in the budgetary costs of
providing a given level of subsidy, and in their political
complications.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
III.A.1. CREATE A DIRECT LOAN PROGRAM. Under this option, federal agencies would provide below-market
loans to States/localities. The loan authority available
each year would be allocated to States/localities by formula, just as
most infrastructure grants are currently allocated. Loan recipients
would control project selection, subject only to federal guidelines.
Through these guidelines, the loans could be targetted to as broad or as
narrow a set of infrastructure facilities as desired.
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
?Matching Rates/"Leveraging" -- Providing loans would be economically
equivalent to offering grants with a federal share significantly lower
than the 80 percent share in most current grant programs. The subsidy
provided by loans would vary with the interest rate charged and the
length of the repayment period. Assuming that repayment was limited to
30 years, the loans could be made equivalent to direct grants that
provide a maximum of 50 percent of a project's cost. The lower subsidy
rate implicit in loans would provide states and localities with
incentives to be somewhat more selective in the projects that they
choose to build.
Under current law, the budgetary cost of loans would be the same as
the budgetary cost of economically-equivalent grants. Because loans
would provide a lower subsidy rate, however, they would "leverage"
federal funds more than current grant programs: every dollar in
federal budget outlays for current grant programs yields about $1.20
in associated total public infrastructure investment; every dollar in
federal budget outlays for loans, in contrast, would
be associated with about $2-3 in total infrastructure investment (all
of which might be federal loans).
?Pricing -- Compared to existing grants, loans would provide no added
economic incentive for states to price infrastructure services more
efficiently. At the same time, providing subsidies in the form of loans
might make it easier for localities to overcome the political cost of
paying for infrastructure through user fees. If better pricing were an
important goal of any initiative, however, States/localities could be
required to assess direct user charges on any facilities that are
financed with the loans.
?Incentives for Greater Investment. Unless the loans were targetted or
made open-ended, they would be no more effective than current programs
at stimulating new investment
?Political Considerations -- DOT and EPA believe that infrastructure
advocates would support this option, but only if it were funded from new
resources rather than by reallocating funds authorized for existing
infrastructure programs. In addition, state and local support could be
tempered by a concern that this proposal represented the first step
toward a broader use of loans rather than (higher matching rate) federal
grants. And since federal loans would subsititute in part for tax-
exempt bond financing, the municipal bond industry might not support
this option.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
III.A.2. CAPITALIZE STATE INFRASTRUCTURE BANKS. Under this option, the federal government would
capitalize "State Infrastructure Banks" (SIBs). The SIBs would
operate much like the State Revolving Funds that the federal government
has capitalized for wastewater treatment facilities. SIBs would use
federal funds to make below-market loans and to provide loan guarantees
and other credit enhancements for local infrastructure projects
(alternately, federal grants could be held as a reserve against which
SIBs could borrow the funds that they loan). The SIB would control
project selection, subject only to federal guidelines. As with Option
1, SIB funds could be targetted as broadly or as narrowly as desired.
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
?Matching Rates/"Leveraging" -- Grants could be made to the SIBs with
or without a matching contribution from the states. The incentive
effects of this option depend, however, principally on the extent to
which SIB loans would subsidize local infrastructure. Like direct
federal loans, SIB loans could be made equivalent to a direct grant
covering up to 50 percent of project costs. Unlike a direct federal
loan program, however, a SIB could vary the terms of each loan that it
made. The ability of states to tailor SIB loans to local conditions
might yield efficiency gains marginally greater than those from direct
federal loans.
Grants to SIBs would be scored as a cash outlay in the usual fashion.
The amount of SIB lending that could be supported by these grants
would depend on how aggressively the SIBs sought to leverage the
capitalization grants. If SIBs behaved in the same fashion as most
existing wastewater SRFs, they would simply lend out almost all of
their capitalization grants,
and each dollar in federal budgetary resources would support little
more than one dollar in SIB loans. Past experience also suggests that
some SIBs would use capitalization grants as a reserve to support
further borrowing, in which case each dollar in federal budget
resources could support a larger volume of SIB loans. If SIB grants
were conditioned on the SIBs' achieving a certain leveraging ratio for
their portfolios, SIB grants would "leverage" federal funds to the
same extent as direct federal loans.
?Pricing -- same incentives as with federal loans.
?Incentives for Greater Investment. same incentives as with federal
loans.
?Political Considerations As above, DOT and EPA believe that support
from infrastructure advocates will depend in large measure on whether
SIB grants are offered as a supplement to or substitute for existing
infrastructure programs. State and local officials would prefer this
option to direct loans, for SIBs would give states and localities
somewhat greater control. Compared to a direct federal loan program, a
SIB might be less likely to generate political credit at the Federal
level. A SIB would increase, not threaten, the business of the
municipal bond industry.
HORIZONTAL PITCH 14
PRINTER FONT 10_POINT_ROMAN
III.A.3. CREATE A"TAXABLE INFRASTRUCTURE BOND". Under this option, state and loical governments
would receive a direct federal subsidy for a portion of the
interest that they pay on taxable bonds issued to support specific
infrastructure projects. This subsidy would be a mandatory
appropriation in order to allay issuer concerns that the subsidy might
not continue for the life of the bond. The total subsidy paid out each
year would be capped by limiting the amount of debt eligible for subsidy
each year. Any taxable investor currently purchasing taxable debt
(e.g., individuals, corporations) should be interested in purchasing
these bonds. Taxable bonds could be targetted as broadly or as narrowly
as desired.
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
?Matching Rates/"Leveraging" -- Depending on the interest rate subsidy
provided, taxable bonds could subsidize infrastructure to the same
extent as direct federal loans. The efficiency effects of taxable
interest rate subsidies would be the same as the efficiency effects of
economically-equivalent grants or direct loans. However, the budget
cost of taxable bond subsidies would be lower than the cost of providing
an equivalent subsidy through direct grants or loans. Unlike loans,
which require an up-front appropriation of the present value of the
subsidy offered over the life of the loan, the interest subsidy on a
taxable bond would only require an appropriation each year equal to the
amount of interest paid in that year. Much of the budgetary cost of
taxable bond subsidies therefore would take place outside the budget
window. [need to quantify]
?Pricing -- same incentives as with loans and SIB grants.
?Incentives for Greater Investment. same incentives as with loans and
SIB grants.
?Political Considerations -- Creation of this bond program would appeal
to State and local officials who could issue debt for increased
infrastructure investment. In addition, some pension fund managers may
view this investment vehicle favorably as it would provide a way to earn
taxable returns through investment in public sector infrastructure. The
tax-exempt bond industry, however, would certainly oppose the proposal
as an attempt to undermine the Federal subsidy for tax-exempt debt.
Opposition to a similar proposal in the Carter Administration was
fierce. The potential opposition to this proposal could be lessened if
(1) taxable bond subsidies were allowed only for activities that cannot
now get financing through tax-exempt bonds (i.e., for a limited range of
private sector activities), or (2) the interest rate subsidy on taxable
bonds were significantly greater than that now provided on tax-exempt
bonds.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
III.A.4. CREATE A "TAX-
CREDIT INFRASTRUCTURE BOND". This option would be nearly identical to the taxable bond option in all but its
budgetary effects. Under this
option, State and local governments would issue taxable bonds to support
specific infrastructure projects. The holders of these bonds would
receive a subsidy from the Federal government in the form of a non-
refundable income tax credit. The total Federal subsidy would be capped
by limiting the total amount of tax credit bonds that may be issued by a
State. Any taxable investor currently purchasing taxable debt (e.g.,
individuals, corporations) should be interested in purchasing these
bonds. The tax-credit bonds could be targetted as broadly or as
narrowly as desired.
HORIZONTAL PITCH 11
PRINTER FONT12_POINT_ROMAN
?Matching Rates/"Leveraging" -- Depending on the size of the tax credit
provided, tax-credit bonds could subsidize infrastructure to nearly the
same extent as direct federal loans or subsidized taxable bonds. The
efficiency effects of tax-credit bonds would be nearly identical to
those of economically-equivalent subsidies provided through taxable
bonds, loans and grants. Tax-credit bonds would have the same as the
budgetary cost as taxable bonds, both of which would require fewer
budgetary resources than loans or grants to provide a given subsidy.
Unlike the options considered thus far, however, tax-credit bonds would
show up in the budget not as a direct outlay, but as a revenue loss.
?Pricing -- same incentives as with loans, SIB grants, and taxable
bonds.
?Incentives for Greater Investment -- same incentives as with loans,
SIB grants, and taxable bonds.
?Political Considerations -- Similar to the taxable bond option. The
tax credit bond would appeal to State and local officials who could
issue debt for increased infrastructure investment. The tax-exempt bond
industry, however, would oppose the proposal as an attempt to undermine
the Federal subsidy for tax-exempt debt. As with taxable bonds, the
probability of enactment would increase sharply if the bond were limited
to activities that cannot now be subsidized through tax-exempt bonds, or
if the interest rate subsidy were greater than that now offered through
the existing tax-exemption for municipal bonds.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
III.B. SUPPORT FOR LIMITED CLASSES OF PRIVATE-
SECTOR INFRASTRUCTURE INVESTMENT
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
This approach would focus federal resources on a limited set of private-
sector infrastructure investments. Greater private investment in
infrastructure could lead to more efficient pricing of infrastructure
facilities, thereby giving both private and public managers better
information about where and how much new investment is needed. Private
investment also could provide rivalry for public providers, resulting in
a more rapid adaptation to changes in demand and technology. Finally,
greater private investment would free public resources for other needed
infrastructure projects.
The public sector now owns about X percent of all roads, airports and
mass transit facilities, and about Y percent of all wastewater treatment
and drinking water facilities. Limiting an initiative to private
investments would do little to address the concerns of those who think
that the U.S. has underinvested in public infrastructure. In
particular, the subsidies noted below would only be effective at
stimulating investment in facilities that are more or less already
commercially viable; they would not bring new infrastructure facilities
to low-income areas that cannot now afford to invest.
In theory, all of the options noted above could be used to subsidize
private investment. The additional options noted below are economically
less efficient than those examined above, but they may be politically
easier to achieve.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
I.B.1.EXPAND TAX
EXEMPT BOND SUBSIDIES. State and local governments currently are able to finance public infrastructure projects
with bonds that pay interest
that is exempt from Federal income tax. This ability is constrained for
projects providing significant benefits to private parties (e.g.,
through increased profit-making opportunities). In particular, many
projects providing substantial benefits to private sector project
participants either cannot be financed using tax-exempt debt or else
must be allocated a portion of the State private activity volume cap
(private activity bond issues are annually limited to the larger of $150
million or $50 per State resident).
HORIZONTAL
PRINTER FONT 12_POINT_ROMAN
Under this option, the Administration would seek two changes to tax-
exempt bond law:
?raise the volume cap on tax-exempt private activity bonds;
?allow private activity bonds to be issued for highways and
intermodal facilities, just as such bonds can already be issued
for all other forms of infrastructure.
?Matching Rates/Leveraging" -- The value of tax-exempt financing varies
with At present, tax-exempt financing provides a subsidy to bond
issuers that is economically equivalent to a direct grant for roughly
15-20 percent of a project's costs. Most economists believe that the
budgetary cost of subsidies provided through tax-exempt bonds is higher
than
the budgetary cost of providing an economically equivalent subsidy
through direct spending, i.e., that the benefits of lower interest rates
to issuers are smaller than the Federal revenue foregone through the
grant of tax-exemption. A rough estimate suggests that tax-exempt bonds
provide a subsidy that is worth about 10 percent less than the subsidy
that could be provided with an equivalent amount of budgetary resources
on the direct spending side of the budget. Raising the volume cap would
be a particularly inefficient way to target budget resources new
subsidies to highways and intermodal facilities, for in an effort to
support private investment in roads, it would allow a greater volume of
all private activity bonds.
Despite their inefficiency, tax-exempt subsidies may offer two
political advantages. First, tax-exempt bonds subsidize a relatively
low share of project costs. Second, the tax subsidies would be scored
as revenue losses, rather than direct outlays, which might be
attractive in the current budget climate. Unlike direct subsidies,
which require an up-front appropriation of the present value of the
subsidy being offered, tax-exempt bond subsidies would require budget
resources equal to the annual loss from the increased use of tax-
exempt debt.
?Pricing -- same as options above.
?Incentives for Greater Investment -- For a given cost to the federal
government, tax-exempt bonds provides less subsidy than the options
noted above.
?Political Considerations. Loosening the constraints on tax-exempt
debt would be politically popular. Taken alone, State and local
officials would support this proposal. Unknown how States and
localities would view this option compared to direct spending proposals.
Participants in the tax-exempt bond industry would support the proposal.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
III.B.2. OTHER TAX SUBSIDIES. Under this option, the Administration would seek to provide
new investment tax credits and accelerated depreciation.
HORIZONTAL_PITCH 1
PRINTER FONT 12_POINT_ROMAN
III.B.2.a Investment tax credit for infrastructure -- A tax credit
would be given to private sector investors in infrastructure projects.
In theory the credit could be applied to all infrastructure; in
practice, this type of subsidy appears to be a priority only for
wastewater treatement projects and drinking water projects. This
proposal would essentially reinstate a provision of the tax Code that
was repealed in the 1986 Tax Reform Act, but would limit it to
investment in selected property.
?Matching Rates/"Leveraging" -- Although a tax credit could equal any
specified percentage of the cost of an investment, in practice Congress
usually limits these credits to 5-10 percent of project costs. The
credit would have the same economic and budget effects as a direct grant
of the same amount.
?Pricing -- same incentives as with an equivalent-sized direct grant or
loan.
?Incentives for Greater Investment -- The credit would have the same
effects as an open-ended grant for 5-10 percent of the project costs.
To the extent that these investments are mandated, however, (e.g., some
wastewater treatment and drinking water treatment facilities) there
would be no increase in the aggregate amount of investment. Instead,
the credit would simply change the mix of ownership by making it
relatively more attractive to undertake these investments as private
facilities rather than public projects.
?Political Considerations -- The political acceptability of the
proposal is uncertain. Congress repealed a broader investment credit in
1986 and rejected the Administration's proposal for an investment tax
credit in the deliberations surrounding OBRA 1993. However, this
proposal should generate some support from affected businesses.
III.B.2.b More accelerated tax depreciation for infrastructure
investment -- A more accelerated income tax depreciation schedule would
be applied to selected infrastructure property. As with the ITC, this
option seems to be of interest only to owners of wastewater or drinking
water facilities. The depreciable life of this property would be
reduced from the current levels of 15 or 20 years to a shorter period
(e.g., 7 or 10 years). This proposal would essentially reinstate a
provision of the Tax Code that was repealed in the 1982 Tax Act.
?Matching Rates/"Leveraging" -- More accelerated depreciation would
provide a subsidy that was economically equivalent to a direct grant for
something less than 5 percent of the amount of project costs. For
budget purposes, the proposal would be scored as the annual difference
between depreciation deductions under current rules and those under the
proposed rules multiplied by the investors' marginal tax rates.
Compared to direct grants or loans, therefore, much of the revenue loss
would be scored outside of the relevant budget window.
?Pricing -- same incentives as with an equivalent-sized direct grant,
loan or ITC.
?Incentives for Greater Investment -- same as with an equivalent direct
grant, loan or ITC.
?Political Considerations -- The political acceptability of the
proposal is uncertain. Congress repealed similar depreciation treatment
in 1982, arguing that depreciable lives for income tax purposes should
be at least somewhat tied to economically useful lives. However, this
proposal should generate some support from affected businesses.
Congress appears more willing to adopt accelerated depreciation than
ITC.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
C) TARGETTED CONGESTION RELIEF INITIATIVE. TBA.
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
IV. SHOULD ANY NEW PROGRAM BE MANDATORY OR DISCRETIONARY?
?A mandatory program would provide less Congressional oversight and
afford Congress less control over federal revenues. Moreover,
infrastructure facilities are unlike the "entitlements" that
traditionally make up mandatory programs.
?On the other hand, a mandatory program would have the virtue of being
able to be funded on a PAYGO basis rather than by taking from the
discretionary caps, which are fixed in nominal terms through 1998.
Moreover, a mandatory program would provide more predictable funding
streams, allowing better planning and more efficient resource use at the
local level. Finally, Congressional oversight would be maintained
through routine oversight hearings and the reauthorization process.
TAB A -
-
PUBLIC INFRASTRUCTURE SPENDING
Table I
Administration Budget Requests and Enacted Levels
for Major Infrastructure Categories
($ in billions)
#8
#9
1993
#9
1994
Request
#9
1994
Enacted
#9
1995
Request
#9
1995
Likely
Enacted
$8
#8
Transportation
#9
#9
#9
#9
#9
$8
#8
Highways
#9
(18.0)
#9
(20.3)
#9
#9
(20.3)
#9
$8
#8
Transit
(capital)
#9
(2.6)
#9
(3.3)
#9
#9
(3.8)
#9
$8
#8
Railroads
#9
(.4)
#9
(.4)
#9
#9
(.5)
#9
$8
#8
Air Transport
#9
(7.1)
#9
(7.5)
#9
#9
(8.3)
#9
$8
#8
Water Treatment
and Supply
#9
3.3
#9
3.1
#9
#9
3.3
#9
$8
#8
Water Resource
Development
#9
2.2
#9
2.1
#9
#9
1.6
#9
$8
#8
Other / CDBG
#9
.9
#9
.9
#9
$8
#9
34.4
6#
#9
33.9
6#
31.3
6#
Total
#8
$8
#9
is
6#
The term "infrastructure" refers here transportation, environmental, and
water resources facilities. This definition corresponds to the role of
infrastructure in supporting the national civilian economy, and also to
the areas in which the federal government plays the largest role in
project selection and funding.
Table 2 displays government spending on major infrastructure categories
in 1990. Spending by all levels of government on all forms of
infrastructure totalled $147 billion in 1990. Net of federal grants,
state and local governments spent $110 billion, or X percent of this
total. Of the $36 billion in federal spending, $22 billion was spent in
the form of grants to states and localities (these grants were for
highways, transit, wastewater treatment facilities, and airports).
Direct federal spending in 1990 totalled $14 billion, nearly all of
which was spent on rail, aviation, and water transportation and water
resources (i.e., the Army Corps of Engineers and Bureau of Reclamation).
Much of the $110 billion in state and local spending is financed with
tax-exempt debt. In 1992, states and localities issued more than $78
billion in infrastructure debt; total outstanding municipal debt was
$1.2 trillion at the end of 1992. The federal tax exemption for
interest on state and local debt provides a major subsidy to state and
local infrastructure spending. In 1993, the revenue loss from tax-
exempt debt on infrastructure bonds totalled $X billion.
Table 2
1990 Spending by All Levels of Government for Infrastructure
(1990 $ in billions)
#8
#9
Total
#9
Federal
#9
State and
Local
#9
% of S&L
through
Debt
$8
#8
Highways
#9
62
#9
15
#9
48
#9
$8
#8
Transit (capital)
#9
18
#9
4
#9
14
#9
$8
#8
Railroads
#9
1
#9
1
#9
0
#9
$8
#8
Air Transport
#9
13
#9
?
#9
?
#9
$8
#8
Water Treatment
and Supply
#9
#9
#9
#9
$8
#8
Water Resource
Development
#9
#9
#9
#9
$8
#8
Other
#9
#9
#9
#9
$8
#8
Total
#9
#9
#9
#9
$8
NOTE: NEED TO CHANGE TABLE TO SHOW O&M SEPARATE FROM CAPITAL
TAB B -
-
ADMINISTRATION ACCOMPLISHMENTS IN INFRASTRUCTURE
write-ups on Administration accomplishments. DOT's brief is attached.
TAB C -
-
E.O. 12803: PRIVATIZING PUBLIC INFRASTRUCTURE
One page on the issue, noting that the Deputies will shortly get a
separate decision memo dealing solely with this issue.
TAB D -
-
OTHER OPTIONS CONSIDERED
Side-by-side of all options considered, including those that the Working
Group supports but are not, by themselves, of sufficient weight to be
considered part of a major initiative (e.g., the Baucus bill if problems
with scoring can be worked out); and those that the Working Group
opposes.
END ATTACHMENT 1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Sharon A. Barkeloo (BARKELOO_S) (OMB)
CREATION DATE/TIME: 5-OCT-1994 09:00:20.40
SUBJECT: This is i:\data\ffgaproc.3 (referred to in earlier e-mail)
TO: Michael D. Deich
(DEICH_M) (OPD)
READ: 5-OCT-1994 09:05:02.52
TEXT:
PRINTER FONT 12_POINT_COURIER
Honorable Federico Pe?a
Secretary of Transportation
Washington, D.C. 20590
Dear Mr. Secretary:
I would like to bring to your attention some concerns I have
about the Federal Transit Administration's (FTA) program to
construct new transit systems and extend existing systems, commonly
known as "new starts." I am concerned that this program has become
oversubscribed and that expectations have been created among new
start project sponsors that will be difficult to meet in the current
budget environment. I am also interested in ensuring that the new
start program does not unnecessarily constrain the President's
flexibility in formulating future budgets.
As you know, the Intermodal Surface Transportation Efficiency
Act of 1991 (ISTEA) earmarked more funds for transit new start
projects than it authorized. Specifically, ISTEA earmarked $6.1
billion, but only authorized $5.0 billion for this purpose.
Subsequent annual appropriations action has worsened this funding
shortfall by providing less than the authorized level and by
earmarking funds for projects in addition to those earmarked in
ISTEA. As an example of how severe the funding shortfall has
become, it would require over $7.3 billion in post-1995 Federal
funding to complete just the transit new start projects that
received earmarks in the 1995 appropriations bill, or are proposed
by FTA for Full Funding Grant Agreements (FFGAs). This does not
include many additional new starts that are just beginning the
project development process. This $7.3 billion figure compares with
approximately $3.2 billion that is in the level-funding baseline for
this program over that time period.
In addition to the risk of limiting the President's future
budget flexibility, the oversubscription of the new start program
also risks wasting resources. If more projects are initiated than
can be adequately funded, available funds would be rationed among
projects, leading to escalating project costs and, in the worst
case, to possibly unfinished and unusable projects.
I understand that FTA is aware of the oversubscription problem
and that FFGAs are one tool FTA is using to manage the problem.
Traditionally, FTA has used FFGAs in an attempt to cap the total
Federal contribution to project costs, and provide a degree of
financial certainty to project sponsors. Although the FFGAs are
expressly made contingent on the availability of funds, FTA has
understandably made every effort to honor these FFGA commitments.
In particular, in the past, the Executive Branch has viewed FFGAs as
a moral commitment to request the funds promised by the FFGAs.
To the extent FFGAs are a commitment, legal or moral, real or
perceived, on the part of the Executive Branch to provide future
Federal funding, they must be made through the Administration's
budget formulation process. To do anything else would pre-empt the
President's prerogative to make such decisions based on his own
priorities and in full knowledge of the competing Government-wide
funding needs that must be met within the discretionary budget caps.
Alternatively, if FFGAs are devalued so that they no longer
represent any sort of commitment on the part of the Executive
Branch, then FFGA decisions could be divorced from the
Administration's budget formulation process. As major policy
commitments they would continue, of course, to receive some White
House review.
It is the Administration's responsibility to recommend how best
to manage the new start program and allocate scarce resources
Government-wide. Thus, the Administration's recommendations, as
contained each year in the President's Budget and FTA's section 3(j)
report to Congress, should be based on the President's
infrastructure investment principles (Executive Order 12893) and the
priority of new start spending relative to competing funding needs.
While I prefer that transit projects recommended for funding in the
President's Budget correspond to those projects that have been
issued FFGAs, I would not sacrifice the President's prerogative to
make budget decisions for this goal.
I think the problem of how to manage the transit new start
program warrants our personal attention, and I would appreciate your
thoughts on how to proceed. I believe we should work to publicize
the oversubscription problem, align the expectations of project
sponsors with budget realities, and present a persuasive case to
Congress for how this program should be managed. Absent improved
management, the new starts program is at high risk for becoming ever
more oversubscribed, thereby limiting the President's flexibility
and possibly crowding out higher priority spending.
I look forward to discussing this issue with you.
Sincerely,
Alice M. Rivlin
Acting Director
cc:
Official file
DO Records
DO Chron
Mr. Miller (2)
Mr. Damus
Mr. Edley
Mr. Schwartz
Mr. Rhinesmith
Ms. Barkeloo
TCJ Front Office
TCJ:SBARKELOO:sb
10/5/94
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Christopher F. Edley, Jr (EDLEY_C) (OMB)
CREATION DATE/TIME: 6-OCT-1994 11:55:30.58
SUBJECT: NHS Dead
TO: Michael D. Deich
(DEICH_M) (OPD)
READ: 6-OCT-1994 12:10:51.75
TEXT:
So, we should think about a must-pass NHS bill next year, combined
with ISTEA reauthorization and infrastructure bank.
No reason to think small.
ATTACHMENT 1
ATT CREATION TIME/DATE: 5-OCT-1994 11:28:00.00
ATT BODYPART TYPE:B
ATT CREATOR: Daniel J. Corbett
ATT SUBJECT: NHS Bill
ATT TO: Christopher F. Edley, Jr
(EDLEY_C)
ATT CC: Kenneth L. Schwartz
(SCHWARTZ_K)
ATT CC: Margaret R. Shaw
(SHAW_M)
ATT CC: Alan B. Rhinesmith
(RHINESMITH_A)
ATT CC: Sharon A. Barkeloo
(BARKELOO_S)
ATT CC: Alice R. Davis
(DAVIS_A)
TEXT:
It looks like the NHS bill is dead for this session, unless it
somehow gets resurrected in the lame-duck session.
The Senate refused to go along with any new exempt demos. They
were only willing to have the demos come from within current
apportionments (i.e., earmarked).
In particular, Sen. Moynihan was not willing to have the Maglev
funding rescinded, which was one of the primary offsets for the
new demos.
I will let you know if I hear differently, but DOT staff think it
is dead.
Dan
END ATTACHMENT 1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Daniel J. Corbett (CORBETT_D) (OMB)
CREATION DATE/TIME:12-OCT-1994 07:20:17.23
SUBJECT: Public Works
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:12-OCT-1994 08:11:57.21
TO: Christopher F. Edley, Jr
(EDLEY_C) (OMB)
READ:12-OCT-1994 09:37:38.89
CC: Alan B. Rhinesmith
(RHINESMITH_A) (OMB)
READ:12-OCT-1994 07:45:52.38
CC: Kenneth L. Schwartz
(SCHWARTZ_K) (OMB)
READ:12-OCT-1994 08:12:41.59
CC: Margaret R. Shaw
(SHAW_M) (OMB)
READ:12-OCT-1994 10:10:18.22
TEXT:
See attached.
ATTACHMENT 1
ATT CREATION TIME/DATE:11-OCT-1994 17:06:00.00
ATT BODYPART TYPE:B
ATT CREATOR: Christopher W. Parker
ATT SUBJECT: PUBLIC WORKS PANEL TO CALL FOR WHITE HOUSE INFRASTRUCTURE
ATT TO: Daniel J. Corbett
(CORBETT_D)
TEXT:
PUBLIC WORKS PANEL TO CALL FOR WHITE HOUSE INFRASTRUCTURE
CONFERENCE
An upcoming report from the House Public Works and Transportation
Committee will call for a White House conference to examine the growing
backlog of infrastructure needs and how to finance improvements, Rep. Robert
Borski (D-Pa) said Oct. 6.
Borski, chairman of the Public Works Investigations and Oversight
Subcommittee, said at a hearing that his staff will finalize the report in the
next few weeks, drawing information from a series of hearings on
infrastructure needs that the subcommittee has held during the past year.
An aide to Borski said the report will be finished soon but may not be
released until after the mid-term elections. Among other things, the report is
expected to endorse capital budgeting to facilitate investment in
transportation and other public works projects.
Borski's subcommittee has held several hearings this year on public
investment in infrastructure, focusing in turn on highways, transit, aviation,
and other facilities. At the Oct. 6 hearing, Borski received testimony from
federal and local officials on the effectiveness of the Intermodal Surface
Transportation Efficiency Act (ISTEA) in addressing local needs, particularly
in metropolitan areas.
For his part, Philadelphia Mayor Edward Rendell said that even the higher
funding made possible by the 1991 act is not enough to stop the decline in
public works facilities. "Even with ISTEA, we are not attacking the
infrastructure needs of our nation," he told Borski.
Rendell cited public disinvestment in both transportation and other
facilities, including water projects. And he said Amtrak has suffered for
years from a lack of investment in its capital stock.
More Surface Transportation Funds Being 'Flexed'
The discussion about the inadequacy of public investment in
transportation came amid rumors that the Public Works' main infrastructure
initiative of the year -- the designation of the 159,000-mile National Highway
System (HR 4385) -- would die because of an ongoing squabble of its inclusion
of demo projects (see related report in this section).
Rendell and other witnesses said that although ISTEA provided new
flexibility in the use of federal transportation dollars, even more discretion
may be desirable. Rendell said too often cities do not receive the funding
they need to address their transportation needs.
Rendell cited problems with the Metropolitan Planning Organizations that
were given an increased role in transportation decision-making under ISTEA.
"The MPO basically cannot do anything that the state doesn't want it to do,"
he said, adding that states still have much of the final say over which
projects get funded.
To address the situation, Rendell urged Borski to consider creating
special allocations of surface transportation money that would go directly to
localities. Such proposals have been promoted by other local officials, who
say state governments have too much control over federal highway aid.
"We need to give flex funding directly to cities or metropolitan
areas," Rendell said.
'Flexing' Of Funds Said On The Rise
But Transportation Department officials testifying at the hearing said
there is increasing use of ISTEA's flexible provisions to help urban areas.
Deputy Federal Highway Administrator Jane Garvey said greater use is
being made of the funds available under ISTEA's Surface Transportation Program
and the Congestion Mitigation and Air Quality Improvement Program (CMAQ).
According to Garvey, some $600 million in surface transportation funds
were flexed to transit in fiscal 1994, up from $469 million during the
previous year. Since ISTEA's enactment at the close of 1991, she said, a total
of $1.3 billion in these funds have been flexed to transit.
Meanwhile, states are making greater use of the CMAQ funds, Garvey said.
For example, she said, the obligation rate for the CMAQ program has steadily
risen since ISTEA's enactment, rising from 42 percent in fiscal 1992 to 62
percent in fiscal 1993 to 85 percent last year.
But Garvey also pointed out that highway needs are not being fully met.
According to FHWA, the backlog of needed highway improvements now totals $290
billion.
Garvey declined to say whether states should have a veto over the
decisions of MPOs. Instead, she said it is important that states participate
all through the transportation planning process with MPOs, given ISTEA's
emphasis on coordination between local and state governments.
Deputy Federal Transit Administrator Grace Crunican said she does not
believe that it is appropriate for states to veto MPO decisions, also citing
the act's intent for states to be involved with transportation planning and
project selection much earlier in the process.
END ATTACHMENT
I
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Daniel J. Corbett (CORBETT_D) (OMB)
CREATION DATE/TIME:16-OCT-1994 11:29:52.27
SUBJECT: Program size
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:18-OCT-1994 09:16:37.80
TEXT:
Regarding program size
My rough idea for an initiative is $1 billion per year for 5
years.
This is not based on an analysis of overhead expenses of an SRF,
but a sense of what might be credible.
Given a $27 billion per year tax expenditure and a $34 billion
grant and discretionary spending, anything less than something
with billions per year is just not credible.
If we needed, we could have a program which grows to a billion per
year or more in the future, but a credible initiative must be in
the billions rather than millions if it is going to be a broad
based initiative.
A targeted initiative such as congestion could be much smaller and
could only total to $1 billion initiative over the 5 years,
although it could also be much larger.
I think these size initaitives could be funded through some
combination of the following: ethanol-subsidy phase out, parking
cash-out and the various truck taxes that haven't been changed in
a while. The combination of these can provide PAYGO offsets of $1
billion annually.
A much larger initiative would probably require a gas tax or oil
barrell fee.
A smaller congestion relief/transportation efficiency initiative
could probably be paid for by parking cash-out and changes to
truck taxes, and maybe the diesel fuel tax, but probably dropp the
ethanol-phase out.
If spending cuts are on the table, then I would nominate some of
the following: energy power subsidies such as Bonneville Power,
limitations on obligations of highway demo projects (no
rescissions), discretionary grants generally, FAA grants to
reliever airports.
It may be time to put this type of discussion in the memo, but I
would want to run the language by Edley before putting it in.
I don't want the near-term discussion to focus on how to pay for
the initiative, but I think some of the opposition doesn't believe
there are any credible financing ideas out there. I think the
above are very credible, but come with political costs. What
doesn't?
Hope this is helpful.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Joseph Minarik (MINARIK_J) (OMB)
CREATION DATE/TIME:24-OCT-1994 16:19:53.12
SUBJECT: RE: Beneficiary Pays?
TO: Randolph M. Lyon
(LYON_R) (OMB)
READ:24-OCT-1994 17:14:02.03
CC: Michael D. Deich
(DEICH_M) (OPD)
READ:24-OCT-1994 16:53:33.91
CC: Daniel J. Corbett
(CORBETT_D) (OMB)
READ:24-OCT-1994 16:54:05.33
TEXT:
I don't think this is an obvious call, but I know where I would
come down upon reflection. Further, I think that this kind of
reflection could be good for all concerned.
The object of this process from the beginning was to improve the
allocation of infrastructure spending, rather than to increase the
amount. Pricing was of the essence. There is some difference of
opinion, but Michael seems to believe that the requirement is
necessary to get pricing. If the States would do pricing without
a requirement, then this concession would be meaningless, and
those who are well informed would know that. But if the
concession in fact gives something away, then that something is
the heart of the initiative. If we are willing to give that much
ground even before zero hour, then what does that say about the
proposal? Are we acknowledging that this is really an ISTEA
expansion in reform's clothing? that no one will buy onto our high
ideals, and it is all just a charade?
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Michael D. Deich (DEICH_M) (OPD)
CREATION DATE/TIME:31-OCT-1994 12:04:54.76
SUBJECT: just in case
TO: Daniel J. Corbett
(CORBETT_D) (OMB)
READ:31-OCT-1994 12:17:23.44
TO: Randolph M. Lyon
(LYON_R) (OMB)
READ:31-OCT-1994 12:05:48.27
TEXT:
see attached
ATTACHMENT 1
ATT CREATION TIME/DATE:31-OCT-1994 12:04:00.00
ATT BODYPART TYPE:p
ATT CREATOR: Michael D. Deich
TEXT:
PRINTER FONT 12_POINT_ROMAN
OPTIONS FOR AN FY 1996 INFRASTRUCTURE FINANCING INITIATIVE
During the FY 1996 budget process, the Administration will consider
whether the budget should include new resources to fund an initiative
that would offer a distinctive Clinton Administration approach to
infrastructure. Two issues are before the Deputies:
?
what option or options should be considered during the budget
process?
?
does this memorandum adequately reflect the arguments that should
be made for and against devoting new resources to an
infrastructure initiative?
Section I of this memorandum provides background on the Administration's
infrastructure policies to date. Section II describes baseline
infrastructure policies for 1995. Section III evaluates the option that
the Working Group believes should form the core of any large initiative.
Section IV considers four additional policy tools that the
Administration might adopt either as a complement to the larger
initiative, or as a substitute for it should the Administration wish to
pursue a smaller initiative.
I. THE ADMINISTRATION'S INFRASTRUCTURE POLICIES TO DATE
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
A. BUDGET POLICIES. Despite very tight budget caps, the Administration has sought
significant spending increases for infrastructure. The Administration's 1995 budget
requested funding for infrastructure totalling $34.0 billion. This
represented an 11 percent increase over 1993 spending levels but only a
1 percent increase from the 1994 enacted level.
HORIZONTAL PITCH 11
PRINTER FONT 12_POINT_ROMAN
?The Administration's budget requests (see TAB A) have especially
favored transportation programs: the FY 1995 budget sought an increase
of 3 percent over FY 1994 levels and 15 percent over FY 1993 levels.
The proposed spending would have supported "full-funding" of both
federal-aid highways and formula grants for transit capital spending.
?The Administration's 1995 Budget requests for wastewater treatment and
safe drinking facilities were up 7 percent from 1994 levels and up 5
percent from 1993 levels.HORIZONTAL_PITCH 15
PRINTER FONT 9_POINT_ROMAN
As part of NAFTA, the Administration sought $56 million to
capitalize the first tranche of the U.S. capital contribution to
the North American Development Bank. The NAD Bank will be
instrumental in providing $2 to $3 billion in environmental
infrastructure for the U.S.-Mexico border region.
PRINTER FONT 12_POINT_ROMAN
The Administration had mixed success with its budget requests. Total
1995 appropriations for infrastructure were $33.2 billion, or almost 9
percent higher than FY 1993 levels. FY1995 appropriations for both
wastewater treatment and for safe drinking water were 12 percent higher
than in 1993. However, the Administration did not achieve its goal of
"full-funding" for ISTEA the 1995 highway program level was $1.2
billion less than authorized while transit formula grants were $373
million less than authorized.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
B. PROGRAMMATIC REFORMS. In 1993 and 1994, the Administration pursued a number of programmatic reforms
in federal infrastructure programs. Congress
enacted none of the changes sought by the Administration. The most
important of these efforts included:
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
?Reauthorization of the Safe Drinking Water Act (SDWA) and the Clean
Water Act (CWA). The Administration proposals would have created and
capitalized a "Drinking Water State Revolving Fund" program and expanded
the existing Clean Water State Revolving Fund" program.
?A proposal in the President's 1995 budget to rescind $4.7 billion in
"highway demonstration" projects in order to make available enough funds
to fully-fund the core highway programs authorized by ISTEA.
?A proposal to restructure the Federal Aviation Administration as a
public corporation.
Congress rejected the Administration's proposed reprogramming of highway
funds, and did not complete action on the other Administration proposals
noted above. A comprehensive list of the Administration's
accomplishments related to infrastructure policies can be found at TAB
B.
II. BASELINE INFRASTRUCTURE POLICIES FOR 1995
All agencies agree that the Administration should continue to press the
general themes established during the last two years. Although the
specific legislative strategy would depend on political developments in
coming months, in general the Administration would continue to work on
behalf of the legislative initiatives noted above. In addition, the
Administration would probably propose or support limited programmatic
reforms. These include:
?Reissuing Executive Order 12803, which would stimulate private
investment in infrastructure by allowing states and localities to sell
certain federally-funded public infrastructure facilities and use the
proceeds to make additional public infrastructure investments (see TAB
C).
?Supporting legislation that would allow States to set up revolving
funds using their Federal highway funds;
?Administrative and regulatory actions to improve the Clean Water SRFs.
III. THE CORE PROPOSAL: CAPITALIZE STATE INFRASTRUCTURE BANKS.HORIZONTAL_PITCH 15
PRINTER FONT9_POINT_ROMAN
A number of proposals have been made to capitalize an off-budget federal infrastructure
bank. TAB D discusses why the Working Group opposes the many proposals that have been
floated for such a bank. Under this option, the FY1996 Budget would include increased
funding to capitalize "State Infrastructure Banks" (SIBs).HORIZONTAL_PITCH 15
All agencies agree that SIBs would be far more efficient
than current programs. In principle, SIBs could be funded by
reallocating existing infrastructure outlays. This memo assumes,
however, that political constraints require SIBs to be funded as a
supplement to, not substitute for, existing outlays. Although SIBs could be capitalized at any level, the Working
Group believes that funding on the order of $2.5 billion - $5.0 billion
over five years would be needed to induce states to form such Banks.
PRINTER FONT 12 POINT ROMAN
Permissible Use of Funds -- SIBs would be a more flexible version of
existing Clean Water State Revolving Funds. SIBs would be allowed to:
?
make below-market loans for local public infrastructure
investment;
?
provide loan guarantees or other credit enhancements for local
public infrastructure debt;
?
use the federal grants as a reserve against which the SIB would
borrow added funds;
?
make subordinate loans in local private projects;
?
provide development risk insurance for private projects.
?
accept funds from state entities;
Leveraging -- The capitalization grants would be leveraged by requiring
that the SIB finance infrastructure projects worth a total of four times
the amount of the initial federal grants.
Beneficiary Pays -- To reduce local reliance on financing by general
taxpayers, some portion of SIB loans would have to be used to construct
or repair facilities that were paid for directly by users (dedicated
taxes could be used to repay other SIB subsidies). The exact fraction
specified in the Administration proposal would be determined after
consultation with the Congress.
Pro:
?During the campaign, the President emphasized the role of public
investment in economic growth. The Administration has continued to
build a public case for the importance of public investment. The 1994
Economic Report of the President, for example, described at some length
why "the Administration believes the United States has underinvested in
its public infrastructure." Capitalizing SIBs would underscore the
importance that this Administration attaches to public investment, and
would advance an important part of the President's economic agenda.
?SIB funding would be dramatically more efficient than current federal
infrastructure programs. SIBs would "reinvent" federal programs in five
principal areas:
(1) SIBs would leverage federal funds far more than do current
programs. In most existing infrastructure programs, each dollar in
federal spending is associated with $1.25 in total
infrastructure investment. SIBs, in contrast, would be required to
leverage federal funds by four-to-one.
(2) Shallow subsidies would provide incentives to fund only the most
productive investments. Current federal transportation programs cover
an average of 80 percent of project costs. Because of the leveraging
requirement, however, SIB loans and credit enhancements would provide
subsidies that, on average, were economically equivalent to about 25
percent of project costs. (The SIB would tailor each loan or other
subsidy to fit local conditions. SIBs could provide subsidies that
were economically equivalent to direct grants ranging from zero up to
a maximum of 50 percent of project costs.) The shallow subsidy
provided by the SIB would provide states and localities with
incentives to be more selective in the projects that they choose to
build.
(3) SIBs would give states greater flexibility in the use of federal
funds. Compared to current programs, SIBs could better tailor
solutions to fit local problems. SIBs would have more discretion over
the type of infrastructure to be built, and the depth of the subsidy
needed to build it. Greater flexibility would lead to more efficient
solutions to local problems.
(4) SIBs would increase the amount of private investment in
infrastructure. The vast majority of infrastructure investment is now
undertaken by the public sector. SIBs would be allowed to join with
private sector firms that wished to investment in infrastructure. The
greater private sector investment in infrastructure would result in
competition for public providers; greater competition would bring a
more rapid adaptation to changes in demand and technology, and would
free public resources for other needed infrastructure projects.
(5) SIBs would reduce the need for general taxpayers to fund
infrastructure investments. At present, much infrastructure is paid
for by taxpayers generally rather than those who use the
infrastructure. The shallow subsidy rate provided by SIBs, together
with the explicit requirement that beneficiaries pay, would work to
channel SIB subsidies to projects that were more likely to be self-
supporting. Increased payments by beneficiaries would provide new
revenues for further investment and better signals about where and how
much new investment was needed.
?This initiative would provide new funding that could be used to
support other Administration policies, such as efforts to address
problems in urban areas.
Con
?Some believe that the requirements for leveraging and pricing would
sharply limit the political appeal of this initiative.
?Undertaking this initiative would divert budgetary resources and
political capital from other Administration priorities, such as health
care reform or welfare reform.
?The Administration already has sought a limited "reinvention" of
federal infrastructure programs through the programmatic reforms
undertaken to date. More extensive reinvention efforts could be pursued
in the context of routine reauthorizations.
?Although infrastructure spending has fallen short of what the
Administration had hoped to achieve, it nonetheless has remained high
relative to other priorities -- funding has been preserved and slightly
increased at a time of severe budget constraints. Section I showed how
the budgetary and programmatic efforts of this Administration have
advanced the agenda of those who would invest more -- and more
efficiently -- in America's infrastructure. Given the Administration's
infrastructure achievements to date, and the severity of existing budget
constraints, the limited available resources might be better spent on
other Administration priorities.
?Congress might not enact any of the programmatic reforms embodied in
this option, but instead use proposed funding simply to increase
spending on existing programs. Yet achieving programmatic reform would
be one of the most important justifications for undertaking this
initiative. Some agencies do not believe that an adequate case has been
made for increasing spending on existing infrastructure programs.
?The options considered in this memo would tend to focus spending on
projects that can be justified on economic merit alone, and might give
less weight to some of the distributional concerns that are reflected in
current programs. Specific provisions might need to be added to the SIB
proposal in order to address federal concerns about the distribution of
SIB subsidies. For example, special provisions might be needed to
insure that the subsidies addressed the infrastructure needs of
economically troubled areas.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
A UNRESOLVED DESIGN ISSUES. A number of issues remain open: project eligibility criteria; whether the SIBs
should provide special treatment for "federal
priorities," and whether the program should be mandatory or
discretionary.
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
1. Project Eligibility -
all infrastructure or transportation
only. A broad-based initiative would cover all transportation and
water-supply facilities now eligible for federal aid. Such a program
would address concerns about underinvestment in "public
infrastructure" generally, and has the potential to generate the
widest support among infrastructure advocates.
On the other hand, a broad-based initiative would run the greatest
risk of being attacked as being unnecessary in a time of fiscal
constraint. Moreover, unless the SIBs receive substantial resources,
environmental advocates may want to focus all available resources on
existing Clean Water SRFs, rather than have water projects compete for
the same pot of money as transportation projects. Nor would limiting
the SIBs to transportation projects necessarily sacrifice the support
of environmentalists, for the conditions under which SIB subsidies
would be made available are exactly those that environmentalists have
championed for some time: relatively low matching rates, greater
reliance on beneficiary pays, and increased private sector investment
in infrastructure.
2. "Federal Priorities" Window -- SIBs would not be well-suited to
address specific federal priorities. If desired, special provisions
could be added to achieve various federal priorities. SIBs could be
required to allocate a specified portion of subsidies: for projects
in designated urban areas; for qualifying congestion relief projects;
for projects addressing regional or interstate problems; and/or to
make below-market loans to private entities that need to clean
up "brownfields." Adding such provisions would increase the
likelihood that the SIBs furthered specific federal goals, but would
reduce state flexibility and its attendant benefits.
3. Mandatory or Discretionary. Legislation establishing the SIBs
could determine that federal capitalization grants were mandatory
spending, discretionary spending, or both:
?
A mandatory program could be paid for on a PAYGO basis. In
addition, a mandatory program would provide more predictable
funding streams, allowing better planning and more efficient
resource use at the local level. Congressional oversight would be
maintained through routine oversight hearings and the
reauthorization process.
? A mandatory program might provide somewhat less Congressional
oversight and afford Congress somewhat less control over federal
revenues. In addition, designating such a program as "mandatory"
would run the risk of opponents charging the Administration with
trying to avoid the intent of the Budget Enforcement Act
(opponents might charge that the Administration was using
artifical categorization in order to use PAYGO offsets to fund
spending that otherwise would be capped.)
IV. OTHER OPTIONS. None of the options below could provide an
initiative of the scope and magnitude of SIB grants. At the same time,
the options that follow might be attractive either as complements to a
larger SIB initiative, or as a substitute for it should the
Administration wish to pursue a smaller initiative.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
A. CREATE A "TAXABLE INFRASTRUCTURE BOND". SIBs, or perhaps state and local governments generally,
would receive a direct federal subsidy for a portion of the
interest that they pay on taxable bonds issued to support specific
classes of infrastructure projects. Taxable bonds would be attractive
to SIBs if (1) the interest subsidy lowered borrowing costs below what
they could achieve through tax-exempt borrowing, or (2) it were made
available for projects that cannot now get tax-exempt financing, e.g.,
privately-owned roads and intermodal facilities.
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
The taxable bond interest subsidy would be a mandatory appropriation in
order to allay issuer concerns that the subsidy might not continue for
the life of the bond. The total subsidy paid out each year would be
capped by limiting the amount of debt eligible for subsidy each year.
The market for taxable bonds would encompass both those investors that
currently invest in tax-exempt debt and those that do not now purchase
tax-exempt bonds (e.g., pension funds and foreign investors). Bond
volume would be allocated to states either on a per capita basis (a la
the existing cap on tax-exempt, private activity bonds) or would be
auctioned off by some federal entity.
Pro
?Would give SIBs another tool to subsidize state and local
infrastructure investment. This option would have none of the economic
inefficiencies associated with tax-exempt financing.
?Pension fund managers may support this option, for it would allow them
to earn taxable returns on investment in public sector infrastructure.
Con
?All of the objections raised against Option 1 apply equally to this
option.
?State and local officials and the tax-exempt bond industry would be
likely to oppose the proposal strongly as a threat to the existing
Federal subsidy for tax-
exempt debt. Fierce opposition greeted a
similar proposal by the Carter Administration. Some of the opposition
to this instrument might be blunted by providing direct interest
subsidies only for bonds issued by SIBs or only for projects that cannot
now receive tax-exempt financing.
?Would divert resources from the basic option.
Other
?Much of the budgetary cost of taxable bond subsidies would take place
outside the budget window. Unlike grants, which are scored as an up-
front appropriation, the interest subsidy on a taxable bond would only
require an appropriation each year equal to the amount of subsidy paid
in that year.
HORIZONTAL_PITCH14
PRINTER FONT 10_POINT_ROMAN
B. CREATE A
CREDIT INFRASTRUCTURE BOND". This option would be similar to the taxable bond option in all but its
budgetary effects. Under this
option, SIBs would issue taxable bonds to support specific
infrastructure projects. The holders of these bonds would receive a
subsidy from the Federal government in the form of a non-refundable
income tax credit (the value of the credit would be included in gross
income). The total Federal subsidy would be capped by limiting the
total amount of tax credit bonds that may be issued by a State.
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
Pros/Cons/Other same as taxable bond subsidies except that:
?Budget considerations -- unlike taxable bond subsidies, tax-credits
would appear in the budget as a tax reduction rather than as direct
spending.
?Political considerations -- Unlike taxable bonds, tax-credit bonds
would not enjoy the support of pension funds (who would be unable to
invest profitably in tax-credit bonds). On the other hand, tax-credit
bonds would not carry the albatross of the words "taxable bond." Some
agencies believe, however, that all those who oppose taxable bonds would
equally oppose the substantively similar tax-credit bonds.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
C. EXPAND
EXEMPT BOND SUBSIDIES. State and local governments currently are able to finance public infrastructure projects
with bonds that pay interest that
is exempt from Federal income tax. Most infrastructure projects with
significant private involvement, however, either cannot be financed with
tax-exempt bonds or else can be so financed only if a portion of the
relatively scarce State private activity bond volume cap is allocated to
the project. Under this option, the Administration would seek to:
HORIZONTAL_PITCH11
PRINTER FONT 12_POINT_ROMAN
?
provide a partial exemption from the state private-activity
volume cap for certain infrastructure facilities;
?
allow highways and intermodal facilities to be financed with
private activity bonds.
Pro
?Tax-exempt bonds provide only a shallow subsidy. The value of tax-
exempt financing varies with interest rate levels, individual and
corporate income tax rates, and other factors affecting the tax-exempt
market. At present, tax-exempt financing provides a subsidy that is
economically equivalent to a direct grant for roughly 15-20 percent of a
project's costs.
?Because these subsidies generally would benefit private investments,
they would lead to facilities paid for by the beneficiaries rather than
general taxpayers.
?Easing constraints on tax-exempt debt at the same time that a taxable
bond option is proposed might reduce fears that the taxable bond was
intended to undermine support for tax-exempt financing.
Con
?All of the objections raised against Option 1 apply equally to this
option.
?Most economists believe that tax-exempt financing is inefficient, for
the benefits of lower interest rates to issuers are smaller than the
Federal revenue foregone through the grant of tax-exemption. A rough
estimate suggests that state and local borrowing costs are reduced by
about $90 dollars for every $100 in revenue that the federal government
loses due to tax-exemption for municipal bonds.
?Would take money from the basic option.
Other
?The tax subsidies would be scored as revenue losses, rather than
direct outlays. Unlike direct subsidies, which require an up-front
appropriation of the present value of the subsidy being offered, tax-
exempt bond subsidies would require budget resources equal to the annual
loss from the increased use of tax-exempt debt during the budget window.
HORIZONTAL_PITCH 14
PRINTER FONT 10_POINT_ROMAN
D. PROVIDE TAX SUBSIDIES FOR PRIVATE ENVIRONMENTAL FACILITIES. The Administration would seek
two tax subsidies for private sector investors in wastewater
treatment and drinking water facilities:
HORIZONTAL_PITCH 11
PRINTER FONT 12_POINT_ROMAN
? accelerated depreciation (the depreciable life of this
property would be reduced from the current levels of 15 or 20
years to a shorter period, e.g., 7 or 10 years).
? contributions in aid of construction (CIAC) -- CIACs are
contributions of capital assets or the cash equivalent made to
investor-owned water utilities by new customers to reimburse the
utility for the cost of improvements needed to serve the customer
(e.g., the land developer). Current law includes the value of
CIACs in a regulated utility's gross income subject to federal
income tax. This option would allow utilities to exclude from
gross income the value of CIACs if such contributions were also
excluded from the utility's rate base.
Pro
?These changes would provide relatively shallow subsidies. The
accelerated depreciation, for example, would provide a subsidy that was
economically equivalent to a direct grant for something less than 5
percent of the amount of project costs. CIAC would provide a subsidy
roughly on the order of 30 percent of capital costs.
?The CIAC change would provide incentives to consolidate small, public
systems into larger, private systems. Larger systems may be more likely
to comply with EPA regulations.
Con
?These proposals would effectively reinstate provisions of the Tax Code
that were repealed in the 1982 Tax Act and the Tax Reform Act of 1986.
In 1982, Congress repealed accelerated depreciation for these
facilities, arguing that depreciable lives for income tax purposes
should be at least somewhat tied to economically useful lives.
Similarly, Congress decided in the Tax Reform Act of 1986 that CIACs
should be treated for income tax purposes as compensation for a service
provided. Supporting a reversal of the 1982 and 1986 decisions would
make it more difficult to oppose other exceptions to what the
Administration believes is good general tax policy.
?All of the objections raised against Option 1 apply equally to this
option.
?Would take money from the basic option.
Other
?The budgetary cost of accelerated depreciation would be equal the
annual difference between depreciation deductions under current rules
and those under the proposed rules multiplied by the investors' marginal
tax rates.
END ATTACHMENT 1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Daniel J. Corbett (CORBETT_D) (OMB)
CREATION DATE/TIME:15-NOV-1994 09:38:24.18
SUBJECT: Potential Budget/Policy Initiative
TO: Wesley P. Warren
(WARREN_W) (OPD)
READ:17-NOV-1994 21:37:30.43
TEXT:
Chris Edley asked that I pass on the attached paper to you for
your comments. We are considering the attached as a 1996
budget/policy initiative.
The paper describes the development of an Air Quality (AQ)
incentive grant program within the current Congestion Mitigation
and Air Quality (CMAQ) program. CMAQ is one of several programs
that are part of the larger Federal-aid highway program in DOT.
We have not shared the attached with either DOT or EPA.
Since we may want to include something like this in our passback,
we would like to get comments as soon as possible.
Dan
ATTACHMENT 1
ATT CREATION TIME/DATE:14-NOV-1994 22:59:00.00
ATT BODYPART TYPE:p
ATT CREATOR: Daniel J. Corbett
TEXT:
PRINTER FONT 12_POINT_ROMAN
Potential Program Reform/Initiative
Program: Congestion Management and Air Quality (CMAQ) Program, Department of
Transportation, Federal Highway Administration.
Proposal -
-
Air Quality (AQ) Incentive Grant
A demonstration project funded by CMAQ to test the potential of an incentive grant
approach to CMAQ. Under this approach, a fraction of CMAQ funds would be set aside and
then granted to States on a project-by-project basis according to the expected emissions
benefits of the project.
$150 - $250 million would be set-aside from the normal allocation process given to the
States. DOT, working with EPA, would develop a "pollution bounty" it is willing to pay
for each ton of emissions avoided through a federal-aid project. The values would be
based on the cost to control such pollution though regulation, or the projected benefit of
avoiding it. Cost of control would put the amounts at about $2,000 - $10,000 per ton of
criteria emission reduced.
The justification for moving in this direction is that an AQ incentive grant program would
improve the knowledge about transportation control measures and help to ensure that the
CMAQ program gets the most emission reductions for the Federal dollars invested. It
offers a better opportunity to test the value of TCM's as a way to improve air quality.
If few claimants emerge for AQ Incentive Grants, we may conclude that the practical
potential for TCM's is low. If, on the other hand, many takers come forward, we may say
that TCM's have some promise.
Furthermore, this approach encourages innovation and the values can be flexibly adjusted
based on the science of air quality benefits and emission reduction strategies.
Background
The CMAQ program is a new program established in 1992 in the Intermodal Surface
Transportation Efficiency Act (ISTEA).
The CMAQ program is supposed to help areas reach attainment under the Clean Air Act,
meaning that the transportation projects funded by the program should reduce emissions of
pollutants.
ISTEA authorized $1 billion in contract authority for CMAQ. This contract authority is
distributed to the States based on a formula that is focused on Clean Air Act non-
attainment areas in the State. Areas without a non-attainment area receive a minimum
apportionment.
In the Federal-aid highway program, of which CMAQ is a part, States control project
selection subject to eligibility rules. States use the available "obligation limitation"
provided in the annual DOT Appropriations Act against the contract authority that has been
apportioned in that year or from balances from previous years. Therefore, it is possible
that States could use all or none of the contract authority for a particular program, like
CMAQ, in any given year.
Since the CMAQ program is new, States were initially reluctant to obligate CMAQ funds.
However, the obligations have increased from $340 million in 1992 to $815 million in 1994.
Performance accomplishments/assessment
?
Projects funded by the program are roughly 50% transit projects, 33% traffic flow
improvements, 5% Ride sharing, 3% Bike/Pedestrian, and the remaining 8% split between
"other" (e.g., including vehicle inspection and maintenance program) and States
without attainment areas who do not have to use the funding for emissions reducing
projects.
? DOT, along with EPA, is in the midst of a review of the CMAQ program. Although the
review is not complete, the program does not appear to be working well from the
perspective of achieving significant and/or cost-effective emissions reductions.
-
Not all projects submit analysis demonstrating the emissions benefits of
projects (e.g., tons per year). Even for the projects that did complete
analysis, most projects show reductions of less than 0.2 tons per day.
-
The program does not require cost-effectiveness as a criterion, and decisions
are not being made on this basis.
-
The cost-effectiveness appears to be very low. [The major exception to this
appears to be vehicle inspection and maintenance programs which are thought to
be a cost-effective method for reducing emissions.]
?
The poor success of the program may not be entirely the result of growing pains for a
new program. There is growing skepticism that conventional transportation control
measures (TCM's) can ever be a cost
-effective strategy to deal with emissions. For
example, some studies have shown costs of $50,000 $100,000 per ton for control of
Hydrocarbon emissions compared to EPA estimates of cost-effectiveness of about $2,000
- $10,000 per ton.
? This analysis goes against conventional wisdom about what should be done to reduce
vehicle pollutants. It should also be noted that over the past decade, significant
highway vehicle emissions reductions have been achieved for CO, VOCs and
NOx despite a 37% increase in vehicle miles travelled. This trend of reduced
automobile emissions in these categories is expected to continue until the year 2000,
when there is concern that continually increasing VMT could start to overtake the
reduced emissions from the turnover of the fleet to newer vehicles, with better
emissions control systems.
?
It is also disheartening that no CMAQ-funded transportation measure of any
significance has appeared in State Implementation Plans submitted to EPA.
END ATTACHMENT
1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Margaret R. Shaw (SHAW_M) (OMB)
CREATION DATE/TIME:22-NOV-1994 17:42:06.21
SUBJECT: demo scoring FYI
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:22-NOV-1994 17:42:18.47
TEXT:
ATTACHMENT 1
ATT CREATION TIME/DATE:22-NOV-1994 12:59:00.00
ATT BODYPART TYPE:B
ATT CREATOR: Christopher F. Edley, Jr
ATT SUBJECT: HWY Demo scoring
ATT TO: Kenneth L. Schwartz
(SCHWARTZ_K)
ATT TO: Richard P. Emery Jr.
(EMERY_R)
ATT CC: Daniel J. Corbett
(CORBETT_D)
ATT CC: Alan B. Rhinesmith
(RHINESMITH_A)
ATT CC: Margaret R. Shaw
(SHAW_M)
TEXT:
1. Disco Dan reports no "decision" yet on scoring of demos. What
does it take to get a decision? (Inquiring minds want to know.)
2. Can we reclassify prospectively, so as to avoid a downward cap
adjustment for reclassification of the demos in the base?
END ATTACHMENT 1
ATTACHMENT 2
ATT CREATION TIME/DATE:22-NOV-1994 09:50:00.00
ATT BODYPART TYPE:B
ATT CREATOR: Daniel J. Corbett
ATT SUBJECT: RE: Interesting statements from House Public Works
ATT TO: Christopher F. Edley, Jr
(EDLEY_C)
ATT CC: Alan B. Rhinesmith
(RHINESMITH_A)
ATT CC: Kenneth L. Schwartz
(SCHWARTZ_K)
ATT CC: Margaret R. Shaw
(SHAW_M)
ATT CC: Richard P. Emery Jr.
(EMERY_R)
TEXT:
You raise an important question
We have not made a decision about whether we will redefine all the
demo projects as mandatory and make a discretionary cap
adjustment.
If we did, we could still propose the separate obligation
limitation on demos and get credit for it under the discretionary
caps.
So far, it is clear that we want to score any new exempt demos as
mandatory. What is not clear is what we will do about the base
and how we would treat any recessions of the "old" demos.
The issue of rescission is particularly problematic. Since, we
did not score the "old" demos with outlays when they were created,
it is hard to argue that they should be scored with outlays
savings when they are rescinded.
The NHS bill that passed the House included funding for new demo
projects, and "paid" for them with rescissions of other contract
authority like Maglev and Congestion Pricing Pilot Contract
Authority that wasn't going to spend anyway. Therefore, the bill
was not deficit neutral as claimed, although it was BA neutral.
I would recommend that we take the "hard" line and not score any
savings from the rescissions, but score PAYGO outlays for any new
"exempt" authority regardless of whether it is offset by a
rescission. This position does not offer the committee any
incentives for rescinding, but who cares, since HPW only wants to
rescind if it can replace it with new projects.
In summary, the "old" money would be subject to the old rules and
the new money to the new rules.
My "hard" line would mean that HPW would not be able to regenerate
failed projects (i.e., projects that are not going forward because
of environmental or other problems) into funding for new projects.
This means that HPW would likely be able to spend something less
than the $6.2 billion authorized by ISTEA. How much less would
depend on how many projects fail to go forward?
A compromise position would let them regenerate up to the $6.2
billion authorized by ISTEA, but no more.
I recommend we start with the "hard line" and compromise to allow
regeneration if need be.
Redefining the base to be mandatory would be similar to the
"regenerate" position above, because it allows use of the full
$6.2 billion by HPW. It might also be simpler to explain, but
harder to achieve, because it involves a cap adjustment rather
than a scoring change. It is easier to explain because the
scoring rule is simply -- spending subject to explicit
appropriations control is discretionary, otherwise it is
mandatory.
END ATTACHMENT 2
ATTACHMENT 3
ATT CREATION TIME/DATE:22-NOV-1994 08:23:00.00
ATT BODYPART TYPE:B
ATT CREATOR: Christopher F. Edley, Jr
ATT SUBJECT: RE: Interesting statements from House Public Works
ATT TO: Daniel J. Corbett
(CORBETT_D)
ATT CC: Alan B. Rhinesmith
(RHINESMITH_A)
ATT CC: Kenneth L. Schwartz
(SCHWARTZ_K)
ATT CC: Margaret R. Shaw
(SHAW_M)
TEXT:
How will our scoring change for demos be affected by the argument
that new demos are funded by rescissions? That is, will the
scoring change retroactively make old demos PAYGO?
If it does, then the 50% ob limit we propose is, uh, awkward.
END ATTACHMENT 3
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Sharon A. Barkeloo (BARKELOO_S) (OMB)
CREATION DATE/TIME: 7-DEC-1994 12:03:29.91
SUBJECT: per your request
TO: Michael D. Deich
(DEICH_M) (OPD)
READ: 7-DEC-1994 12:04:49.67
TEXT:
The savings relative to passback for the transit option we just
discussed are as follows:
(dollars in millions)
1996
1997
1998
1999
2000
5-Yr. Total
Disc. BA -2160
-1295
-1295
-1146
-1095
-6991
Disc. OL -63 -309-712-1097
-1340
-3521
The attached e-mail message describes the option.
Regarding your other idea of reauthorizing ISTEA to create a
consolidated Surface Transportation Trust Fund:
The general fund savings from terminating FTA completely beginning
in 1996 would be as follows (again, savings are relative to
Passback:
(dollars in millions)
1996
1997
1998
1999
2000
5-yr. Total
Disc. BA -2155
-1295
-1295
-1146
-1095
-6987
Disc. OL -474-818-1123
-1209
-1322
-4945
The trust fund savings (relative to Passback) from terminating FTA
completely beginning in 1996 would be as follows:
(dollars in millions)
1996
1997
1998
1999
2000
5-yr. total
Mand. BA
-2786
-3645
-3645
-3645
-3645
-17366
Disc. OL -89
-662-1523
-2280
-2958
-7513
If you used these trust fund savings (along with some highway
savings) to create a new, consolidated Surface Transportation
Trust Fund (STTF), I think we would just have to think about what
types of things the new STTF would fund, figure out a spend-out
rate, and make sure that the resulting outlay stream from the new
STFF does not exceed the highway and transit Trust Fund outlay
stream in Passback.
ATTACHMENT
1
ATT CREATION TIME/DATE: 6-DEC-1994 11:21:00.00
ATT BODYPART TYPE:B
ATT CREATOR: Sharon A. Barkeloo
ATT SUBJECT: Less drastic option for transit - for your review
ATT TO: Christopher F. Edley, Jr
(EDLEY_C)
ATT TO: Kenneth L. Schwartz
(SCHWARTZ_K)
ATT CC: Margaret R. Shaw
(SHAW_M)
ATT CC: Alan B. Rhinesmith
(RHINESMITH_A)
TEXT:
We have priced out another, less drastic, option for transit --
but have not yet put it into MAX. (The option currently in MAX is
to phase out all transit programs over 4 years.)
Here's our new idea:
1) set the total FTA program level at $3.3B annually. This is
about the amount of gas taxes we take in to the Mass Transit
Account of the Highway Trust Fund, plus interest earned, each
year.
2) focus the $3.3B on Formula Capital Grants. This means zero
out Discretionary Grants (and all that nasty pork). The argument
here is that major capital investments (e.g., new starts) would
be funded through a combination of transit formula grants, SIBs
and/or the bond market.
Rather than go cold turkey on transit operating subsidies, I
phased them out over 3 years and redirected the savings to formula
capital grants.
The 5-year savings from this $3.3B transit program level option
are $7B in BA and $3.5B in outlays.
If we kept transit at this $3.3B program level, rather than
phasing out all transit programs over 4 years, our 5-year savings
in MAX for the option titled "Narrow Federal Role in
Transportation but add SIBS" would be $8.2 billion in BA and $5.7
billion in outlays. This compares to 5-year savings of $6.9B in
BA and $8.8B in outlays currently in MAX.
Please let us know if you prefer this new option.
END ATTACHMENT 1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Elgie Holstein (HOLSTEIN_E) (OPD)
CREATION DATE/TIME:18-JAN-1995 14:41:16.99
SUBJECT: NGA Economic & Community Development Resolution
TO: David J. Lane
(LANE_D) (OPD)
READ:18-JAN-1995 16:59:24.39
TEXT:
PRINTER FONT 12_POINT_COURIER
January 18, 1995
MEMORANDUM TO DAVID LANE
FROM:
ELGIE HOLSTEIN
RE:
NGA Policy Resolutions
The policy resolutions of the state and local government
organizations are usually a mix of specifics and generalities, so
that they can respond to a wide range of proposals advanced by
Congress and the Administration. Accordingly, it can sometimes
be difficult to assess precisely how draft policies fit with
Administration positions. Following are our comments about some
potentially troublesome portions of the draft amendments to the
NGA's Economic and Community Development resolution (EDC-18).
18.2-A
Full funding of ISTEA is highly unlikely. It has not been fully
funded to date, and, given current budget realities, it is
unlikely that the Administration will support full funding.
18.2-C
"Changes in federal law to increase flexibility in the use of
tax-exempt financing" in infrastructure is likely to mean higher
costs to the Treasury. Accordingly, the Administration would be
opposed. Specifically, the Administration would oppose
increasing state IDB volume caps.
18.2-F
I assume the Administration will support an extension of the R&D
tax credit, but I don't know if we will be supporting a permanent
extension. I've asked for Tom K's input.
18.2-G
The recommendations for consolidation of federal grant and loan
programs, including federal job training programs, refer to
consistency with NGA policy, and to the "Governors Principles to
Ensure Workforce Excellence." The details of those other
policies and principles are not provided. In general, however,
the Administration is planning to propose consolidations that
involve both less funding to the states and less reliance on them
for administration of education and training programs, e.g.
vouchers to individuals and large block grants to local
governments.
[Peter Yu should look at the farm bill/rural development section
-- first bullet of "G"]
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Michael D. Deich (DEICH_M) (OPD)
CREATION DATE/TIME:30-JAN-1995 13:30:22.15
SUBJECT: reinvent
TO: David E. Tornquist
(TORNQUIST_D) (OMB)
READ:30-JAN-1995 14:04:04.98
TEXT:
let me know if this is helpful. i'll call for update wehn i return from mtg.
ATTACHMENT
1
ATT CREATION TIME/DATE:30-JAN-1995 13:29:00.00
ATT BODYPART TYPE:p
ATT CREATOR: Michael D. Deich
TEXT:
PRINTER FONT 12_POINT_ROMAN
MEMORANDUM FOR THE CHIEF OF STAFF
FROM:
Alice M. Rivlin
Bowman Cutter
SUBJECT:
Department of Transportation (DOT) Reinvention
Legislative Strategy -DECISION REQUIRED
Secretary Pe?a must decide in the next day or so how to roll out
the Administration's proposals for restructuring DOT. The nature of
that rollout will depend to a large extent on the priority that the
Administration wishes to assign the reinvention. This memo asks your
guidance on the level of priority you think should be accorded the DOT
restructuring, and the extent of Presidential/White House involvement
that DOT should expect for their proposal.
Reinvention Proposal
The reinvention proposal includes two parts: restructuring grant
programs and reorganizing the Department.
Restructuring Grants. The Administration proposal would shift the
focus of federal grants from individual modes (highways, air, etc.) to
transportation generally, and would give states and localities the
greater flexibility that they need to pursue solutions that best meet
local needs. Separate programs for highway, transit, intercity
passenger rail, intercity bus, and airport capital programs would be
consolidated into three broad programs: unified transportation block
grants, State Infrastructure Banks (SIBs) and discretionary grants (see
Attachment A for a description).
The consolidated program would be financed with existing highway
fuel taxes and aviation ticket taxes. These taxes would not be raised.
Although states could use the consolidated grants to finance both
aviation and surface transportation programs, separate trust fund
accounts at the national level would ensure that -- for the nation as a
whole --revenues from aviation taxes would be used only for aviation
related spending, and highway fuel taxes would be used only for surface
transportation spending.
Reorganizing the Department. Two plans are under consideration --
one mode-based, the other mission-based. Both plans would leave the
Coast Guard intact and both would transfer to a government corporation
the air traffic control functions now performed by the FAA. The
Secretary appears to favor a mode-based approach, with separate
administrations for air transportation, surface transportation, and
maritime affairs. Under a mission-based plan, the Department would be
organized into separate administrations for
infrastructure investment, for safety, and for the Coast Guard.
The reinvention proposal would save $1.7 billion in budgetary
resources ($671 million in outlays) in 1996 and $X.Y billion in budget
resources ($6.4 billion in outlays) over five years. The Department
plans to have the reinvention specifications completed by February 6.
The actual legislation will be completed by early March. The Air
Traffic Service Corporation legislation will be finished earlier, likely
before a February 14 hearing on the subject.
Congressional and Interest Group Reaction
After numerous outreach sessions, the Administration has found no
allies for its proposals. In general, groups oppose restructuring grant
programs (at least at this time) and are largely indifferent to
restructuring the Department's bureacracy.
The proposal for grant restructuring has led members of Congress,
State and local interests, and groups representing different
transportation modes all to rally around the status quo. Whatever their
objections to current law, groups regard the status quo as the devil
they know. ISTEA, in particular, is seen as a delicate balancing of
interests -- among States, between states and localities, between
highway and transit interests -- that was achieved only after lengthy
debate and close votes in Congress. Barring some crisis or action-
forcing event, no group wishes to reopen any allocation-related issues
in advance of ISTEA's scheduled expiration at the end of FY97. At
present, however, most transportation groups believe that the budget
cuts required for FY '96 will be relatively manageable, and will be
distributed proportionately across interest groups. While none would be
happy with this outcome, they all enjoy the predictability and
familiarity of current law.
In contrast to current law, the Administration's reinvention
proposal is rife with uncertainty. The greater flexibility that would
be given to grant recipients, for example, creates uncertainty about how
resources would be divided amongst the different types of
transportation. In addition, the consolidated grants would change both
the locus of decisionmaking -- states, cities, Metropolitan Planning
Organizations, and local airport authorities all would see changes in
their authority over the use of federal funds -- and the amount of
transportation funds that each entity receives from the federal
government. The Administration is unlikely to find much support for its
proposals until it can spell out in rather exacting detail who would
win, and by how much, under the new programs.
The key Transportation Committees are preoccupied with their own
agendas, which include: Clean Water, the National Highway System (NHS)
designation, Pipeline Safety Authorization, wetlands legislation, and
Amtrak authorization. Chairman Shuster's top priority is taking the
Aviation and Highway Trust Funds off-budget. The air traffic control
corporation proposal currently is being driven by the Budget Committee.
Finally, there is no legislation which forces consideration of the
reinvention proposal. Therefore, it will need to be forced upon the
Committees' agendas.
Options
The Administration can either (1) ratchet up the commitment and
effort behind the proposal, under the assumption that the overall
reinvention principle is important (Class A), or (2) ratchet down the
effort under the assumption that enacting the proposal next year, rather
than this year, is acceptable (Class B).
Under the Class A option, the proposal would be highlighted in
Presidential speeches and remarks. DOT would prepared detailed
legislation and negotiate to have it included in the must-pass NHS
designation bill. A Secretarial veto threat would be issued if need be.
However, if the NHS bill is not passed by the end of this fiscal year,
States will lose up to $6 billion in highway funds.
Under the Class B option, a broader legislative package would be
released, but the Secretary would not engage in detailed negotiations in
search of political support this year. The Administration would use the
next six to nine months to lay out its future direction for
transportation. This would be the foundation for seeking enactment next
year.
Discussion
The Class A option, if successful, permits the Administration to
take credit for a major departmental reorganization and a change to
"business as usual". However, it could potentially alienate many
interest groups and Members of Congress in the process.
The Class B option would permit the Administration concentrate on,
and take credit for, several legislative items this year, including the
NHS designation, Amtrak reauthorization, and air traffic services bill.
As budget realities become better understood, the block grant proposal
will generate more support. Also, budget exigencies are likely to force
an early ISTEA reauthorization. This could result in both greater
support for the proposal and a legislative vehicle for its enactment.
Recommendation
Make DOT reinvention a Class A priority. Develop a legislative
strategy based on Presidential involvement and possible veto
threat.
Make DOT reinvention a Class B priority. Publicly release a
proposal, and lay the ground work for Congressional consideration
next year.
Other.
Attachment A
Department of Transportation Reinvention Proposal
Restructuring infrastructure grants
Over 30 separate, categorical programs will be consolidated into three
broader, flexible programs. The three new programs are:
?
A unified transportation block grant, funded at $10 billion, would
be available to fund highway, transit, passenger rail and airport
capital projects. Funds would be allocated by formula to States,
with a set-aside for urbanized areas. The Governor is the
recipient of all funds, but the Metropolitan Planning
Organizations (MPOs) are strengthened.
?
State Infrastructure Banks, capitalized with $2 billion, would
permit jurisdictions to leverage public and private resources for
investment in any type of infrastructure. SIBs would also
encourage more business-like investment strategies, such as user
fee financing.
?
Discretionary grants, funded at $1 billion, would be available to
finance projects or regional or national interest that are not
addressed through other mechanisms.
Additional funds will be requested separately to complete existing
multi-year funding commitments for specific airport and transit projects
(approximately $1 billion in 1996). Another $8 billion per year will be
dedicated to rehabilitation and repair of the 155,000 mile National
Highway System through a continuing separate program.
END ATTACHMENT 1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: David E. Tornquist (TORNQUIST_D) (OMB)
CREATION DATE/TIME:30-JAN-1995 11:14:00.49
SUBJECT: Latest Version of Rivlin/Cutter Memo
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:30-JAN-1995 11:27:29.10
TEXT:
ATTACHMENT 1
ATT CREATION TIME/DATE:30-JAN-1995 11:13:00.00
ATT BODYPART TYPE:p
ATT CREATOR: David E. Tornquist
TEXT:
PRINTER FONT 12_POINT_COURIER
MEMORANDUM FOR THE CHIEF OF STAFF
FROM:
Alice M. Rivlin
Bowman Cutter
SUBJECT:
Department of Transportation (DOT) Reinvention
Legislative Strategy - DECISION REQUIRED
This memorandum requests your decision regarding the level
of effort that should expend on the DOT reinvention proposal.
Reinvention Proposal
The reinvention proposal includes two parts: restructuring
infrastructure grant programs and reorganizing the Department.
Restructuring Infrastructure Grants. Separate highway,
transit, passenger rail, intercity bus, and airport capital
programs would be consolidated into three broad programs. These
are a unified transportation block grant, State Infrastructure
Banks (SIBs) and discretionary grants (see Attachment A for a
description). Consolidation will increase flexibility and
emphasize local decisionmaking.
Financing remains through existing highway fuel taxes and
aviation ticket taxes. These taxes would not be raised. While
highway and aviation taxes would be kept separate, eligibility
for both would be expanded. The Governor would be the recipient
of all funds, but the Metropolitan Planning Organization (MPO)
function is strengthened. Set-asides would ensure that
localities receive their "fair share".
Reorganizing the Department. Two plans are under
consideration, one mission-based and one modally-based. Both
leave the Coast Guard intact and assume air traffic control
functions performed by the FAA will be corporatized. The mission-
based plan organizes the remaining into a safety and an
infrastructure and investment administration. The modally-based
plan organizes them into an air and a surface administration.
The reinvention proposal saves $1.7 billion in budgetary
resources in 1996 ($671 million in outlays) and $6.4 billion over
5 years. The Department plans to have the reinvention
legislative specifications completed by February 6. The actual
legislation will be completed by early March. The Air Traffic
Service Corporation legislation will be finished earlier, likely
before a February 14 hearing on the subject.
Congressional and Interest Group Reaction
After numerous outreach sessions, no outright supporters for
the reinvention proposal have emerged. Reactions range from its a
good idea, but now is not the time to pursue it, to vehement
opposition.
Key issues raised are: broadening the range of projects
eligible for funding from the Trust Funds, potential loss of
identity for some modes, State involvement in what previously
were local decisions (e.g., transit and capital), and protection
of rural interests within States.
The key Transportation Committees are preoccupied with their
own agendas, which include: Clean Water, the National Highway
System (NHS) designation, Pipeline Safety Authorization, wetlands
legislation, and Amtrak authorization. Chairman Shuster's top
priority is taking the Aviation and Highway Trust Funds off-
budget. The air traffic control corporation proposal currently
is being driven by the Budget Committee. Finally, there is no
legislation which forces consideration of the reinvention
proposal. Therefore, it will need to be forced upon the
Committees' agendas.
Options
The Administration can either (1) ratchet up the commitment
and effort behind the proposal, under the assumption that the
overall reinvention principle is important (Class A), or (2)
ratchet down the effort under the assumption that enacting the
proposal next year, rather than this year, is acceptable (Class
B).
Under the Class A option, the proposal would be highlighted
in Presidential speeches and remarks. DOT would prepared
detailed legislation and negotiate to have it included in the
must-pass NHS designation bill. A Secretarial veto threat would
be issued if need be. However, if the NHS bill is not passed by
the end of this fiscal year, States will lose up to $6 billion in
highway funds.
Under the Class B option, a broader legislative package
would be released, but the Secretary would not engage in detailed
negotiations in search of political support this year. The
Administration would use the next six to nine months to lay out
its future direction for transportation. This would be the
foundation for seeking enactment next year.
Discussion
The Class A option, if successful, permits the
Administration to take credit for a major departmental
reorganization and a change to "business as usual". However, it
could potentially alienate many interest groups and Members of
Congress in the process.
The Class B option would permit the Administration
concentrate on, and take credit for, several legislative items
this year, including the NHS designation, Amtrak reauthorization,
and air traffic services bill. As budget realities become better
understood, the block grant proposal will generate more support.
Also, budget exigencies are likely to force an early ISTEA
reauthorization. This could result in both greater support for
the proposal and a legislative vehicle for its enactment.
Recommendation
Make DOT reinvention a Class A priority. Develop a
legislative strategy based on Presidential involvement
and possible veto threat.
Make DOT reinvention a Class B priority. Publicly
release a proposal, and lay the ground work for
Congressional consideration next year.
Other.
Attachment A
Department of Transportation Reinvention Proposal
Restructuring infrastructure grants
Over 30 separate, categorical programs will be consolidated into
three broader, flexible programs. The three new programs are:
?
A unified transportation block grant, funded at $10 billion,
would be available to fund highway, transit, passenger rail
and airport capital projects. Funds would be allocated by
formula to States, with a set-aside for urbanized areas. The
Governor is the recipient of all funds, but the Metropolitan
Planning Organizations (MPOs) are strengthened.
?
State Infrastructure Banks, capitalized with $2 billion,
would permit jurisdictions to leverage public and private
resources for investment in any type of infrastructure.
SIBs would also encourage more business-like investment
strategies, such as user fee financing.
?
Discretionary grants, funded at $1 billion, would be
available to finance projects or regional or national
interest that are not addressed through other mechanisms.
Additional funds will be requested separately to complete
existing multi-year funding commitments for specific airport and
transit projects (approximately $1 billion in 1996). Another $8
billion per year will be dedicated to rehabilitation and repair
of the 155,000 mile National Highway System through a continuing
separate program.
END ATTACHMENT
1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Michael D. Deich (DEICH_M) (OPD)
CREATION DATE/TIME:31-JAN-1995 11:30:05.33
SUBJECT: budget prebrief
TO: Christopher F. Edley, Jr
(EDLEY_C) (OMB)
READ:31-JAN-1995 14:12:09.82
TEXT:
Chris:
what are the plans for giving Dems a preview of the DOT budget? Given the
complexity of the restructuring, I think that the sooner we can sit down and
explain the plan at some length, the more likely that we could control damage.
I just had an interesting visit from Alex Washburn, Moynihan's infrastructure
guy. We agreed that the reinvention was exactly what Moynihan has advocated for
years -- more leveraging of federal dollars through increased public/private
projects; greater flexibility to states/localities in how money is spent in
order to increase efficiency and intermodalism. On the other hand, Alex says
Moynihan is adamant about not opening ISTEA prematurely. Alex is now trying to
reach Bill Cunningham, Moynihan's new AA, to ask whether Moynihan would be
willing to embrace the principles of restructuring, applaud the Administration
f
or thinking ahead, but close by saying that while discussions about NEXTEA are
fine, ISTEA should be allowed to run its course. He will try to get back to me
before 4:30 today.
I think we should push hard to get endorsements of our general goals. That kind
of moral victory might allow the Administration to fight for the highground of
ideas even if we need to wait for others to catch up w/us before anything is
actually enacted.
Michael.
PS: Alex had the impression that most people on the Hill thought that the DOT
box shuffle was simply a way for the Admin to keep busy and look as if it were
doing something. Could Rivlin push Pena to focus more on substance than on
form?
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Larry D. Magid (MAGID_L) (OMB)
CREATION DATE/TIME: 1-JUN-1995 14:01:14.72
SUBJECT: Thanks for lunch.
TO: Ellen S. Seidman
(SEIDMAN_E) (OPD)
READ: 1-JUN-1995 15:56:22.24
TEXT:
As always, good to talk with you over lunch. I will let you know
if I learn anything about opportunities at Interior or Justice.
If you do see George Frampton in an appropriate setting, feel free
to mention my interest in Parks.
As far as Car Talk report writing goes, just give me some notice
as to what work needs to be done when, and I would be happy to
draft scenarios, or whatever else needs to be done.
Meanwhile, I will do some research into intermodal facilities and
ISTEA.
See you at 2,
Larry
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Paul R. Dimond (DIMOND_P) (OPD)
CREATION DATE/TIME:18-JUL-1995 20:27:59.58
SUBJECT: Mayors
TO: Kumiki S. Gibson
( Kumiki S. Gibson@EOP_OVP@CCGATE@EOPMRX)
READ:NOT READ
TEXT:
K.G.
A copy of my note to Marcia Hale FYI. The only thing on here that I didn't
mention to you was the item number 4, realting to some EZ/EC type process
(sounded like they had been talking to Edley on MEZ, although they seemed much
less hung up on any particular form or label). In my opinion, this was
definitiely least important of issues raised and maybe was just another way of
talking about their whole approach to economic development in general. I'm not
sure how to handle the Crime Bill point; they clearly like Dole's approach, but
didn't want to ditch the President either, were hoping for some sort of
compromise, which I have no idea whether this has any chance.
Let me know if you have any questions.
Dimond
ATTACHMENT
1
ATT CREATION TIME/DATE:18-JUL-1995 19:19:00.00
ATT BODYPART TYPE:B
ATT CREATOR: Paul R. Dimond
ATT SUBJECT: Conference of Mayors Meeting
ATT TO: Marcia L. Hale
(HALE_M)
ATT CC: William R. Daley
(DALEY_W)
ATT CC: Gene B. Sperling
(SPERLING_G)
TEXT:
Marcia,
For two reasons, I recommend that the Vice-President focus on the larger budget
issues with the 15-20 mayors in Austin on Sunday rather than "oregon style
performance partnerships":
1. The Mayors are not all that much interested in talking about
Oregon-style performance partnerships, period. It would take a great deal more
staff-to-staff work to even begin to turn this into a fruitful discssion.
2. The Conference of Mayor representatives do not get the nature and the
extent of the budget battle that is going to go on. They are proceeding from
the assumption (false) that they should worry more about what they should be
doing after the dust settles on Congress dismantling the budget. After some
discussion, they began to see that the President had an alternative budget, one
that was defensible, and that the Republicans didn't have 34 votes to override
with respect to appropriation bills and budget reconciliation. The V.P. needs to
discuss this at the meeting on Sunday.
The mayors are not intersted appearing t have their tin cups out there asking
for more dollars, and they do want to talk about new, joint initiatives with
the Admionistration to counter the open invitation from Dole (on a different
crime bill) and Gingrich (on eliminating all federal barriers, limits
restrictions on local discretion and initiative). As a result, the V.P.'s budget
discussion does need to be placed in the context of joint Administration mayor
initiatives that will enable cities to expand business, jobs and economic
development and become engines of regional growth: examples could include
1. V.P., Secretaries Rubin, Cisneros, Brown joining with mayors who want
to leverage federal CD Bank and EDA Funding, coordinated with SBA one-stop
shops, to secure five and ten-fold matches from banks, thrifts, insurance
companies, and other financial firms to form local CD Bank. [This has a specific
budget implication: House Appropriation Committee, like FY95 Rescission, zeros
out CDBank funding.]
2. G.I. Bill for America's Workers, (a) including local School-to-Work
partnerships for inner city youth with firms, colleges, schools, community-based
organizations and national service and (b) one-stop career cetners to connect
people who want to find new or better jobs with employer job openings and
providers of skills that will be rewarded in the marketplace. Wnat to work
closely with Reich and Riley, and the Hill to implement, make sure there is a
local voice and participation as provided in McKeon bill. [House and Senate want
to cut funding 20-30%, while even NGA joined in demanding NO cuts in education
and training funding for youth and adults.]
3. A process for figuring out how to coordinate ISTEA, environmental
protection, even clean drinking water (which mayors fear they are going to be
made object of Administration abuse) with sustainable, economic
development. [Again, there is a budget implication here.]
4. A process for figuring out how to do another round of EZ/ECs, or some
interagency program, built around object of helping cities work with suburbs to
become engines of local economic growth.
A couple of Heads-ups:First, Mayors still strongly support Crime Bill, but they
are being romanced by Dole who proposes a much more flexible grant to
localities, which is very attractive to mayors; you need to check with Bruce
Reed about status of this and how to respond. Second, some mayors want to talk
about targeted tax credit for business development or welfare-to-work,
apparently on the grounds that if Repuiblicans are talking about over $250
billion and we're talking about over $50 billion in tax cuts, they want to get a
piece of the tax incentive pie: but the size and object of the tax cut is what
will decimate medicare, medicaid, food stamps and EITC, while piling all of the
cumulative discretionary budget misery on elderly and poor so that rich folks
can pay lower taxes. This is an example of why the VP must bring the larger
budget message home to the mayors THIS weekend.
You may want to confimr with Bill Daley (and with Tom Cochran), but I know that
Bruce Katz concurs strongly with my assessment of the importance of this
approach with the Mayors. And Bruce will be with the Mayors on Saturday
softening them up for this message from the VP.
The format for the VP is a 60-minute closed, no tie working dialogue with 15-20
mayors, followed by 15 minutes with the press.
Dimond
END ATTACHMENT 1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME: 8-AUG-1995 14:11:25.36
SUBJECT: RE: ISTEA Meeting
TO: Gay L. Joshlyn
(JOSHLYN_G) (OPD)
READ: 8-AUG-1995 14:18:04.84
TO: Michael D. Deich
(DEICH_M) (OPD)
READ: 8-AUG-1995 14:30:53.24
TEXT:
Obviously I didn't read the note real well; I thought Michael was scheduling the
meeting. Does he want me to come? If not, that's fine. If he want me to,
would he have any objection to my trying to get it moved? Also, as he and I
discussed, I'd like to make sure that we don't leave CEQ out of this issue, even
though it's obviously not necessary that they be at every meeting. Ellen
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Ellen S. Seidman (SEIDMAN_E) (OPD)
CREATION DATE/TIME:10-AUG-1995 08:50:31.89
SUBJECT: RE: Ready When You Are
TO: Wendy J. Einhellig
(EINHELLIG_W) (OPD)
READ:10-AUG-1995 09:01:35.54
TEXT:
The ISTEA meeting got changed to noon, so I'm not going, but I am going over to
Treasury for a FHLB meeting instead. Ellen
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Wendy J. Einhellig (EINHELLIG_W) (OPD)
CREATION DATE/TIME:10-AUG-1995 08:09:42.84
SUBJECT: Ready When You Are
TO: Ellen S. Seidman
(SEIDMAN_E) (OPD)
READ:10-AUG-1995 08:49:58.88
TEXT:
I'm here and ready to talk whenever you are. I changed the time
and place on the clearance for the Car Talk group today and is the
3:30-4:30 today the ISTEA meeting? W
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Michael D. Deich (DEICH_M) (OPD)
CREATION DATE/TIME:11-AUG-1995 08:51:27.15
SUBJECT: istea/nhs sap
TO: Dapper Dan the Man
(CORBETT_D) (OMB)
READ:11-AUG-1995 09:24:39.74
TO: David E. Tornquist
(TORNQUIST_D) (OMB)
READ:11-AUG-1995 09:11:27.20
TEXT:
Dan:
Given DOT's internal bickering, we might be able to get closure on an ISTEA/NHS
SAP more quickly if the WH takes the lead. Of course, the previous sentence was
merely a thinly veiled statement that, once again, I want you to do my job.
Would you please draft a one or two paragraph statement that we could throw over
the transom to our friends at DOT? I bet we'd be able to reach a quick,
unoffical agreement and then sell it fairly easily to the bombthrowers. Let me
know.
Michael
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Daniel J. Corbett (CORBETT_D) (OMB)
CREATION DATE/TIME:11-AUG-1995 11:12:20.75
SUBJECT: RE: istea/nhs sap
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:11-AUG-1995 11:24:24.91
CC: David E. Tornquist
(TORNQUIST_D) (OMB)
READ:11-AUG-1995 11:12:30.48
TEXT:
We will draft something and send it to you.
Dan
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Daniel J. Corbett (CORBETT_D) (OMB)
CREATION DATE/TIME:11-AUG-1995 17:26:56.24
SUBJECT: Wordperfect document - draft SAP language
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:11-AUG-1995 17:47:54.68
TEXT:
ATTACHMENT
1
ATT CREATION TIME/DATE:11-AUG-1995 17:26:00.00
ATT BODYPART TYPE:p
ATT CREATOR: Daniel J. Corbett
TEXT:
PRINTER FONT 12_POINT_ROMAN
Draft SAP language.
Section
would create a ?trigger? provision to force early
reauthorization of the Intermodal Surface Transportation
Efficiency Act (ISTEA) in 1996. The provision would sequester
authorized FY 1997 contract authority and obligation authority
for Federal
-aid highway, safety, motor carrier, and transit
programs until August 1, 1997.
The Administration [strongly] opposes this provision. The
Administration supports legislation that would reform the
Department?s program as proposed in the 1996 President?s budget.
We do not support an early reauthorization to create new winners
and losers among the States by changing the existing formulas.
Furthermore, we oppose the "trigger" mechanism as a way to bring
about early reauthorization because it would create a crisis
atmosphere that is unproductive.
END ATTACHMENT
1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Paul A. Deegan (DEEGAN_P) (OPD)
CREATION DATE/TIME:11-AUG-1995 19:05:30.22
SUBJECT: Weekly Report
TO: Julia E. Chamovitz
(CHAMOVITZ_J) (OPD)
READ:14-AUG-1995 13:10:18.23
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:14-AUG-1995 08:30:14.14
TO: Paul R. Dimond
(DIMOND_P) (OPD)
READ: 5-SEP-1995 08:46:17.73
TO: Wendy J. Einhellig
(EINHELLIG_W) (OPD)
READ:16-AUG-1995 08:07:47.52
TO: Michael B. Froman
(FROMAN_M) (OPD)
READ:14-AUG-1995 09:10:25.76
TO: Daniel D. Heath
(HEATH_D) (OMB)
READ:14-AUG-1995 09:19:19.28
TO: Elgie Holstein
(HOLSTEIN_E) (OPD)
READ:11-AUG-1995 19:31:18.36
TO: Gay L. Joshlyn
(JOSHLYN_G) (OPD)
READ:14-AUG-1995 08:22:56.24
TO: Thomas A. Kalil
(KALIL_T) Autoforward to: Remote Addressee
(
[email protected]@inet ) (OPD)
READ:NOT READ
TO: Robert D. Kyle
(KYLE_R) (OPD)
READ:NOT READ
TO: David J. Lane
(LANE_D) (OPD)
READ:11-AUG-1995 19:19:55.10
TO: Elisabeth L. Lindemuth
(LINDEMUTH_E) (OPD)
READ:14-AUG-1995 09:13:07.35
TO: Sonyia Matthews
(MATTHEWS_S) (OPD)
READ:14-AUG-1995 11:10:12.21
TO: Elena R. Mccoy
(MCCOY_ER) (OPD)
READ:11-AUG-1995 19:08:19.61
TO: Elaine M. Mitsler
(MITSLER_E) (NSC)
READ:14-AUG-1995 07:55:23.14
TO: Thomas O'Donnell
(ODONNELL_T) (OPD)
READ:NOT READ
TO: Dorothy Robyn
(ROBYN_D) (OPD)
READ:13-AUG-1995 10:28:53.79
TO: Ellen S. Seidman
(SEIDMAN_E) Autoforward to: Wendy J. Einhellig
(EINHELLIG_W)
(OPD)
READ:16-AUG-1995 08:07:47.52
TO: Gene B. Sperling
(SPERLING_G) Autoforward to: Elena R. Mccoy
(MCCOY_ER)
(PDONE)
READ:11-AUG-1995 19:08:19.61
TO: FAX (94569280,NEC Staff, 227)
(TLXA1MAIL_\F:94569280\C:NEC Staff, 227
READ:NOT READ
TO: FAX (94569290,NEC Staff, 365)
(TLXA1MAIL_\F:94569290\C:NEC Staff, 365
READ:NOT READ
TO: FAX (93956853, Lael Brainard)
(TLXA1MAIL_\F:93956853\C:Lael Brainard)
READ:NOT READ
TO: Laura D. Tyson
(TYSON_L) Autoforward to: Thomas O'Donnell
(ODONNELL_T)
(OPD)
READ:NOT READ
TO: Helen C. Walsh
(WALSH_H) (OPD)
READ:14-AUG-1995 14:11:40.33
TO: Dena B. Weinstein
(WEINSTEIN_D) (OPD)
READ:11-AUG-1995 19:20:47.71
TO: Marilyn E. Wilson
(WILSON_M) (WHO)
READ:NOT READ
TO: Remote Addressee
( [email protected]@INET)
READ:NOT READ
TEXT:
PRINTER FONT 12_POINT_ROMAN
August 11, 1995
MEMORANDUM FOR THE CHIEF OF STAFF
FROM:
LAURA D'ANDREA TYSON
SUBJECT:
NEC STAFF WEEKLY REPORT
The following is an update on NEC initiatives and policy
development efforts:
PRINTER FONT_12_POINT_ROMAN_ITALIC
Tax Issues: NEC Principals met with the President on Monday to
discuss pension simplification and broader tax issues. A
determination was made to continue to develop legislative support
for the pension simplification proposal that has already been
announced. In addition, NEC and Treasury will jointly coordinate
a background series on tax issues. In general, the attendees at
these sessions will be NEC Principals or their designees. The
first session of the series is scheduled for early next week and
will provide background information on the US tax system as well
as current economic and political rationales for tax reform.
Future sessions will focus on the particular proposals advanced
by Members of Congress.
FAA Reform: NEC, OMB and DOT staff worked with bipartisan
Commerce Committee staff to find acceptable language on
personnel, procurement and budget reforms. Work is continuing
with a goal of reaching agreement on a bill sometime in the first
half of September.
Intelsat Restructuring: Bo Cutter made further calls to EU and
South American Telecom and Finance Ministers to discuss INTELSAT
restructuring. To date, all parties have agreed to support the
U.S. position at the INTELSAT Assembly of Parties to be held at
the end of August.
ISTEA Reauthorization: An interagency group has begun to
consider legislative and political strategy for possible action
next year on reauthorizing ISTEA.
Technology Budget: Dr. Tyson briefed over 300 representatives of
high technology companies and universities on the impact of
Republican budget cuts on R&D. During August, NEC staff will
work on follow
-up activities, such as analyzing the impact of
these cuts, contacting editorial boards, and planning potential
Presidential and Vice
-Presidential events.
Encryption: NEC staff will work with OSTP and NSC to build
industry and public support for the Administration's new
encryption policy. A meeting with the Software Publishers'
Association and the American Electronics Association is scheduled
for August 17th. The new policy will include lifting export
controls on commercial key escrow products which meet certain
requirements.
Superfund: The NEC and CEQ led an interagency meeting on
Superfund, including a review of communications needs and
opportunities. The group will coordinate the Administration's
response to Congressional Superfund reauthorization proposals,
which are expected to be introduced in legislative form sometime
after the recess.
Oil Imports Study: The NEC is leading an effort to resolve
interagency differences over a DOE
-drafted study examining the
costs and benefits of oil imports. The study was promised as
part of the Administration's Oil and Gas Initiative.
Reform of Export Subsidies for Agriculture: The public comment
period has ended for the Administration's proposals to
restructure USDA's Export Enhancement Program (EEP). NEC staff
is leading the interagency effort to analyze the results, and is
conducting staff
-level meetings to prepare the policy decisions
for the NEC Deputies in September.
G.I. Bill for America's Workers: Senator Dole included Senator
Kassebaum's G.I. Bill for America's Workers in his Welfare Bill
for Senate action this week. The bill authorizes the states to
use federal education and training funds for high school
students, dislocated and disadvantaged workers to finance welfare
reform. The bill does not require the states to incorporate the
centerpiece of the President's proposal -- Skill Grants for
Dislocated Workers to inject more choice and competition into
adult training and education. We are working closely inside the
WH with those concerned about welfare reform. The result in the
Senate on the workforce issues is particularly important at this
time: The bi
-partisan CAREERS bill reported out of House
Education Committee -- which requires the states to incorporate
Skill Grants to build a market
-driven approach -- is being
challenged by many House Republicans who want to join the Senate
in vesting discretion on such issue in the governors.
Activities of the Assistant to the President
LAURA D'ANDREA TYSON
Week of August 7, 1995
PRINTER FONT 12_POINT_ROMAN
Internal: Met to discuss tax issues, securities litigation and
international trade issues. Continued meetings on international
trade issues, budget scenarios, and candidates for the Federal
Reserve. Met with CIA Director Deutch to discuss intelligence
issues.
External: Spoke to three separate groups of businessmen
-and
women regarding the Administration's economic policies. Met with
Clyde Prestowitz and with Felix Rohatyn.
PRINTER FONT 12_POINT_ROMAN_ITALIC
Week of August 14, 1995
PRINTER FONT 12_POINT_ROMAN
Internal: Will meet with CEA and Treasury Department to discuss
Federal Reserve candidates, will meet with CIA Director Deutch to
discuss intelligence issues. Will meet with Chairman Greenspan
and with Secretary Christopher. Will meet to discuss health care
reform and endgame scenarios. Will begin to plan for the fall
economic conference.
External: Will interview with NHK network, Bloomberg News, and
Business Week. Will headline a Clinton
-Gore Reelection Committee
event in New York.
PRINTER FONT 12_POINT_ROMAN_ITALIC
Activities of the Deputy Assistants to the President
BO CUTTER
Week of August 7, 1995
PRINTER FONT 12_POINT_ROMAN
Internal: Continuation of work on the budget; Russian HEU;
various international economic issues; rural credit; light truck
CAFE; intelligence issues; APEC; and Mexico.
External: Meetings on commercial remote sensing and UK
civilian aviation; telephone calls to various international
officials regarding Intelsat.
Speaking engagements: None.
Press: Ken Karube, JiJi Press, re: framework talks.
PRINTER FONT12_POINT_ROMAN_ITALIC
Week of August 14, 1995
PRINTER FONT 12_POINT_ROMAN
Internal: On vacation.
External: On vacation.
PRINTER FONT 12_POINT_ROMAN_ITALIC
GENE SPERLING
Week of August 7, 1995
PRINTER FONT 12_POINT_ROMAN
Internal: Continued work on budget. Worked on preparation for
environment event. Prepared talking points for NPR radio
address. Worked on preparation/strategy for the United We Stand
event. Drafted Q&A for POTUS press conference. Continued work
on education. Attended meetings with Cabinet and President on
budget strategy.
External: Traveled to Dallas for USWA event. CNN interview with
National Economic Adviser Tyson on Medicare.
PRINTER FONT 12_POINT_ROMAN_ITALIC
Week of August 14, 1995
PRINTER FONT 12_POINT_ROMAN
Internal: Continue work on the budget, urban policy, health care
and education.
External: None.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Gay L. Joshlyn (JOSHLYN_G) (OPD)
CREATION DATE/TIME:14-AUG-1995 09:50:53.56
SUBJECT: ISTEA/NHS Meeting Tomorrow
TO: Michael D. Deich
(DEICH_M) (OPD)
READ:14-AUG-1995 09:51:17.29
TEXT:
There will be an ISTEA/NHS meeting tomorrow in Bob Litan's office at 11:00 am.
The attendees will be: Gene Conti, Steve Palmer, Ken Schwartz, & Sharon
Barkeloo. POC-Diane Limo 5-3120. I put this on your calendar.
Gay
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Sheryll D. Cashin (CASHIN_S) (OPD)
CREATION DATE/TIME:28-SEP-1995 15:01:31.22
SUBJECT: DOT's Targeted Demonstrations for EZ/EC
TO: Remote Addressee
([email protected]@INET)
READ:NOT READ
TO: Remote Addressee
([email protected]@INET)
READ:NOT READ
TO: FAX (94017420,Alvin Brown)
(TLXA1MAIL_\F:94017420\C:Alvin Brown\)
READ:NOT READ
TEXT:
DOT wants to make five grants of $50,000 each to support five small scale demo
projects in EZ/ECs. The $50,000 would be TA/planning money to help the
communities procure/implement ISTEA funds to complete physical improvement
projects in/near transportation nodes. The DOT folks and I met with Ann Weidel,
Pam Swain, and Sharon Colbert this week. DOT had on their own identified
eligible projects from 10 EZ/ECs. They asked for the task force's help in
identifying which of these projects were real, i.e. in the benchmarks and ready
to go. Ann and Sharon said they would get back to DOT (Judith Burrell) and me
next week and then we would talk to you guys about how to move forward with the
identified communities. I am alerting you now because I want to be sure the
task force comes through next week and that we make this project happen. DOT's
intention is to fund projects that would be COMPLETED by Sept. 96. This is
precisely the kind of physical change we want to foster over the next year.
Thanks.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Michael D. Deich (DEICH_M) (OPD)
CREATION DATE/TIME:10-OCT-1995 17:44:52.17
SUBJECT: infra bank; per your request
TO: Randolph M. Lyon
(LYON_R) (OMB)
READ:11-OCT-1995 10:10:19.80
TO: Joseph Minarik
(MINARIK_J) (OMB)
READ:10-OCT-1995 17:47:45.43
TEXT:
hope this is helpful.
ATTACHMENT 1
ATT CREATION TIME/DATE:10-OCT-1995 17:44:00.00
ATT BODYPART TYPE:p
ATT CREATOR: Michael D. Deich
TEXT:
PRINTER FONT 12_POINT_ROMAN
August 8, 1995
MEMORANDUM FOR LAURA TYSON
FROM: Michael Deich
SUBJECT: Background for meeting with Felix Rohatyn
Rohatyn states that he fully supports the President's plan to
balance the budget in ten years. He argues, however, that the
social costs of a balanced budget will be too high unless annual
GDP growth reaches 3
-3.5 percent instead of the roughly 2.5
percent assumed in consensus forecasts. To achieve this higher
growth rate, Rohatyn calls for the creation of a new trust fund
to be "owned by the states" and therefore off
-budget. The Trust
Fund would be receive revenue from 4.3 cents of the current gas
tax; the $4.3 billion annual budget shortfall would be made up in
some unspecified manner during reconciliation. Rohatyn
anticipates that the Trust Fund would issue $10
-15 billion
annually in 30- or 40
-year bonds backed by future gas tax
receipts. This proposal is a variation on a theme that Rohatyn
has played for some time (see attachment).
Macroeconomic consequences. In terms of its macroeconomic
effects, this proposal would be much like any other fiscal
stimulus of $10
-15 billion per year. If the Fed believes that
potential GDP growth is about 2.5 percent per year, it presumably
would raise interest rates in order to offset the stimulus, and
real growth would not reach Rohatyn's desired 3.0
-3.5 percent.
In his memo, however, Rohatyn argues that government borrowing of
$10
-15 billion would not affect markets, and seems to imply that
the Fed might ignore the stimulus, in which case increased growth
is at least theoretically possible. My understanding, however,
is that the Administration generally agrees that potential GDP
growth really is around 2.5 percent, so the proposed stimulus
would only accelerate inflation.
The best case that can be made for this proposal is to
assume that the returns to infrastructure investment exceed the
average rate of return on private investment. Many high
-return
infrastructure projects surely exist. In practice, however,
federal programs have had limited success targetting high
-return
projects. As Mark Mazur noted in his memo of last week, an
interagency review concluded that there was no credible evidence
supporting the claim that public infrastructure investment, on
average, has a social rate of return greater than that of the
private investment that would be displaced under the Rohatyn
plan. Even if one believed that infrastructure did have a higher
return than private investment, however, the sums involved in
this proposal are too small to increase potential GDP growth by
more than a few tenths of a percentage point, rather than the
.5
-1.0 percentage points that Rohatyn seeks.
Political Complications: (1) This proposal would cost $4.3
billion per year. Rohatyn's suggestion that the money be found
during reconciliation would be more helpful if it were more
specific; (2) in essence, this would create the functional
equivalent of a capital budget for a narrow sector of the federal
budget. The Administration rejected this course during its
consideration last year of various capital budget proposals; (3)
OMB's preliminary judgment is that scoring the Trust Fund
off
-budget would require a waiver of the BEA.
An Administration Alternative. The President's FY 1996 Budget
proposed transferring $2 billion per year from the Highway Trust
Fund to new State Infrastructure Banks (SIBs). The SIBs would be
required to "leverage" their federal grants through some
combination of borrowing, user fees, and state funds. The SIBs
would be able to use federal grants as a reserve fund against
which they could borrow further monies for infrastructure
investment. In contrast to the Rohatyn proposal, SIBs would not
be able to borrow against future federal grants. Funding issues
aside, the Administration's proposal is similar to the Rohatyn
proposal.
Last week, the Senate Appropriation Committee approved $250
million for SIBs and authorized states to use up to 10 percent of
their federal highway apportionment to fund a SIB. The House has
not included this provision in its bill. You might solicit
Rohatyn's support for getting some type of SIB established this
year. Although a far cry from the expansive program envisioned
by Rohatyn, the Senate bill would be an important first step that
could easily be expanded if, as Rep. Schuster desires, ISTEA is
reauthorized next year.
END ATTACHMENT
1
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Daniel J. Corbett (CORBETT_D) (OMB)
CREATION DATE/TIME:15-NOV-1995 10:57:15.64
SUBJECT: RE: National Highway System Bill
TO: Robert E. Litan
(LITAN_R) (OMB)
READ:15-NOV-1995 14:50:37.73
CC: Kenneth L. Schwartz
(SCHWARTZ_K) (OMB)
READ:15-NOV-1995 10:59:18.12
CC: Karin L. Kizer
(KIZER_K) (OMB)
READ:15-NOV-1995 11:24:21.30
CC: Charles E. Kieffer
(KIEFFER_C) (OMB)
READ:15-NOV-1995 11:07:24.59
CC: Charles S. Konigsberg
(KONIGSBERG_C) (OMB)
READ:15-NOV-1995 12:48:26.22
CC: Lisa Kountoupes
(KOUNTOUPES_L) (OMB)
READ:15-NOV-1995 11:55:39.62
CC: David E. Tornquist
(TORNQUIST_D) (OMB)
READ:15-NOV-1995 11:00:29.99
CC: Mikey Deich
(DEICH_M) (OPD)
READ:20-NOV-1995 08:20:07.93
TEXT:
Ken's e-mail emphasized the budget aspects of the bill, which
turned out relatively well for us, except for elimination of the
congestion pricing funding.
However, we pretty much lost on the major safety provisions in the
bill, which DOT feels will have a horrible impact, both in terms
of fatalities and injuries, and eventually through increased
medical costs. DOT was interested in vetoing the bill because of
the safety provisions. They backed off of the veto recommendation
after consultation with White House Legislative Affairs earlier in
the process.
Below is a summary of the major safety provisions in the bill:
- Consistent with the House version, the National Speed Limit will
be repealed. The Senate version had kept a National Speed Limit
for trucks.
- An ISTEA provision that "penalizes" states for not having
motorcycle helmet laws is repealed. The ISTEA provision requires
States without motorcycle helmet laws to transfer a percentage of
their highway construction funds to highway safety programs.
There are about 3,000 motorcycle fatalities each year and
thousands of injuries. A great deal of the cost of these
accidents is passed onto Federal insurance programs such as
Medicaid, unemployment compensation, etc.
- A version of the so-called "Frito Lay" amendment is retained.
This provision would exempt a large percentage of commercial
vehicles and operators from safety requirements related to driver
qualifications, operator fatigue and hours of service, drug and
alcohol use and vehicle safety standards.
One budgetary issue not included in Ken's e-mail is the fact that
no funding is provided for a replacement for the Wilson Bridge.
The bridge has urgent and significant structural and capacity
problems. The bridge is the only federally-owned bridge on the
Interstate system, although it is jointly operated by Maryland,
Virginia and the District. A new Wilson Bridge will cost about $1
billion. This may become a 1997 budget issue because of the
bridge's urgent needs and because it will be argued that the
Federal ownership of the bridge translates into Federal
responsibility for replacement of the facility. At this point,
Sen. Warner is the primary advocate of addressing the bridge
problem.
We hear that the conference report may be filed today and that the
bill will be taken up at the end of this week or early next week.
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Sharon A. Barkeloo (BARKELOO_S) (OMB)
CREATION DATE/TIME:29-DEC-1995 10:35:49.55
SUBJECT: Transit position on ISTEA reauthorization
TO: Michael D. Deich
(DEICH_M) (OPD)
READ: 2-JAN-1996 07:45:10.60
TEXT:
I wrote a memo to you and Bob Litan last week summarizing the
meeting we had with transit representatives that you could not
attend. I am trying to figure out if the memo ever got out while
I was on leave. Did you receive a copy?
RECORD TYPE: PRESIDENTIAL (ALL-IN-1 MAIL)
CREATOR: Michael D. Deich (DEICH_M) (OPD)
CREATION DATE/TIME: 2-JAN-1996 07:47:43.88
SUBJECT: RE: Transit position on ISTEA reauthorization
TO: Sharon A. Barkeloo
(BARKELOO_S) (OMB)
READ: 2-JAN-1996 09:35:21.51
TEXT:
Sharon:
thanks. the memo was sent but i've beeen awol for a while. i'll read it and
call you today.
michael