Follow the Money…

On February 1, president Obama unveiled his Fiscal Year 2011 US$3.8 trillion budget. Sustainable transportation activists saw some reason to celebrate: out of US$6.7 billion dedicated to transportation, US$530 million was allocated to the Partnership for Sustainable Communities, a programme aimed to enhance metropolitan affordable housing and transportation connections. Obama has also set aside US$1 billion for high-speed rail (HSR), adding to the US$8 billion that went to HSR from last year’s US$787 billion stimulus measure, the American Recovery and Reinvestment Act (ARRA). And on February 17 the administration announced the winners for US$1.5 billion in another part of the ARRA, the Transportation Investments Generating Economic Recovery (TIGER) awards. Highway projects received 23% of funding, while rail projects won 19%, transit projects 26%, ports 7%, and multimodal projects received 25%.

“I think this administration has given the signal that it’s serious about making communities livable,” said Caron Whitaker, campaign director for the advocacy organisation America Bikes. “It’s serious about biking and walking.”

Construction and Cars versus Operations

Still, the amount of money being dedicated to any kind of transportation revolution is small. One of the largest single recipients of ARRA money in the country is the fourth bore of the Caldecott Tunnel, a US$420 million project to relieve congestion on a California highway that carries about 160,000 vehicles daily. The Department of Transportation (DoT) has awarded US$197.5 million in ARRA money to the project. The rebuild of a highway from the Golden Gate Bridge into San Francisco has also received stimulus money – US$122 million – and then an additional US$46 milion in TIGER funds. And those are just two out of many highway construction projects that received ARRA funding.

Add to those figures last year’s US$3 billion Cash for Clunkers programme, in which consumers traded in old gas guzzlers for new, slightly more fuel efficient cars, and the combined US$52 million that General Motors has received in the form of loans and the taxpayer purchase of 60% of its stock. Then compare this amount to US$114 million: the projected deficit for the San Francisco public transportation system – which carries about 700,000 passengers daily – over the next two years. In order to eliminate that deficit, the agency may cut service by 10%. (SamTrans, the transit agency south of San Francisco, has cut its service by 15% in order to close its budget gap.) Yet no – or very little – money goes from the federal government to transit operations. “It’s a matter of political will,” said Jim Berard, director of communications for the House of Representatives Committee on Transportation and Infrastructure.

On February 12, San Francisco Bay Area transit advocates received a sign that this political will may be emerging: the Federal Transit Administration announced it would deny US$70 million for a rail extension to the Oakland Airport. The money that would have gone to construct a project widely considered a boondoggle will, instead, be divided among the region’s ailing transit agencies for maintenance.

Congress

Meanwhile in the House and the Senate, the US$500 billion renewal of the 2005 Surface Transportation Bill languishes. “The big issue,” said Berard, “is how we’re going to pay for it.”

According to Berard, Chairman of the House Committee on Transportation and Infrastructure James Oberstar (D-Minnesota) has recommended an increased federal gasoline tax (now 18.4 cents), which has not gone up since 1993. Another possibility is taxing people based on vehicle miles travelled (VMT). But both these revenue-generating measures come with problems. People are buying more fuel-efficient cars, thus lowering what lawmakers can expect to generate from a gas tax; and both gasoline and VMT taxes depend on people doing something that good transportation policy seeks to discourage: driving.

In lieu of the stalled transportation bill, the House passed a job creation bill in December. “Ten percent of the transportation money in the bill will go towards operations,” said Matt Lewis, transportation staff writer for the Center for Public Integrity. “At the forefront is the idea that saving a job that is going to be cut is just as good as creating a job through a capital project.”

Susan Vaughan is a San Francisco bicyclist, gardener, artist and public transportation activist in search of that most elusive of all luxuries: free time. She also occasionally maintains the blog Car-Free Talk.

The schemes have generally been presented as pro-environment, often with names like the Austrian “Okopramie” (Eco Premium). There is at least some evidence to back up the green claims:  In the US, for example, in the month the scheme ran, the top trade-in was the Ford Explorer 4Wheel Drive; while the Toyota Corolla and the hybrid Prius were top-sellers, luxury car sales plummeted. Compared with a year before, 18% fewer BMWs sold in the US in August, the month of most “cash for clunkers” transactions. In the same month, Ford sales were 17% higher than in August 2008. But not thanks to their gas guzzlers.

The issue of when it becomes environmentally beneficial to scrap a car is hotly contested. Professor Baback Yazdani, Dean of Nottingham Business School, UK, suggests that when an average car reaches four to six years old, its emissions make it greener to invest in a new car. Others argue it is never green to replace a roadworthy car with another car.  Willem Buiter, Professor of European Political Economy at the London School of Economics and Political Science, and no environmentalist, wrote: “It’s like being paid to burn down your house to encourage the residential construction industry”.

Professor Buiter and others make another point. If the schemes are short term, then people will probably buy sooner than they might otherwise. So after the scheme ends, sales will fall. This briefly delays bankruptcies and unemployment, but it does not effectively protect the car industry.  If governments fund the schemes long term, then demand might stay artificially high – good for the car industry, but worse for the planet. And it would mean a new form of protectionism. Protecting national car industries has always been the primary aim of the scrappage schemes. Governments reason that the recession risks destroying car industries so that “when” prosperity returns there will not be the capacity to take advantage. Governments also get more tax revenue from a prosperous economy.

It’s taken for granted that the car industry is an essential part of national economies. As the Managing Director of Nissan UK, Paul Willcox, said when the UK extended its scheme, it “has rightfully placed the car industry at the top of the economic agenda where it belongs”. And President Sarkozy promised, “La France ne laissera pas tomber son industrie automobile”(France won’t give up its car industry). As one country adopted a scheme, others felt they could not be left behind.

Keynes said in an economic downturn there could be a “liquidity trap”. Consumers may stop spending because they fear recession. Demand falls; bankruptcy and unemployment rise. Demand falls further, so governments want us to spend our way out of recession.

Much of the opposition to scrappage schemes comes from the right. They argue the state should not take on more power and interfere in markets. This would at least be consistent with their approach to other industries in decline. A taxpayer does not have a choice about supporting the car industry and may never want to or be able to benefit from the scrappage scheme. These arguments are similar to what might be heard from many carbusters, who could find themselves with some very strange bedfellows in the coming months. Why should we all subsidise an industry which damages the planet? Would resources not be better used in unhooking us from dependence?

Some of the schemes point to how they could be applied in a truly green way. The Canadian scheme “Retire Your Ride” offers cash in exchange for an old car, or alternatives like a bicycle, public transport pass or membership of a car sharing scheme. Here perhaps is a model that can be developed, along with employers’ incentives as in Belgium, Britain and Holland that encourage cycling. These schemes, coupled with a movement towards more sustainable production in the auto industry, and the kind of “green new deal” John Urry outlined in Carbusters #39, could be the key to help individuals and the economy kick their car habit.

article and illustration by Roger Bysouth

American Recovery and Reinvestment Act (ARRA)

Early in his administration Obama signed into law the American Recovery and Reinvestment Act (ARRA) – a US$787 billion stimulus bill, US$48.2 billion of which will go towards transportation. Most of that – US$27.5 billion – is dedicated to highways and bridges. The rest gets distributed to various mass transit systems, with almost US$10 billion for state and local public transportation – but only capital projects.

Buried in the ARRA is the US$1 billion “Cash for Clunkers” programme in which car owners with vehicles that get 18 miles per gallon (mpg) or less can exchange their gas guzzlers for US$4,500 towards the purchase of a new vehicle that gets at least 22 mpg. Some environmentalists, however, see this programme as a handout to automakers, rather than a serious way to tackle foreign oil dependence, climate change, or any one of the other dire problems associated with car dependence.

Corporate Average Fuel Economy (CAFE)

In mid-May, the Obama administration announced new automobile fuel economy standards, the Corporate Average Fuel Economy (CAFE), which call for improvements of 5% every year – standards that will require that cars achieve 39 mpg and light trucks 30 mpg by 2016, 40% more efficient than cars are now. The new CAFE standards underscore the irrelevancy of the Cash for Clunkers program, but have their own weaknesses: sport utility vehicles, or SUVs, those humongous gas guzzlers long the favourites of families, have always been classified as “light trucks”. These new mandates also leave the American fleet at 2 mpg lower than the European fleet.

California Waiver

In June, the Obama administration reversed Bush administration policy by granting waivers long sought by California and 13 other states to set auto emission standards higher than national ones. Those emission standards will be higher for about two years – when the new national CAFE standards start to kick in.

American Clean Energy and Security Act

Passed by the House of Representatives in June, the American Clean Energy and Security Act addresses greenhouse gas emissions from mobile sources, but it overrides the United States Clean Air Act by permitting the construction of new coal-fired power plants for up to a decade with no additional emission reduction requirements. According to Auto Glass and Insurance Industry News, if the bill passes, the US Secretary of Energy would have to create a large-scale plug-in programme and assist car manufacturers financially in their transition to producing electric vehicles.

Surface Transportation Bill

Work has begun on a half trillion-dollar reauthorisation of the 2005 Surface Transportation Bill. Currently the bill seeks to set aside nearly US$100 billion for public transit. However, in June the Obama administration announced its wish for an 18-month postponement, a decision that has been opposed by many. Jeff Mapes, news writer and author, surmises that Congress will have to raise taxes in order to pay for this bill and that perhaps the Obama administration is just not ready for it. “I do think Obama is interested in change”, says Mapes. “But it’s politically difficult to do… One can argue that the 18-month delay will give his transportation department time to craft a plan”.

GM and Chrysler

Obama appointed a “car czar” to tackle the collapse of auto giants General Motors (GM) and Chrysler. Under this czar, American taxpayers have become majority owners of GM and are likely to end up contributing US$50 billion for its transformation into a leaner manufacturer of smaller, more fuel efficient cars with fewer dealerships. Meantime, Chrysler got US$6.6 billion from the government to finance its exit from bankruptcy and its sale to Fiat. Many more billions in taxpayer dollars are likely to be funnelled to GM’s suppliers and financial supporters. In addition, now that Americans are majority owners of GM, congressmen and women are making efforts to keep dealerships in their own districts open.

GM and Chrysler “were both clearly failing enterprises and the bailouts were done just to… prevent massive numbers of unemployed [from hitting] the claims lines all at once”, says James Howard Kunstler, author of The Geography of Nowhere. “I doubt that they will survive in any recognisable form … Personally, I think the whole Happy Motoring paradigm is in its death throes, though most Americans don’t realise it”, he adds.

Does Obama realise it? That is hard to say. If he does, he may not be politically in a position to say so, and he certainly has not been heard calling for similar fuel taxes as in Europe.

By Susan Vaughan

“If the new administration doesn’t consider transportation for its climate and its energy impacts, then…ultimately we’ll have dire economic consequences,” said Randy Neufeld of the Chicago-based Active Transportation Alliance and president of the lobbying group America Bikes. The key, he said, is moving more federal funding into metropolitan areas for bicycle, pedestrian and transit improvements. Right now, no one knows whether the Obama administration and the new Congress will do this, but environmentalists are studying the signs.

Change?

Within a week of his inauguration, Obama reversed a Bush administration executive order forbidding states – especially the state of California, which had passed a law to get it into compliance with the Kyoto Protocol – from regulating auto emissions. He is also permitting federal agencies to raise fuel efficiency standards.

But Obama’s big test will come with the US$825 billion stimulus package that should be ready for him to sign by mid-February. This package, the largest in American history, is intended to lift the national economy out of its malaise.

Sustainable transportation organisers have their own ideas for that bill – and for a transportation bill that may be voted on in the fall – but right now, they are struggling to get Congress to restore funding for local and regional mass transit agencies, funding that had been cut by late January to make way for tax cuts.

San Francisco’s Municipal Transportation Agency alone, which records about 700,000 daily trips, is projected to be short US$90 million out of an annual budget of US$787 million this year. Transportation for America, a mass-transit lobbying group, is organising now to get money restored for transit agencies.

Signs of Hope

Nonetheless, many environmentalists are optimistic. During the campaign, said Jeffrey Miller, president of the Washington, DC- based Thunderhead Alliance for Biking and Walking, Obama talked about Safe Routes to School, the federal programme geared at increasing the number of children walking or bicycling to school. “He gets it and supports it,” said Miller.

Obama also pledged to have Americans getting 10% of their energy from renewable sources by the end of his first term, and to achieve a 15% reduction in electricity demand by the end of the next decade. In addition, he took Amtrak from Philadelphia to Washington, DC for his inauguration.

Balancing Change with Business as Usual

However, just as Obama was declaring victory in November, American auto company executives were lining up at the congressional trough, begging for handouts to keep their struggling industries in operation. Congress gave them nothing, but they did get a US$13.4 billion bailout from Bush, with another US$4 billion to come in February if needed. This lifeline has given Obama time to create a plan around the auto industry. But what kind of plan will he create?

Obama, a Democrat, has chosen former Republican Illinois Congressman Ray LaHood to be transportation secretary. He has also chosen Tom Vilsack, the former governor of Iowa, to be agriculture secretary, and Steven Chu, the former head of Lawrence Berkeley National Laboratory, to be his energy secretary. Through these appointments, Obama may be indicating his support for ethanol, a plant-based alternative to petroleum: Iowa and Illinois are two big growers of corn for ethanol, and Chu has voiced support for cellulosic ethanol.

But, for many sustainable living advocates, ethanol can enrich agribusinesses, yet it is unlikely to give Americans the “energy return on energy invested” that they are used to from oil, natural gas and coal, especially without seriously impacting soil health and world food supplies. Ethanol “doesn’t really address the core energy issue in terms of using less,” said Neufeld. “I think conservation is where it’s at.”

Wish Lists

In the interests of conservation, sustainable transportation activists have wish lists. “I would like an incremental downsizing of the highway system, and an upsizing of the rail system,” said San Francisco State geography professor and bicycle activist Jason Henderson.

Henderson would like Obama to give “fireside chats” like those given by president Franklin De- lano Roosevelt. “Americans could save energy,” said Henderson, “if Obama told Americans, ‘We gotta slow down. ’Otherwise we’re going to go medieval. Al Gore told us we had 10 years to reduce greenhouse gas emissions.”

As to the transportation bill that should now be in the works in Congress, said Caron Whitaker, campaign director for America Bikes, “We need…to build a green infrastructure and active public transportation systems.” Such a system would ensure networks for bicycle and walking in every community, and safe routes to transit stops, schools, and shopping centres for everyone from school-age children to seniors.

By Susan Vaughan