Two of the Big Three on transportation and infrastructure reform in America, Gov. Ed Rendell, Democrat of Pennsylvania, and Gov. Arnold Schwarzenegger, Republican of California (they make up the group, Building America’s Future, along with Mayor Mike Bloomberg, Independent of New York City), in a conversation on that very same subject — calling for a reprioritization of infrastructure development and planning throughout the country. Not only will it modernize infrastructure, they say, bringing it into the 21st century, but it will also quicken economic recovery. By that standard, America is already a decade behind.

The governors join Jay Etta Hecker, former GAO Director of Physical Infrastructure; and Douglas Foy, former Secretary of Commonwealth Development for Massachusetts, and former Executive Director of the Conservation Law Foundation, as they grapple with a commonly heard argument on Capitol Hill these days: “The federal government must create a comprehensive infrastructure policy in concert with national energy, environmental, and economic priorities.”

Hosted by the Miller Center of Public Affairs at the University of Virginia, in partnership with Blueprint America and PBS NewsHour.

[Participants]

Robert MacNeil

Until his 1995 retirement, Robert MacNeil was executive editor and co-anchor of The MacNeil/Lehrer NewsHour, a 20-year nightly partnership with Jim Lehrer on PBS. He began his 40-year career as a correspondent for Reuters, NBC News, and the BBC before joining PBS in 1971. There, he teamed with Jim Lehrer to co-anchor public television’s Emmy-winning coverage of the Senate Watergate hearings. Their collaboration led to The MacNeil/Lehrer Report, launched in October 1975. Eight years later, the program became The MacNeil/Lehrer NewsHour, the nation’s first full hour of evening news. They founded MacNeil/Lehrer Productions and produced many programs broadcast on PBS, network, and cable television. MacNeil’s honors include Peabody Awards, a Dupont-Columbia Award and the Fred Friendly First Amendment Award. He was inducted into the Television Academy Hall of Fame with Jim Lehrer in 1999. MacNeil has written several books, and his memoir, Looking for My Country: Finding Myself in America, was published in 2003.

Edward G. Rendell

Edward G. Rendell is serving his second term as Pennsylvania’s 45th Governor, overseeing a $28.3 billion budget in the nation’s sixth-most-populous state. His strategic investments have energized Pennsylvania’s economy, created jobs, revitalized communities, improved education, protected the environment, and expanded access to health care for children and affordable prescription drugs for older adults. Governor Rendell is also working to create jobs in the emerging alternative energy economy and develop strategies to reduce dependence on foreign oil and save families money. Rendell was the 121st Mayor of the City of Philadelphia (1992–99), eliminating a $250 million deficit; balancing the city’s budget and generating five consecutive budget surpluses; reducing business and wage taxes for four consecutive years; implementing new revenue-generating initiatives, and improving services to neighborhoods. The New York Times called the Philadelphia renaissance under Rendell “the most stunning turnaround in recent urban history.” Before serving as Mayor, Rendell was elected district attorney of the City of Philadelphia (1978–85).

Arnold Schwarzenegger

The world knows Arnold Schwarzenegger as a bodybuilder and a Hollywood action hero, but he is also a successful businessman, philanthropist and California’s 38th Governor. Governor Schwarzenegger’s most notable accomplishments include helping to reach a bipartisan agreement to reduce California’s greenhouse gas emissions, increasing the minimum wage while lowering the state’s unemployment rate and overhauling the workers’ compensation system – cutting costs by more than 35 percent. Schwarzenegger is the first Governor in decades to make major investments in improving California’s aging infrastructure through his Strategic Growth Plan, aimed at reducing congestion and cleaning the air. He also established the Hydrogen Highway and Million Solar Roofs Plan. As Governor, he has been California’s most effective ambassador, traveling across the country and around the world promoting California-grown products, cutting-edge technologies and diverse travel destinations. Governor Schwarzenegger earned a college degree from the University of Wisconsin and became a United States citizen in 1983.

JayEtta Hecker

JayEtta Hecker is a Senior Fellow at the Bipartisan Policy Center, an Adjunct Fellow at the Rand Corporation, and an independent consultant working to develop strategies for improving the economic performance of U.S. transportation networks. From 1982 to 2008, Hecker served in the U.S. Government Accountability Office. Her positions at GAO included Director of International Relations and Trade (1993–99), Director of Government Business Operation (1999–2000), and Director of the Physical Infrastructure Team (2000–08). As head of the Physical Infrastructure Team, she was responsible for directing GAO work related to all transportation modes including federal highways, transit, freight and passenger rail, aviation, and maritime issues. Hecker testified frequently before Congress and regularly spoke to professional associations and the media. Prior service includes the U.S. Regulatory Council (1979–81), Commodity Futures Trading Commission (1976–79), and the U.S. Agency for International Development (1971–76).

Douglas Foy

Douglas Foy is the President and founder of Serrafix, a consulting firm working to transform America’s energy profile. At Serrafix, Foy has helped a variety of cities, including New York, Milwaukee, and Cambridge, Mass. to implement large-scale energy savings plans. Foy served as the first Secretary of Commonwealth Development in the administration of Massachusetts Governor Mitt Romney, where he oversaw the agencies of Transportation, Housing, Environment, and Energy. Foy’s agencies developed the Commonwealth’s first comprehensive transportation plan emphasizing transit; the nation’s most comprehensive climate action plan; and numerous programs, policies, and investments to promote sustainable development and smart growth. Before his work in state government, Foy served for 25 years as the President of the Conservation Law Foundation (CLF), the first regional environmental advocacy organization in the nation. For this work, Foy received the President’s Environmental and Conservation Challenge Award, and the Woodrow Wilson Award for Public Service.

[Transcript]

ROBERT MACNEIL: To open the second season of the Miller Center Series, weʹre joined by a special audience, the nationʹs governors who are here in Washington, D.C. for their bipartisan winter meeting.

One of the major issues before them, and the subject of our discussion, is the nationʹs infrastructure. This week President Obama signed into law a $780 billion stimulus package. Of that, roughly $115 billion will go for infrastructure projects. Many say this is just the tip of the iceberg, and there are challenges ahead about how the money is spent, who oversees it and how it fits with a host of other priorities. To examine these questions, we turn to the chairman of the National Governorsʹ Association, the Democratic governor of Pennsylvania, Edward Rendell. Heʹs joined by Californiaʹs Republican Governor Arnold Schwarzenegger. Both men teamed up recently with New York Mayor Richard (sic) Bloomberg to form a coalition called Building Americaʹs Future, a group focused on renewing the federal commitment to funding state and local infrastructure needs.

Joining them is JayEtta Hecker, former director of physical infrastructure issues at the U.S. Government Accountability Office or GAO. She has fellowships at the Bipartisan Policy Center and the RAND Corporation.

And Doug Foy, former secretary in the Office for Commonwealth development of Massachusetts where he oversaw transportation, housing, environment and energy agencies; he is currently president of Serrafix, an energy consulting firm. Before we begin, some general background about the state of our infrastructure.

[BEGIN VIDEOTAPE]

NARRATOR: The countryʹs infrastructure rarely gets much attention until thereʹs a catastrophe; a power blackout or worse ‐‐ incidents such as the I‐35 bridge collapse in Minneapolis, Minnesota in 2007 that killed 13 people and left some 140 injured. The bridge has been reopened, but according to the Federal Highway Administration, there still are 72,000 bridges nationwide in need of repair. Among them, this one on Interstate 95 in Philadelphia.

UNIDENTIFIED MALE: When you see the drainage system, that is almost completely nonfunctional now. When youʹre here during a thunderstorm it can really be a dramatic, almost like Niagara Falls coming off these piers.

NARRATOR: A report by the American Society of Civil Engineers says the cost to fix the nationʹs infrastructure rose in the last four years from $1.7 trillion to $2.2 trillion. That includes fixing not just roads but everything from rail lines to sea ports, water treatments plants, the electrical grid and telecommunications systems. But the overall cost is only part of the problem. Critics say what also is needed is a national strategy for what to fund and how. Responsibility for the infrastructure is widely dispersed. It wasnʹt planned that way.

Infrastructure developed as the nation moved from a system of local roads to interstate canals and highways, from post offices to telegraph lines, to the Internet. Today roads and highways mostly are owned and operated by state and local governments. So are airports. The federal government runs the air traffic system and regulates railroads and waterways. The rest of the infrastructure system is largely in private hands. Those entities want and usually get a say in how resources are allocated. Creating a national strategy also means finding ways to set priorities. What are the trade‐offs between short and long‐term benefits? What should be fixed first? What new projects will serve the country best?

Even how money is raised to pay for infrastructure projects is being challenged. Right now most money comes from the federal government. Proposals have been put forward for more user fees such as highway tolls and carbon taxes. Another model calls for a national bank to provide loans for infrastructure spending. Some suggest that partnerships with private companies can reduce costs and provide greater efficiency.

If there is any area of agreement, it is on the cost of not acting. How and what is spent on infrastructure today will have an impact on everything from the economy to the ecology to the quality of life for the next generations.

[END VIDEOTAPE]

MACNEIL: Now on to our discussion. Each participant will have two minutes for an opening statement, and then a closing statement. In between weʹll have a larger discussion, and we begin with Governor Rendell.

GOV. EDWARD RENDELL: Hello. The video laid out some very important facts, and the stimulus program that was just signed into law is a good first step in helping us revitalize and repair our nationʹs infrastructure. But itʹs barely 5 percent of the total of the American Society of Civil Engineers say we need, $2.2 trillion. I believe we need to commit ourselves as a nation to significant infrastructure repair over the next five to ten years.

And that commitment will produce jobs. It will produce business for American factories, steel, lumber, concrete, asphalt. Itʹll be great for the economy, great for our public safety, great for our quality of life and for our economic competitiveness. But we have to change the way that infrastructure dollars have been spent in this country before. First and foremost we need accountability and transparency. The American taxpayer needs to know where their funds are going and how theyʹre being spent.

Secondly, we need to make sure that these dollars are spent in a way that not only betters our infrastructure but allows for the important environmental changes that we face, climate change, carbon reduction, so we have to have infrastructure thatʹs sustainable for us as a society.

Thirdly, we have to make sure that we fund it in a proper way, and the funding, the bill is so significant that we have to look at new, creative ways of funding including, perhaps, a federal capital budget, private and public partnerships, user fees, all of the things that have been delineated have to be explored.

And lastly weʹve got to make sure that the selection process, what gets spent on which project is taken out of the hands of the politicians. Itʹs not that the politicians donʹt sometimes do a good job and hit the mark, but the earmark process has eroded public confidence and infrastructure spending.

It has to be – the spending has to be transmitted through an infrastructure bank or some agency that in fact makes those determinations not based on political power. If we do all of those things, weʹll have a good infrastructure in this country.

Weʹll be more economically competitive. Weʹll help our environment. Weʹll create jobs. Weʹll do something that this country has needed for an awful long time.

MACNEIL: Thank you, Governor. Now to Doug Foy.

DOUGLAS FOY: Thank you, Robin, and thank you for having us here today. I think weʹre going to have an interesting time actually having a debate here, because we probably all agree on many, many of these issues, but just to add a few points to the ones that Governor Rendell made, this really is the ideal audience for this conversation because ultimately many of the most important infrastructure decisions fall on the laps of governors.

You really – the rubber meets the road in governorsʹ offices. The stimulus bill creates a critically important, perhaps once in a lifetime opportunity to finally get these investment decisions right.

And we do have a very challenging economic situation facing all of us as a nation, and it reminds me of the British general who turned to his troops at one point and said ʺMen, we have run out of money. Now we must learn how to think.ʺ And we are really facing that with infrastructure these days, so I actually come at this with six major thoughts in mind, and I think Governor Rendellʹs already enumerated a bunch of them.

One, we do need a national agenda, a strategy. We havenʹt had a national strategy on transportation or many of these other elements since the Eisenhower days. We need to spend every dollar carefully and wisely and indeed these need to be treated as investments that produce a large array of returns across many sectors, not just transportation, but housing, environment, climate control.

We need to take, as a first priority, repairing what we already have; fix it first. The infrastructure we have built is our single greatest asset and we cannot allow it to fall into disrepair as we have done for going on 50 years now.

We need to treat all modes of transportation equally. Itʹs always amazed me that we refer to driving and roads and bridges, and everything else is alternative transportation, just sort of like referring to a woman as an alternative man. Itʹs just ludicrous. Walking is just as important as anything else in transportation.

We need to bust the silos between our agencies so theyʹre thinking together on this; housing, environment, energy, transportation need to work together. It needs to be taken out of the hands of highway engineers, for instance.

And finally we need to have transparency, or otherwise the American public will not follow us and will not follow the leadership of these governors and others.

MACNEIL: Thank you. Governor Schwarzenegger?

GOV. ARNOLD SCHWARZENEGGER: Well, I think, first of all let me just say I am so excited about the fact that weʹve formed this partnership with Governor Rendell and Mayor Bloomberg. It was very important this partnership to show that it is – itʹs nothing to do with politics. Itʹs not to do with parties.

That he was a Democrat and a Republican and then an Independent that formed a partnership and put the spotlight on this very important issue. We both happen to be very passionate, all three of us, very passionate about infrastructure, because we in California have made a big move forward in that area because the people of California have approved $42 billion of infrastructure.

A whole package to redo our levy system and to build additional roads and mass transit to a build additional classrooms and career – educational facilities, expand our university buildings, infrastructure and also for affordable homes and affordable housing. I think that was a really big, big step forward and I think that the federal government has to do obviously the same thing. The important thing is that we look at how do we get the people enthusiastic about the subject?

Because the word infrastructure means nothing to the majority of people of America. We have to come up with a sexier word than infrastructure. So the key thing is that you have to go out and promote and market this the right way like with everything in policy.

The (INAUDIBLE) difference is in California, even the though the polls showed that thereʹs only 32 percent of the people that were interested in infrastructure at the time it was, you know the election came we had approval of them with 60 percent and 80 percent.

And it was because we went out and didnʹt talk about infrastructure but we talked about are you angry about getting stuck in traffic every day, and you cannot spend enough time with your family and with your children? That really aroused angry in most of the people and we said vote yes on those propositions. So we got them really focused on those things you know and talked about that the levees that we have in California are 100 years old and if thereʹs an earthquake or if thereʹs a big storm it would be disastrous and hundreds of thousands will get wiped out and it actually will make Katrina look small in compare to what would happen in California.

That woke them up. And especially after Katrina happened it really woke them up and said, Yes, we have to go and fix our levies and the same is with schools. We said you know we cannot have our children – our children are the future of our country. We cannot have them be taught in those overcrowded classrooms. Letʹs go and change to build additional classrooms.

So they voted for those things. So this is the kind of things that you have to do. Really have to bring it down to the level of why is it important for the people? Why do we need more runways in airports? Why do we need, you know more hospitals to be built?

Why do we need to fix our plumbing system and the sewage system and the water system and all of those kinds of things? Why do we need mass transit or high‐speed rail and those kinds of things? So I think the debate and putting the spotlight on that issue really is important for the future in order to get all of this done.

MACNEIL: Thanks Governor. And finally, JayEtta Hecker.

JAYETTA HECKER: Thank you, Robin, and thank you to the Miller Center and PBS. Itʹs really an honor to be here. There is so much agreement and itʹs going to be interesting for us to try to draw the points whether itʹs selling and how to motivate people.

Iʹll try to highlight a few points that I think are important to be on the table. The first one always amazes me. This is not about improving our national transportation policy. Itʹs about getting one.

We donʹt even have one. We give out – we collect and we distribute over $40 billion to most of you every year, and it comes with no focus on the performance. No focus on addressing congestion, on improving the sustainability of our air and our environment, on improving the freight flows that are the engine of our economy.

So we do not have a system that has an integrated set of goals. The second point is that the way that we raise and distribute funds is full of perverse effects. Itʹs an interesting point being talked about these days. Itʹs in effect a moral hazard. We basically collect money. The users have a very poor relationship to their use and their cost they impose, there are lots of estimates. Users pay between 30 percent and 15 percent of the full costs of infrastructure so we have a broken financing system. Not just running out of money, but we have a financing system thatʹs giving all the wrong signals either to users or to system owners.

And, finally, and this is the hard one; this is really not easy to talk about. But itʹs the corollary of the point I just made. We have to pay a lot more than we do now for an infrastructure system thatʹs going to work.

We have to invest it more wisely. Thatʹs absolutely one of the points and itʹs why I think the first order of business is actually not that we have a gap and that we have to fill it but in fact that we have to have the kind of policy financing structure that sustainable and focused on clear national goals and issues that are of interest to real people, and until we have that we really canʹt address and solve the gap issue.

MACNEIL: What do you mean that users are paying only a fraction of the cost of infrastructure? Can you give us a concrete example of that?

HECKER: Concrete; thatʹs a good example. The issue that is people – the gas tax of course is completely out of date. It hasnʹt been raised on a federal level since 1992 and while all of you – most of this isnʹt on your watch the state gas tax has declined by over a third since 1957.

So the real tax levels to run the infrastructure system to not just build the roads but to maintain them and to repair them and expand them, people pay less and less per mile every year.

MACNEIL: Now all of you have called in some way or other for stronger federal role. Letʹs begin with the stimulus package. Should the feds and can the feds insist, as some of you have stressed, that the first money – that the money – the priority be to repair existing infrastructure? Does the federal government have the authority to do that?

RENDELL: Well, they could have, Robert. Itʹs interesting that they didnʹt in an explicit form, but by putting timelines, use it or lose it, which we actually suggested to President Obama when we met in late November in Philadelphia. By putting timelines on, it almost begets fix it first.

The timelines are fairly severe so that money is used quickly, creates the jobs that we need right now. You canʹt meet those timelines to build a new road for example because you donʹt have right of way; you donʹt have the environmental impact statement, which can take 18 months alone.

So if you are fixing something, the bridges there, the road needs to be resurfaced, you donʹt need any of those things you can just go ahead, let the job and then put people to work. So although they didnʹt explicitly in stimulus say it had to be fix it first, itʹs implied and really almost mandated by the timelines.

And itʹs a good policy. What was said, fix it first, is what we have to do as a nation. Before we build anything new, weʹve got to get what we have in first rate condition. And then we go on, which is why this is so daunting. The American Society of Civil Engineers, that $2.2 trillion price tag, thatʹs just to fix what weʹve got.

Do we need a high speed inner city rail system like every other developed country in the world has? Absolutely; thatʹs not in that $2.2 trillion figure.

MACNEIL: Doug Foy, what is the cost‐benefit advantage of fixing existing infrastructure as opposed to building new?

FOY: Oh, well thatʹs a big question and itʹs – I – it comes out in a variety of ways to find the benefits. One it reinforces where we already are. I mean youʹve already built the infrastructure. Our communities are located around the infrastructure. You have transit systems in our cities that are falling apart, you have roads in our towns that are falling apart.

For our economy to continue to prosper or come out of the current problems it faces. We need to reinforce that existing capacity. We need – the center needs to hold here. So you get the benefit of literally building on top of what you already have.

Secondly youʹre getting enormous environmental benefits. I mean these governors and many in this room have been leaders on the climate change issue. By growing your economy around the framework thatʹs already in place, the roads, bridges, transit systems already in place you prevent the sprawl that causes emissions.

It causes climate change, so you have direct environmental benefits from actually using the system in place.

MACNEIL: Let me interrupt you; donʹt you then reinforce the existing bias, for instance, which many of you criticize in favor the automobile and against rapid transit or rail.

FOY: Well, itʹs interesting. The stimulus bill actually has a lot of money in it for transit. One of the things that is now being actively debated federally and JayEtta and I are involved in this with Congress is getting more neutral on where the money goes. And we have a lot of transit system…

MACNEIL: Mode neutral.

FOY: Mode neutral, sorry, we need a new word for infrastructure as Governor Schwarzenegger – and we need to get rid of a lot of these terms.

MACNEIL: But mode neutral.

FOY: “Mode neutral” – mode is driving versus transit versus walking versus biking when…

MACNEIL: Meaning they no longer favor the automobile. There was a – in state capitals and in Congress itʹs automobile, automobile. The lobbies are tremendous and the money goes out that way because it has not been mode neutral.

FOY: Right. And so you now see many, many places – states, like these two cities; New York, for instance, under Mayor Bloomberg, emphasizing much more aggressively the transit system, the transit investments they need to maintain their economy and grow their economy, walking, as an alternative, all right I mean, 80 percent of all trips in America are for errands, not work. Theyʹre doing their daily affairs.

MACNEIL: Governor, you mentioned rapid trains, whatʹs that…

SCHWARZENEGGER: High‐speed rail.

MACNEIL: High‐speed rail.

SCHWARZENEGGER: Yes.

MACNEIL: And that has become a priority of yours?

SCHWARZENEGGER: Well, I think that there we see, you know a lot of the countries around the world developing high‐speed rail and I think that it is important for us to recognize that our infrastructure in this country is like a developing country rather than a developed country.

And because weʹre falling behind; I mean one thing, for instance, is the rail system. I mean I think about it, our trains go the same speed today as they were 100 years ago, so whereʹs the progress?

So I think the next thing that we need to do, like France has done; China, Japan, and other countries, Germany and so on, is to build high speed rail. Is it really because infrastructures is said is just not about making sure that our economy can operate on all 12 cylinders and that we can create more revenues and more action in the economy and in businesses.

But I mean also do something that is good for the environment. I mean we donʹt need to fly with a plane when we fly nearly 200 miles. A lot of people in California do that, or 400 miles, you can have high‐speed rail and thereʹs very little pollution this way, very little greenhouse gas emissions.

So one has to think on all of those levels and the other thing that we have to think of is you know I think is a very important part and that is land use. I think whenever we talk about infrastructure I mean the reason why we have to build infrastructures if you donʹt do a smart growth we have to build more and more infrastructure.

I think we can save a lot of money if we do smart growth, where we build the homes and all of this closer into towns. This is what we have just passed SB 375 in California which is the first bill I think nationally that talks about land use and to start giving incentives. Itʹs the planning how to use the land and how to start building and what permits to give and so on.

MACNEIL: Question?

FOY: Just to jump in there, because the land use is so critically important and it is a way to mine the biggest return out of any of these investments. And one of the things weʹve lost sight of in this country is weʹll make an investment in a new road and a new train and a new transit facility of some sort. And then we donʹt deal with the land use that springs up around it or doesnʹt spring up around it.

We have often been investing in infrastructure that is feeding real estate speculation rather than reinforcing our communities so the whole notion of smart growth, more intelligent growth strategies, both at the state and the local level has to be a critical part of this, to get the full benefit out of these investments.

MACNEIL: Is the – just to come back to high‐speed rail for a moment – is the $8 billion in the stimulus package anything realistic in terms of starting work on that?

SCHWARZENEGGER: I think, you know when you talk about the stimulus package, you can ask 1,000 different people and they – you will have 1,000 different opinions of what is the ideal stimulus package.

So is it perfect? No, but I think it is a terrific package, and for instance when we look at our state, high‐speed rail is something that weʹre very interested in, we have just approved a $10 billion of high‐speed rail money to build the high‐speed rail in California.

So this money is very much welcome. It will help us to further our goal including transportation projects, high speed rail, building more roads, schools, university buildings and all those things. There is a lot of water infrastructure, renewable energy infrastructure, a lot of really good things in there that benefit the State of California and Iʹm sure a lot of other states.

RENDELL: I donʹt think anybody thinks that that $8 billion is going to help us build a high‐speed rail system throughout the United States. Thatʹs really to fund a couple of demonstration projects. Why we need demonstration projects when itʹs all around the world is beyond me, but thatʹs what Congress wants to do.

And again, here the earmark issue sort of raises its head, and already you have people attacking this $8 billion because people are saying, and Iʹm not implying that itʹs true, that this money was put in just so that there can be a high‐speed rail link from Los Angeles to Las Vegas.

Not on Governor Schwarzeneggerʹs part, but on Senator Reidʹs, now itʹs supposedly going to be competitive, but whoʹs going to decide if thereʹs going to be political influence? Why do we need to do a demonstration project when we know – just go to Shanghai.

And Mayor Bloomberg always tells the story, he flew into Shanghai for the first time. He expected to be chauffeur driven from the airport into the city but Shanghai airport is way out, they put him on a high‐speed I think it was a Maglev.

SCHWARZENEGGER: Maglev it was a Maglev.

RENDELL: He made it in 16 minutes and he was just literally blown away.

FOY: Two‐hundred‐thirty miles an hour.

RENDELL: Two‐hundred‐thirty miles an hour.

MACNEIL: How are you going to get rid of earmarks, when for many senators and congressmen if theyʹre successful in getting them in bills, it is one measure of how the public can appreciate what theyʹre doing for the state and for the district? How are you going to get rid of it?

HECKER: I think if we advance to actually articulate what the national interests are in transportation; addressing congestion, addressing freight mobility, which is a drag on the economy. Itʹs very severe and earmarks are not a very good way to do that. Weʹve been doing it and GAO just came out with a study. Those earmarks donʹt even get spent, theyʹre not part of a plan theyʹre not strategic, theyʹre not the right projects. So that is not the way to get national priorities addressed, national problems solved. And if we can get an agreement on what those outcomes – thatʹs why it worked with the interstate. People got that it was an interstate and it wasnʹt a fight about return and equity bonus to my state and how much I put in. It was this is the element that was in the national interest.

MACNEIL: For national defense.

HECKER: That was part of the argument.

MACNEIL: Is a great part of what the motivation was.

HECKER: Productivity was certainly a big part.

MACNEIL: Yes.

HECKER: But basically itʹs getting political trust with performance goals, what weʹre trying to do and we start linking what we spend on, where the money goes, and we reward performance right now itʹs just you get it based on some very old formula and no requirement for strategic investment.

RENDELL: And thatʹs why thereʹs such an important time imperative here because the next big infrastructure spending in this country will be the reauthorization of ISTEA which is likely to take place next year? Probably next year. If we let that go the same way, with plenty of earmarks with no conditions and requirements and goals thatʹs given to the states weʹre missing a great opportunity.

Thatʹs when – and one of the things I hope to do with the help of my fellow governors is impress upon the President, the Congress, and most of all the American people, that we canʹt do ISTEA the way itʹs always been done, that it has to be broadened above and beyond just transportation that it has to have goals it has to have an agenda. It has to have five or ten year plan to it and that we have to commit the right resources but the right accountability the right checks and balances to get it done.

MACNEIL: I want to ask Governor Schwarzenegger, in the present economic crisis atmosphere when in short term needs like creating jobs are obviously so much in everybodyʹs mind, can we also tackle the long term goals? All the other priorities, some of them you mentioned, like reducing emissions, traffic congestion, encouraging alternative fuels, I could go on and on, schools levies and so on? Can you do that now or for the next few years has it got to be jobs?

SCHWARZENEGGER: Well I think you can do both, you can do not so much as both, all three. You can protect the environment. You can protect the economy, create jobs, and also go and build the infrastructure that you need down the line.

The important thing is that we now put as much money behind infrastructure as possible, so that was the only disappointing part about the last stimulus package was that we all felt that, as infrastructure fanatics, we all felt like where we hoped that we would get like $300 billion $400 billion towards infrastructure.

Since we know, as you could hear, that thereʹs $1.7 trillion of infrastructure that needs to be done within the next five years, or at least anyone that studies this can tell you that itʹs $250 billion a year that needs to be done.

So I thought it was small, but nevertheless it was a great beginning it got the foot in the door, and I think that you can do both and we in California have done that. We just now have passed legislation part of the budget negotiations where weʹve pushed billions of dollars more of that as we create more jobs, because for every billion dollars that you spend on infrastructure you create 18,000 to 25,000 jobs.

So thereʹs a huge amount of jobs there that can be created because of the infrastructure. But I think I just want to go back quickly of what you said, because I think that Governor Rendell hit the nail on the head when he said you got to have a plan. You know right now, you know we donʹt really feel, or maybe just since the Obama administration came in, they started thinking about what can we do about infrastructure, which is terrific?

But I mean really there is no plan in Washington where you feel like thereʹs a think tank behind it that it really plan and strategize of what America ought to look like 20 years from now, 30 years from now, 40 years from now when it comes to water, when it comes to energy, when it comes to our use of fossil fuel or alternative fuels or of those kinds of things.

How much should we have high speed rail, railroads or mass transportation versus cars? What should the cars look like, all of those things, who is studying that? Itʹs almost like we go from one moment to the next, and I tell you even when you want to be a doctor, you got to think 10 years ahead and make a plan to get there and to become a doctor and to treat patients. So I think that what Iʹm lacking in America right now and in Washington is a master plan.

What is that which America ought to look like, so we can all fall in line, all the 50 governors work with the President, work with the legislators in Washington and they said working together and go for that goal and have also a funding mechanism in place. Not like cutting it in half, the funding that we used to have in the ʹ50s and ʹ60s but you know letʹs go up there again to the 4 percent.

MACNEIL: Iʹll come to the funding in a moment, funding questions in a moment, but do you agree, Doug Foy, that all these other priorities can be pursued while the huge emphasis is on jobs right now?

FOY: Yes, because actually one of the interesting thing to us, statistics around fix it first if we repair what we already have is it produces more job and work faster than building anything new because you donʹt spend a lot of money lawyers and permitting and environmental review.

You just fix the bridge and so itʹs all jobs and itʹs all labor and itʹs all materials, so actually youʹll get way more jobs out of a fix it first agenda the next two years than doing anything else.

But the other thing I want to make sure we keep in mind, because I do believe that this group is even more important than what happens in Washington. We do need a national policy. Thereʹs no doubt about that.

And we need a far more thoughtful revenue strategy. But actually one of the points made in the prologue was wrong. More money is spent by the states and locals on infrastructure than is spent by the Federal government.

So the control of really important decisions on these issues lies in the hands of these governors. And I think the magic of America is that the most innovative solutions are crafted in the States. Thatʹs always been the case.

What we need to do is do whatʹs happening in some of these states, craft those solutions and then bubble them up to Washington at the same time we push for strategy there.

MACNEIL: Ms. Hecker?

HECKER: Maybe I can have a little controversy here because Iʹm not so sure that itʹs so easy to do both or that the vehicle of this Stimulus Bill, which primarily is about stimulating demand and jobs and a long term infrastructure strategy.

The Stimulus Infrastructure Funds as you all know, is a 100 percent federal financing, so thereʹs not state match. Itʹs perpetuating a notion that the Federal government can spend it all, that it can come with the funds, and we know this Federal government is about as broke as itʹs ever been in the history.

So weʹre putting off the realization, the focus that we need a different kind of strategy and itʹs nice that theyʹll be some things in there that are more strategic but basically we need new kinds of planning, we need more strategic choices.

And the one Iʹm the most worried about frankly is the high‐speed rail having looked at rail investments and returns and strategies, and that one actually you talk about a use or lose, I mean as long as they have a plan, I think it goes to 2012.

And that should be fit in those mode neutral strategies of the corridor between Los Angeles and San Francisco or other critical corridors around Chicago where it can really play a role. Those are not shovel ready projects and then not really part of strategies. And I think weʹre confusing the issue by having them combined.

RENDELL: No, youʹre absolutely right and I donʹt think the stimulus program, I mean I know President Obama said thereʹs some far reaching infrastructure in there like building out the electrical grid, building out broadband. Those are more far reaching. And I donʹt think they were intended to have a year or 18 month impact but most of the infrastructure was. But this is literally a drop in the bucket and to do what you want and youʹre absolutely right, has to be the result of real planning, real thought where the things that Governor Schwarzenegger says are weighed, and where we go about it with some rational discussion and where weʹre looking at five to ten years down the road. Tell me if Iʹm wrong, Doug, but didnʹt every one of the G7 nations in the last 15 years undertake significant infrastructure, revitalization, a billion dollars in Germany, a billion dollars in Japan at times when a billion dollars was a lot of money.

FOY: Well I think thatʹs true when weʹve actually fallen behind. Governor Schwarzenegger referred to as the developing world country when it comes to trains and itʹs true. We have fallen behind.

The irony of that is that our competitive advantages in many instances, weʹd already built a lot of the stuff that we needed. We just let it fall in to disrepair. Now some of this stuff we havenʹt built at all like trains and but yes, a lot of the rest of the world is way ahead of us on that.

MACNEIL: That was Senator Dirksenʹs time when a billion dollars was a lot of money.

RENDELL: I was wrong. Japan and Germany spent a trillion dollars even back then, on their own infrastructure, payer programs, countries much smaller than ours, but youʹre absolutely right.

And I donʹt think stimulus was intended to answer the long range problems of creating an American infrastructure plan. Thatʹs why weʹve got to go back, get the Presidentʹs attention, get the Congressʹ attention and most of all get the American peopleʹs attention.

MACNEIL: But make sure we donʹt waste the stimulus doing dumb stuff because it is a down payment on whatever we need.

RENDELL: Everyone of us here, every one of the 40 governors that are here in Washington, we know that itʹs our responsibility to get this right because if we screw up infrastructure spending the chances of getting a comprehensive, well funded, long range plan, down the drain.

MACNEIL: OK, yes, go ahead.

HECKER: Just real quickly, one of the key problems in combining them is the target is to create jobs. And while people have always talked about how public infrastructure is this double win that you get the infrastructure and you get jobs, jobs is actually the worst possible proxy for a good investment.

It is not about whatʹs efficient. Itʹs not about performance. You know, a big part of existing infrastructure isnʹt just fixing the potholes. Itʹs managing it. Itʹs optimizing its performance and thatʹs not very job intensive.

Itʹs use of technology. Itʹs simple things like synchronizing lights, traffic lights. And yet because in many jurisdictions we have so many separate planning entities they canʹt even get it together to synchronize lights that would improve the flow of traffic. So there are strategies that are needed, that really the measure of jobs is the worst possible indicator of the kinds of strategic performance based investments that we need.

MACNEIL: Who wants to comment on that? Arnold?

SCHWARZENEGGER: I think that every job that you can save right now is important. Every job that you can create is very important and like I said, it should not be the number one reason why we invest in infrastructure to create jobs.

But I think since we all know that we need infrastructure and we need it really badly, this is a perfect situation where we can put the two together, create jobs, and also build great infrastructure for the future and also protect environment at the same time.

FOY: But we do need the performance outcomes. What JayEttaʹs on is there needs to be we need to have some standards. What are we trying to accomplish here? What are we going to measure?

Are we trying to get vehicles miles traveled down? Are we trying to reduce congestion? Are we trying to get wait times at train stations down? What are the performance measures that we would apply to any of these investments? And again, we have been a nation that has largely been focused on spending rather than investing these dollars and thatʹs I think the whole core of this.

MACNEIL: Let me ask you…

SCHWARZENEGGER: You know, I just want to say that we all know that the faster you move people and goods around the country or around that state, thatʹs economic power. So therefore we have to concentrate on that because right now we are not operating like I said earlier on all 12 cylinders.

I mean, we are really holding ourselves back. These are self inflicted wounds and because of that we cannot be as competitive to the rest of the world.

MACNEIL: Weʹve got to back to four and six cylinders though Governor.

SCHWARZENEGGER: For you, I like the 12 cylinders but hydrogen – hydrogen mode.

MACNEIL: Governor Rendell, if infrastructure is up there and Iʹve heard you say this with Iraq and Afghanistan and healthcare and education as a national priority, how do you make it so? Should there be a Federal department for infrastructures? Should there be an infrastructure czar? How do you make it happen?

RENDELL: Well Iʹm not so sure that the bureaucratic structures are as important as Presidential and Congressional commitment is. But I would like to see President Obama, having said that, I would like to see President Obama do for infrastructure what he did for energy and the environment.

He had appointed Carol Browner who sort of had the purview of several departments under her, try to develop a comprehensive energy and environmental problem. I would like to see someone be given, and I hate the word czar, is there a better word? You like czar? I knew Arnold would like czar. The infrastructures are, we would have the ability to come in and oversee and try to bring together that coordination that Jay was talking about of the departments together and to build that plan over the course of time just as I think Carol Browner is scoping out a long‐term plan for our environment.

MACNEIL: How would create this as a national priority and institutionalize it, so itʹs not a dirty word.

HECKER: But we do need legislation. We have legislation where the Federal role is so ambiguous and so spread thin that there is no clarity whatsoever to what the Federal role is.

Post interstate and all the extra legislation, they just kept adding on and adding on, spreading the funds thinner, and I want to go back to the reference about other countries because there is a lot that we can learn from other countries.

But some of them really represent good examples where maybe theyʹre making very significant investments, but theyʹre making very tough choices. And one of my favorite examples is the Eddington Report in the U.K. combined with the Stern Report that completely did a clean sweep review and said weʹve got to focus on performance. Weʹve got to focus on critical corridors and there wasnʹt like oh, there isnʹt a line going through that state, you know it was what are the critical economic engines of our country and where do we concentrate performance?

And thatʹs why I said before we need a new national consensus about transportation working to build our economy to make it so it isnʹt unclear whether weʹll be home in half hour or an hour and a half and all of the economic loss associated with the poorly performing system that we have.

MACNEIL: Doug Foy?

FOY: So I think we do need the legislation. I want to go back to Governor Rendellʹs notion you also need a czar or something like a czar. There does need to be a coordinated strategy across multiple agencies.

This isnʹt just a job for the Transportation Agency. And I actually had the good fortune of serving in that sort of czar role in Massachusetts for Governor Romney that had four agencies that reported to me.

And the whole idea was around the notion of integrating their strategies. So we had housing, environment, transportation and energy. We need something comparable at the Federal level and indeed in every state.

Now the governors can do that because they have the ultimate authority to make everybody play by the same rules. Frequently governors are now setting up their own development cabinets or theyʹre creating something analogous to what we had in Massachusetts.

But that notion of integration across the silos, itʹs crazy…

MACNEIL: What do mean, silos?

FOY: The silos of agencies. The agencies get burrowed in, they get very tunnelvisioned. When I sat down to my first cabinet meeting of the four agencies that reported to me the first week in office, the head of the housing agency, and the head of the transit agency introduced themselves to each other.

They had never met and they had been in government for 15 years each. Now thatʹs just ridiculous. And how can you have a housing agenda in a state if you donʹt marry it to your transportation agenda?

Thatʹs I think in part what the President is now trying to do with Carol Browner, but this needs to be actually bigger than that. I know for instance the energy office and housing are now carefully talking about how they do energy efficiency and housing in America. We need to do that in every state.

MACNEIL: Letʹs use the remainder of our time to talk about how we pay for this. Starting with you, Ms. Hecker, how do you make Americans understand the real cost of and pay a realistic price for the transportation for the infrastructure theyʹre using? Youʹre very familiar, far more than I am, with all the things that have been suggested. That you charge people for the number of miles their cars actually drive by haunting them with a GPS thing.

You actually impose congestion tolls, or congestion fees as Major Bloomberg tried to do but failed to do in Manhattan, and so on. How do you get the real cost into the minds of people who are driving the cars and taking the trains and whatever?

HECKER: Well thereʹs actually some interesting examples in some of the states. I think thereʹs one in Kansas where thereʹs actually an on‐line system and a debate where you can put your own policy together and you see the implications. So there are tradeoffs.

You canʹt have everything. And you canʹt just say well the Government should do it. So getting a public awareness of those tradeoffs and what it costs is absolutely critical. I actually think one of the things thatʹs actually take hold is the environmental costs of the way we run our transportation systems.

We are destroying the planet that we live in. Not only are we mortgaging our future for our children but weʹre also destroying the planet. And it is all about the kind of transportation systems and our communities and the kind of investments that we make. And I think when people get that weʹve got to transform this.

This is the abstract with the principal of how we finance it would be, but basically getting a more accurate user pay, that is not just for the concrete, but the management of the infrastructure, the improvement of the performance of the infrastructure, and the economic and environmental indirect cost that people impose on others when they get in their car or ride their bike to work.

MACNEIL: Governor Schwarzenegger, do you have ideas on this? How do you meet the problem of paying for all this and paying for what people are actually using in terms of the wider social cost of what theyʹre using?

SCHWARZENEGGER: Well I think that weʹve had a history that there was a certain amount of percentage of our budget was put aside for infrastructure. And the states have done that. The Federal government has done it and these were the times when the Eisenhower and the Roosevelt build huge amounts of infrastructure.

And you know the people still paying the taxes. So why are we all of a sudden wanting to charge them extra for infrastructure? I mean, I think theyʹre supposed to be part of what they are paying in taxes. But I think if we donʹt have that money, I think that the Federal government and the state should open it up to public‐private partnerships.

Now labor happens to be in many states very much against that idea of having public-private partnerships because, you know especially the state employees, the engineers, they want to do it themselves and have a lock on the monopoly.

We have now finally gotten through that during our budget negotiations where now this will be open to bidding and that brings the prices down and the public sector can participate and also can finance and invest in it.

So I think thatʹs the way to go because you canʹt just all do it through public funding.

MACNEIL: Right. Well, now weʹre going to move to the closing statements by each of the participants and if thereʹs something you havenʹt been able to say up till now youʹll get a chance to say it. Doug Foy?

FOY: Thanks Robert. Iʹll make a couple points. One that weʹve talked very about, that all three levels of Government are critical and I think thatʹs clear from the discussion, federal, state and local.

We need to bust through these silos that are separating the agencies so I think that weʹve talked about that. This notion of revenue; the other idea that I think is quite striking about the conversation with America on this is we do need to bring it down to terms that people can understand as Governor Schwarzenegger discussed.

Weʹve going to fix this road, this bridge; weʹre going to get your traffic, your commute time down. Weʹre going to allow your children to walk to school. My home governor and friend, Deval Patrick, called for a 19 cent gas tax increase yesterday in Massachusetts which is a big number.

But he characterized it for the people of Massachusetts by pointing out that it would amount to about the cost of a large cup of coffee a week. Now thatʹs a really interesting way to communicate that notion to people.

We need to get better at that. We need to go back to Governor Schwarzeneggerʹs question of, can we come up with a better term than infrastructure? We need to have a conversation with America around this is the critical framework of our society.

Whether its roads and bridges or transit or sewers or water and I think the citizens donʹt really understand what weʹre doing about it right now. And there needs to be a much more personal conversation. So I like the cup of coffee idea.

Thereʹs something toxic about gas tax increases. People have fits over putting VMT charges on road use but when you start to talk to America about what this really means is a cup of coffee, I think we can get people to take seriously they need to step forward on this.

MACNEIL: Governor…

FOY: Iʹm sorry, ten seconds, it says ten seconds. I was a lawyer I had to deal with this in fact…

MACNEIL: You can have another ten seconds.

FOY: Thank you, Your Honor. The final thing is I want us to think much more outside of the box if to use a trite phase. My favorite transportation goal of all in America is that every child should be able to walk to a library, because that requires us to have centered communities.

It requires walking safety. By the way it requires broadband to walk to a library could be to their bedroom with a broadband access to the Google library. So we need to think differently about these issues, thank you.

MACNEIL: Governor Schwarzenegger?

SCHWARZENEGGER: I think that it goes back to what I said earlier weʹve got to have a vision, weʹve got to have goals so that we can all join together and work towards that goal in infrastructure.

One should not forget that infrastructure is not just building buildings and building bridges and tunnels and off ramps and on ramps and highways and mass transit and all those kinds of things, but also, like President Obama has talked about, telemedicine. I think itʹs very important that we concentrate on that. Like the state of California just with prescriptions being written by hand, you know, you have 1,000 people die every year instead of having telemedicine put it on the computer.

And I think Iʹve seen first‐hand the kind of things where doctors have examined patients that were actually 100 miles away from their doctor, did a perfect examination and diagnosis and all this.

So, I think that one has to really, the people of America have to join together and kind of demand from the local government, from the state and from the federal government to rebuild this country because for decades and decades we have not rebuilt the country.

We have had our great boom in the ʹ30s and ʹ40s and ʹ50s and Eisenhower had built the national highway system and all of this, but what has happened since then, nothing really. And we have landed a man on the moon, so now we need a kind of goal like this and say, ʺOK, in the next 20 years weʹre going to do this.ʺ Thatʹs what we need to do.

MACNEIL: OK. Ms. Hecker?

HECKER: Well, Iʹll actually reiterate my opening points because I think theyʹre honed in on the kind of changes we need. And the first one is this strategic national plan, goal, vision. Now the tough news about that is I think the federal role has to be more focused and where the role is focused, where there are national interests, I think federal dollars have to go to states with strings.

They have to be performance strings not process strings, not paperwork and not forms but results. So, I think we need a new federal, state compact in the relationship we have about infrastructure spending and investment more importantly. I think on the issue of financing we have to be very careful about the difference between financing and funding. Financing is like having a mortgage.

Funding is like having a job to be able to pay for it. So, with all the excitement about innovative financing and being able to monetize assets, thatʹs just borrowing money. And there are many benefits and Iʹve studied public/private partnerships around the World, so there are some real benefits, but we have to be very careful that we really need to raise more money and we shouldnʹt camouflage it.

And the final point is basically back to the one that you made in your opening and itʹs about depoliticizing decision making. Weʹve got to invest dollars where we get the maximum return, which is the same thing as that performance based accountability. That is really the key of building accountability. Itʹs having goals, measuring them and I think the federal government has to get involved in helping measure them. I mean, no state really has this data yet, so, itʹs a transformation and I think thatʹs the kind of leadership and vision we need to start transitioning to incrementally in national transportation policies.

MACNEIL: Thank you. You have the last word, Governor Rendell.

RENDELL: Well, I think all of the conclusions raised by my three colleagues here are correct but I do think, I mean, thereʹs no way around it. Itʹs going to cost us more money and itʹs going to cost us significantly more money. Weʹve got to spend it well, wisely, accountability, transparency, all of those things.

But the good news is the American people are ready to pay. Theyʹre ready to spend more money. Frank Luntz was hired, a Fox TV analyst and pollster by BAF and the National Governor Association to do a poll.

Eighty‐one percent of the people who responded said theyʹd be willing to pay 1% more on their federal taxes if we could revitalize our nationʹs infrastructure with good accountability and transparency and the decisions were made outside of the political system.

Ninety percent of Obama voters, 74 percent of McCain voters, so it cut across rural, urban, every type of line, the American people are ready for a plan. We have to seize the moment. The problem is thereʹs a clock ticking and that clock is the reauthorization of ISTEA.

If ISTEA is reauthorized, business as usual, weʹre cooked. Itʹll be another generation before anybody starts thinking about a plan for the national infrastructure and itʹll go up dramatically. Itʹll increase.

Our road building cost in Pennsylvania increased 38 percent in the last few years. If we donʹt do this now, the cost is going to be double or triple 15 years from now. So, it has to be done and itʹs incumbent upon all of us, my colleagues, the governors, we can begin at home, in hometowns and on Main Street building this consensus by getting out there and making speeches and doing the things we need to make it done. But itʹs going to take real leadership here by people in the transportation community and by the President and the Congress. This is an opportunity to do something as valuable for the country as healthcare or any of the other challenges that face us. Do we have to spend money on it?

Yes, but itʹs money that has a return on the investment thatʹs made and has a return in the jobs that are created, whatever those jobs are. It has a return in our economic competitiveness versus foreign countries in the global marketplace. It has a great return. Letʹs do it. Letʹs not waste any more time.

MACNEIL: And maybe find a different word for infrastructure. I told Doug Foy that working on Microsoft Word, my word processing program, I have the ʹ07 version. It does not recognize the word “infrastructure” as spelled by us.

Theyʹre telling me I was misspelling it, so, we have to end it all now. Our participants have certainly given us a lot to consider. The subject of the next Miller Center Debate will be How to Deal with a Nuclear Iran.

Check the Miller Center Web site for more information and your local PBS station for our broadcasts. On behalf of the Miller Center for Public Affairs, Iʹm Robert MacNeil. Thank you for watching.

NARRATOR: This program was made possible by the generous support of Frederic W. Scott Jr. and Anne R. Worrell and the Rockefeller Foundation for its support of the Blue Print American Initiative and the Surdna Foundation.

[BREAK FOR DIRECTION]

MACNEIL: Now we have time for some questions or comments from the governors and their aides who are in our audience. And we have a first question here from Governor Granholm of Michigan.

GOV. JENNIFER GRANHOLM: Thank you so much. And, preliminary to my question I just have a follow up on the statistic that you cited Governor Rendell about 81 percent of the people saying that they would be willing to pay 1 percent of their federal taxes. Does that mean their income tax?

RENDELL: Yes.

GRANHOLM: OK. So this is whatʹs really interesting to me because the car is – I mean is a user fee, right? The gas tax is a user fee and if we want to go to a broader base of viewing transportation then we ought not just to rely on the vehicle and in fact most vehicles we hope will be moving toward electric vehicles so the gas tax should become an obsolete way of funding transportation.

The elephant in the room really is this question of funding because this is motherhood and apple pie. You can get the environmental, the jobs, the infrastructure, the real question is how to fund it. And I would wonder I mean the 81 percent is a great number. Public/private partnerships only work when they are toll roads right? You canʹt really get them otherwise, so, would the voters of California be willing to pay a 1 percent…

RENDELL: Yes.

GRANHOLM: …increase, or Pennsylvania? I am just not sure in a recession whether the voters of any state are going to be willing to see a percentage increase like that in their federal income tax and that would relay be the question because thatʹs ultimately where we have to go.

MACNEIL: Who wants to tackle it?

HECKER: Governor, I would be happy to comment on that because I think youʹre absolutely right about the long‐term diminution of viability of a gas tax. The concern that I have about the general fund whether itʹs designated in a tax or not, itʹs separating the user from the real costs of the infrastructure. And just like in the energy area like how theyʹve done some experiments, when people
have smart grids in their house they make smarter decisions. They donʹt turn the dishwasher on until later at night.

So the more you separate the cost of the infrastructure from the actual use I think weʹre losing the opportunity to promote the more efficient use of the infrastructure, to promote more awareness of the environmental costs of the infrastructure, to use it as a tool to get more smooth flow and better use of the scarce infrastructure. So I think we do need to have very serious evaluation of a foundation that is mileage based but is actually flexible enough that it can handle congestion fees, it can handle state taxes, local taxes, so that if – use taxes, so that itʹs very flexible. And I think it is the most efficient way to go in terms of promoting the most national interest in having users understands the costs they impose.

MACNEIL: How do you meet the objection that, that would fall so heavily on people of low and moderate income who spend such a high proportion of their income already on transportation?

HECKER: The general fund has people who may not drive at all paying for the infrastructure. And one of the real challenges in California is the local option sales taxes are the most regressive ways to finance transportation. Itʹs popular. People like seeing what theyʹre voting for because the rest of the system is so unaccountable. But that in fact is the most costly for the poorest people. So the reality is the studies that have been there have really made the case that users of all levels will use variable toll lanes, and that you can subsidize transit to decrease the cost of transit for lower income people and itʹs really got the greatest promise for the greatest national benefit in the long‐term.

MACNEIL: I think did you want to comment on this?

SCHWARZENEGGER: I just wanted to say that I think that the most important thing. I think that the people are always ready to pay a little bit more but I think they wanted to see more accountability.

I think thatʹs the most important thing in that whole thing because people feel a lot of times that a lot of money is being spent. They donʹt know where it goes. It goes to pork barrel projects and all of this and theyʹre paying for something that they donʹt get the value. I think thatʹs the important thing.

RENDELL: And let me just say, I think Governor Granholm was making a good point. If we – and youʹre certainly right about user fees, smart grid for electrical use is perfect because people can save money themselves but why is it all on the automobile. We all use rail freight right? Weʹre all benefit from rail freight because it brings our goods and our food to us faster. But look at this statistic on rail freight.

One gallon of gasoline can move a ton of freight 430 miles. Why in Godʹs name arenʹt we investing tons of money in our rail freight system to get the trucks off the road you know not all of them but a lot of them et cetera.

Why is it always the automobile that gets crushed and remember when we say infrastructure itʹs not just transportation. Who pays for water and waste water systems? You know who pays for all of the other things that make up the number of infrastructure?

I think the only weʹre going to do this, I think we need a mix. There should be some user fees. There should be some opportunity for private investment. I think we can use the tax code to spur, especially when the markets come back, private investment but I think we…

MACNEIL: Letʹs move it along. Take another question. I have a question from Governor Ritter of Colorado.

GOV. BILL RITTER: Thank you. And maybe to Mr. Foy, the issue you addressed about incorporating transportation planning, housing planning, and I think you even mentioned with issues that relate to climate change, how do you do that when really in much of this country land use planning is a local province?

FOY: Right.

RITTER: Transportation planning is both a federal and a state province with some local. Climate planning is largely non‐existent in some places around the country and yet we are at a time when I think itʹs right to incorporate those. What structure if youʹre governor of a state do you put in place to begin seriously think how, about how you deal with all of those issues at the same time? And just to frame this a little bit further in Colorado weʹve grown significantly over the last 20 years. Much of that growth was suburban and so not only do we have more drivers on the road we have all of those additional drivers driving more miles. We have to reverse that trend even as we grow forward and I think the way to do it really is to think about you put in place the state of structure that allows you to think about transportation, land use and climate all in one?

FOY: Well, I agree completely and actually, in Colorado, you have done some remarkable stuff in your state already. The way we tried to start to wrestle with it, all of us comes from states that are proudly home rule. So the local communities have control over zoning and so ultimately a lot of us throw our arms up and say well we can get only so far and then the locals will do sprawling development and we canʹt change it. What I think you find though is because the states control the large bulk of infrastructure spending, if you build it they will come. If you build it somewhere else they will go there instead.

So we need to be very, very strategic about the way the states spend the money. So for instance what we did is we started to look very hard at where we were putting our housing investment dollars and where we were putting our transportation investment dollars and neither one was talking to each other.

We started to say to communities, OK, so we have all this housing money and we have – but weʹre going to build train stations and places but you need to show us the zoning. Before we put the train station in your town center you need to show us the zoning around that station that will allow us to put housing there.

We were having a lot of towns down zoning after we put a train station there so no one would be able to get to the train station other than the people that lived right there and, we reversed that. We had the same kind of phenomenon in (INAUDIBLE).

You have an enormous amount of discretionary control over where your capital goes and it needs to be used as a lure to pull the communities forward on zoning reform. And the other thing on climate change, basically, that needs to be embedded in virtually all the capital decisions we make going forward as youʹre now starting to do in Colorado. The carbon consequences of these investments whether itʹs housing, energy, environment, transportation, needs to be made.

And finally your example of the Denver area and your Transit system that was voted – the democracy that rose up to get that Transit system built I think is a wonderful example of the people starting to figure out that they needed to stop this ball and they needed to re‐center.

But I would look at your discretionary grant making and your discretionary spending as a way to pull the communities forward.

MACNEIL: Questions? Any comments? Questions? I think youʹve – I think youʹve satisfied them. Well, let me – let me ask a question which occurs to me. And any other Governors here feel free to comment.

Given the kind of stalemate thatʹs existed in some legislatures but mostly in Washington, political stalemate and all the complexities of Government that are involved in the problem that youʹve all outlined, can the American political system solve this in the big way that youʹre talking about?

Anyone have comment on the way things are at the moment? I mean you have the entire Republican caucus in the House of Representatives voting against the stimulus package, for example.

Some Republican Governors, according to the newspaper, the New York Times today, are going to vote against – are going to not to accept some of the stimulus funds because it might imply that their states would have to – would have to then increase their own spending on unemployment insurance when the stimulus ended.

So can the political – whoʹs got feelings about this? Can the political system solve this?

RENDELL: Yes. Yes, I…

UNIDENTIFIED MALE: Anybody dare say no?

RENDELL: Well, and I think we have rising evidence of that. When you democratize these decisions they – something more than three quarters of all the Transit referenda in America last year passed.

So when the citizens were asked to vote to spend money to build things like the Denver Transit System they voted yes. I think that actually the people are ahead of – have been long time ahead of our Federal Government.

MACNEIL: Absolutely.

RENDELL: And, and I think that that remains the case. Again, thatʹs our strength as a Nation and I think what we have are laboratories in the states where very smart things are now starting to happen trying to integrate these ideas, leadership by many of the Governors here on issues of climate change,
recognizing the importance of these investments. I think the people are with those (INAUDIBLE). So Iʹm actually quite optimistic. We have a heck of a problem and itʹs going to take a long time to dig out of what we not built for ourselves. But I actually think the more we democratize this the better off weʹre going to be.

SCHWARZENEGGER: I think you are absolutely right and I think that we have a very big challenge in California when I talked about the importance of infrastructure it was right away the Republicans were kind of more against that idea than Democrats.

And I think that they felt that there was more spending and – but I think that as soon as they saw that actually it was investing and thereʹs a big difference between investing than in spending, I think they went for it. And then the people, of course, it was very clear that some of those propositions and infrastructure packages were proof that the people, up to 82% Democrats and Republicans alike.

So I totally agree that people are sometimes way ahead of the politicians on those issues. And I think thatʹs the problem right now in Washington, that the Republicans really feel strongly that there is more spending and now is not the time to spend that money and I look at it, even though I am a Republican, but I look at it as investing. There is a big difference and I think we need to invest in our future because other words like I said we are going to fall more and more behind the dying infrastructure.

MACNEIL: Sir, we have a comment over here. Iʹm sorry would you say who you are.

GOV. TIM KAINE: Tim Kaine from Virginia.

MACNEIL: I beg your pardon.

KAINE: I just wanted to follow up on Mr. Foyʹs comment about the transit referendums because I do think weʹre undergoing a shift in attitude about what infrastructure investments are on the transportation side. I have certainly found it easier, and getting a lot of scar tissue in Virginia over infrastructure investments these days, to do Transit in rail than to do roads.

Thereʹs some NIMBY issues, but thereʹs also a greater awareness of the importance of transit. In the old days we would subsidize roads in a massive way, back to your point of kind of mode neutrality, whereas we would ask well, gosh why canʹt AMTRAK turn a profit? Well, why would we subsidize roads but expect that AMTRAK would be able to turn a profit?

I think with rising gas costs that are going to increasingly go up and be volatile, I think the American public now has a sizable appetite for transit and rail solutions, and while weʹre on the rail subject, I know we all love to go to Europe and see what theyʹve done with passenger rail. If you talk to European business what theyʹll say is they love what we do with freight rail.

So the rail side of it has to be freight and passenger but I think weʹre in a new era where these rail and transit investments are going to increasingly be what the public want us to do.

FOY: Although Tim, I think thereʹs a little bit of a disconnect between what the people want and what in fact Congress is willing to do. And you know I donʹt think – if you look at what happened to rail transit, to mass transit, it actually got cut from the House to the Senate by about 25 percent.

But I do think thereʹs hope to go back to your question, Robert, because infrastructure spending was the one area that wasnʹt attacked heavily by the Republicans. The spending for education, the spending for what they classified as social welfare programs, but infrastructure spending wasnʹt really attacked.

Just hypothetically if there had been a bill, as Governor Schwarzenegger suggested, with $300 billion worth of infrastructure spending and letʹs say $400 billion worth tax cuts, do you think that bill would have garnered Republican support?

I mean above and beyond people like Governor Schwarzenegger and Governor Crist. Does anybody think that that would have garnered a lot more Congressional Republican support, if that was the bill, infrastructure spending at a very significant level and tax cuts?

HECKER: Having worked in the independent arm of GAO for the Congress for 25 years I am inclined to be a little bit more skeptical about how easy itʹs going to be to get National Legislation that is as transformative and visionary and bold in making the tough choices that are required.

The food fight that characterized the debate in the last transportation bill was all about return of gas tax to a state. It wasnʹt tackling the issues that were already apparent about the poor performance of our system. I think we need a bottoms up, ground swell of the kind of things weʹve been talking about here, and as Doug said at the beginning every one of you are Generals in this battle.

As our mayors and as our business leaders, they have been very poorly engaged in this, and they need to be more actively engaged. The organization that Doug and I are involved in, the Bipartisan Policy Center, is working to bring together that kind of bipartisan vision to break the stalemate.

But I think weʹve got real challenges and itʹs got to be in the Congress and itʹs got to come from the outside that vision, the commitment, the expectation, the lack of toleration of putting it off any longer to make the tough choices, choices that cross committee lines in the Congress.

I mean weʹve got to really make some tough choices and I think itʹs outside Washington that the pressure has to come.

RENDELL: (INAUDIBLE) domestic. Because the last time that transportation bill
was reauthorized it was in a vacuum. Nobody – there was no push from hometown. There was no push from anybody else. This time if we do it right, and unfortunately we have a short time line; we can get that push from Main Street, from hometowns, from governors, from mayors and from the people themselves.

MACNEIL: You had a comment and then we have another question.

FOY: Yes, very quickly I think I – JayEtta just made a very important point that hadnʹt come up earlier. And that is the importance of the business community in much of this conversation.

One of the things thatʹs intriguing about how the climate change conversation has unfolded in this country is many leading businesses, the DuPonts of the world, the Exxons of the world, are now out in front, GE, arguing for climate change agendas and cranking down on carbon emissions.

That hasnʹt happened on transportation yet and the best example where it has happened was in New York where the business community in New York was overwhelmingly in favor of congestion pricing. It got shot down in Albany for a variety of reasons.

But the business community figured out they really needed that to change the game on transportation and we do need to start to engage that communication…

RENDELL: But the U. S. Chamber and the National Association of Manufacturers have both listed infrastructure as their number one priority.

FOY: I know. So I think that thatʹs encouraging and we need to build on that and take advantage of that.

MACNEIL: Governor Rounds, whoʹs from South Dakota, yes?

GOV. MIKE ROUNDS: Thank you. I recognize that thereʹs been a significant amount of discussion here about mass transit and yet sometimes we forget that you have to have a very good combination of both the mass transit as well as the existing highway system. And in many cases I think thatʹs where the challenge comes in crafting an appropriate transportation bill. Itʹs not just congestion. Itʹs also connectivity. In the entire center of the United States you have areas in which we donʹt have train service and we donʹt have a need for mass transit but we do have a need to remain connected because whether it be energy in the future or whether it be food in the future you have to have a way to combine all of them.

And I think that sometimes gets lost when we start talking about some of those critical areas in which many of the congested areas look strictly at mass transit. I just want to have a discussion perhaps about the recognition that it has to be a combination of both.

MACNEIL: Are there other comments? Yes sir. Iʹm sorry. I beg your pardon?

GOV. PAT QUINN: You know one thing when you talk about transportation I think we should always broadband deployment…

MACNEIL: Could you start again, Governor?

QUINN: Okay when you talk about transportation, you should also think about broadband deployment because in Illinois we had to fix the road but we also put a trench next to the road to lay fiber for high speed internet, particularly in rural areas, under‐served areas.

If weʹre really looking at the next 50 years, if you look back to the last 50 years, we had the federal interstate system for highways but we need to have an information super highway. And so when you talk about investment in infrastructure, it seems to me you always have to have the broadband as part of it because thatʹs really the key to economic empowerment in the future for everybody.

And so I think when you talk about how to raise the money for it, I think the discussion should be if weʹre going to build roads or repair roads, we also have to lay fiber next to those roads so weʹre ready for the information economy of the 21st century.

RENDELL: Governor, itʹs like the Ragu commercial. Itʹs in there. Itʹs in the stimulus program, significant money to build out broadband. And that was one of President Obamaʹs – the planks that he insisted on and thatʹs an excellent start to achieve what you want to achieve and…

FOY: Well and thereʹs a really interesting hook in the stimulus bill to pick up on this point which is really important. Broadband really is a transportation agenda, among other things. Access is what weʹre about with transportation, not just mobility and broadband gives you access.

In the stim bill there is also a lot of money, I think its $11 billion for the smart grid, electrical smart grid. The electrical smart grid is going to have to be based on broadband. We ought to marry these two ideas, transportation and broadband investments and the smart grid.

We need that pipe to do everything. So we donʹt want to build a smart grid for the electrical industry that doesnʹt allow us to get bus arrival information into it for transit and allow broadband in rural communities.

RENDELL: And thatʹll be particularly valuable to the rural and less populated states like Governor Roundsʹ talking about.

FOY: Absolutely, absolutely right. Where buses still are a significant feature but you need to be able to tell people when theyʹre going to arrive which we are now at the point where we can tell them here but we need to do it.

MACNEIL: Governor Manchin?

GOV. JACK MARKELL: Actually Jack Markell from Delaware. Delaware, Jack Markell. He left. I took his spot. A number of the panelists have mentioned the issue of climate change and even climate prosperity. We in Delaware just joined as the first state of the Climate Prosperity Project.

Itʹs certainly a very popular term these days and I guess Iʹd be interested in what the panelists had to say about what it really will mean in their states in terms of an investment, in not only infrastructure but in economic development overall.

MACNEIL: Anyone want to comment on that? Arnold?

FOY: Well I think a governor should comment on this but I will say that one of the most interesting elements of the stimulus bill is the amount of money thatʹs aimed at energy efficiency in buildings.

And that is a huge prosperity investment in the long term, thatʹs another part of the infrastructure that we have not properly built out and it needs to be rebuilt so that we use energy much more efficiently, which is a great climate agenda, huge job agenda, and a long term investment.

RENDELL: And Jack we just in Pennsylvania and I think John Rowe (ph) sort of touched on it a little bit today, we passed in our renewable alternative energy, energy efficiency bill, we passed our requirement that the utilities had to conserve a portion I think, 2 percent of the energy theyʹre now using now, had to conserve it by a specific time.

That they had to do smart grids for consumers et cetera, so I think we can affect that
debate ourselves in many, many ways in dealing with our utilities.

MACNEIL: Letʹs wind it up with Governor Baliles.

BALILES: In many parts of our economy we finance our projects differently depending upon whether they are short term versus long term projects. State and local governments, for example, have an operating budget and a capital budget.

Corporate America operates with an operating budget and a capital budget but not the Federal government. Do you think that the long term infrastructure needs of this country would be better addressed if the Federal government were able and capable of handling financing needs on a capital budget basis much of the rest of country does now?

Iʹve noticed in aviation fields for example that air traffic control financing, things like that, are financed on an annual basis when the needs of the air traffic control systems are really 10, 15 years financing projects. Iʹd be interested in the panelʹs comments.

RENDELL: Iʹm obviously strongly in favor of that. Itʹs insane for the Federal government to finance the purchase of paper clips the same way as we finance building a bridge. One has a 40 year lifespan the other has a 30 day lifespan. And as long as infrastructure competes with the military, social services, things like education, in the operating budget, I fear weʹre never going to get there. And everyoneʹs whoʹs looked at this says we have to get there.

Congress en‐paneled a national surface transportation reform commission. They said that the overall spending, not just the Federal of it, but overall spending on the transportation infrastructure, had to go from $80 billion to $220 billion a year.

How are we going to get there? We can do user fees. We can do private, public partnerships but in the end, the ability to do this long term plan comes from our capital budget. When a business does a long term plan to change its direction over the next five years, they finance it from their capital budget. And so do most of the states and whatever. I think itʹs essential.

MACNEIL: Governor Baliles mentioned the air traffic control system as I understand it, the reason we have not moved to a GPS directed air traffic control system is that they havenʹt – theyʹre collectively, the country, the airlines, and the government havenʹt been able to agree to spend the large amount of money to replace the present system.

SCHWARZENEGGER: I still just want to add…

MACNEIL: And relieve some of the congestion at the big airports.

SCHWARZENEGGER: I just want to add because I donʹt think we have talked enough about public‐private partnerships. I think it’s absolutely crucial to do the same thing as other countries are doing and we – Iʹve just been, recently Iʹve been to British Columbia where they have really the most perfect public‐private partnerships where everyone is happy.

The businesses are happy, the labor, the people, the politicians, the future is happy about it. Theyʹre building huge amounts of projects getting ready for the Winter Olympics, all through public‐private partnerships.

And I think thatʹs where a lot of the action is, to finance a lot of those projects. The other thing I wanted to say is that we havenʹt talked at all about the permitting process and the environmental reviews because this country is getting held back not only because of a lack of funding or political will to do a lot those projects and to move forward with the infrastructure.

But also because our permitting process and the environment reviews, if itʹs Sequel (ph) or Nipa (ph) or whatever, the different things that they have to go through, sometimes get misused or abused.

And therefore, it takes us sometimes five, ten, 15 years to get the permits to move forward with the project. So I think thatʹs another thing I think that the federal government and states ought to go and start working together and addressing.

MACNEIL: If you speed up the permitting process, donʹt you cut into the time that advocates, like some of our other guests have been saying needs for real studies of cost effectiveness of projects that they claim are not done now?

SCHWARZENEGGER: No, no, itʹs not – Iʹm not saying that we should not do the studies and we should not do the work and protect the environment.

MACNEIL: Right.

SCHWARZENEGGER: Iʹm all for that but it is getting – the way the language is written a lot of times, it gets abused, the system. So that someone that isnʹt happy with you building a road just takes you to court and sues you and ties you up for four years. And if you win they sue you again and tie you up again. You cannot move forward with the project. Itʹs just that we have to look at that because it takes sometimes 20 years to get an extra, you know, runway in an airport and I think that just really holds us back and really doesnʹt make us be competitive compared to other countries.

MACNEIL: Do you have a comment on that Doug?

FOY: Well as an – formerly an advocate that fought with the same agencies I ended up then heading, I guess I can see this from both sides. Thereʹs no excuse for simply delaying the permitting process.

And there are ways to streamline permitting so that you get sensible, legitimate regulation but it is prompt. And weʹve gotten a little bit carried away having prolonged battles over this stuff. We actually put through a streamlining process on our environmental regulation when I was in government, simply to deal with these issues. There are a lot of projects you want to get built and you donʹt want to spend the next 12 years battling over it. The other thing thatʹs interesting on infrastructure is to the degree that youʹre doing the fix it first stuff, itʹs in the footprint of the existing project. You shouldnʹt have long permitting problems. You should just be able to blow right through that and thatʹs another advantage. You can get the stuff done quicker.

MACNEIL: Well, Mr. Foy, Ms. Hecker, Governor and Governor, thank you very much for joining us, and thank you all for joining us at the National Governorʹs Association Meeting in Washington.

END