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57–901—PDF 2008

S. HRG. 110–1057

TRANSPORTATION INFRASTRUCTURE:

ISSUES AND OPTIONS

HEARING

BEFORE THE

COMMITTEE ON FINANCE

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

JULY 10, 2008

(

Printed for the use of the Committee on Finance

COMMITTEE ON FINANCE

MAX BAUCUS, Montana, Chairman

JOHN D. ROCKEFELLER IV, West Virginia

KENT CONRAD, North Dakota

JEFF BINGAMAN, New Mexico

JOHN F. KERRY, Massachusetts

BLANCHE L. LINCOLN, Arkansas

RON WYDEN, Oregon

CHARLES E. SCHUMER, New York

DEBBIE STABENOW, Michigan

MARIA CANTWELL, Washington

KEN SALAZAR, Colorado

CHUCK GRASSLEY, Iowa

ORRIN G. HATCH, Utah

OLYMPIA J. SNOWE, Maine

JON KYL, Arizona

GORDON SMITH, Oregon

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

PAT ROBERTS, Kansas

JOHN ENSIGN, Nevada

JOHN E. SUNUNU, New Hampshire

RUSSELL SULLIVAN, Staff Director

KOLAN DAVIS, Republican Staff Director and Chief Counsel

(II)

C O N T E N T S

OPENING STATEMENTS

Page

Baucus, Hon. Max, a U.S. Senator from Montana, chairman, Committee

on Finance ............................................................................................................ 1

Grassley, Hon. Chuck, a U.S. Senator from Iowa ................................................. 3

WITNESSES

Orszag, Dr. Peter R., Director, Congressional Budget Office, Washington,

DC .......................................................................................................................... 5

Hecker, Jayetta Z., Director, Physical Infrastructure Issues, Government Accountability Office, Washington, DC .................................................................. 6

ALPHABETICAL LISTING AND APPENDIX MATERIAL

Baucus, Hon. Max:

Opening statement ........................................................................................... 1

Cantwell, Hon. Maria:

Prepared statement .......................................................................................... 21

Grassley, Hon. Chuck:

Opening statement ........................................................................................... 3

Hecker, Jayetta Z.:

Testimony .......................................................................................................... 6

Prepared statement .......................................................................................... 24

Orszag, Dr. Peter R.:

Testimony .......................................................................................................... 5

Prepared statement .......................................................................................... 55

Salazar, Hon. Ken:

Prepared statement .......................................................................................... 97

COMMUNICATION

Associated General Contractors of America .......................................................... 99

(III)

(1)

TRANSPORTATION INFRASTRUCTURE:

ISSUES AND OPTIONS

TUESDAY, JULY 10, 2008

U.S. SENATE, COMMITTEE ON FINANCE, Washington, DC.

The hearing was convened, pursuant to notice, at 10:06 a.m., in

room SD–215, Dirksen Senate Office Building, Hon. Max Baucus

(chairman of the committee) presiding.

Present: Senators Bingaman, Kerry, Salazar, Grassley, and

Snowe.

Also present: Democratic Staff: Bill Dauster, Deputy Staff Director and General Counsel; Pat Bousliman, Natural Resource Advisor; Cathy Koch, Senior Advisor, Tax and Economics; and Jo-Ellen

Darcy, Senior Environmental Advisor. Republican Staff: Elizabeth

Paris, Tax Counsel; Nick Wyatt, Tax Staff Assistant; and Sherry

Klutz, Special Assistant.

OPENING STATEMENT OF HON. MAX BAUCUS, A U.S. SENATOR

FROM MONTANA, CHAIRMAN, COMMITTEE ON FINANCE

The CHAIRMAN. The hearing will come to order.

The prophet Isaiah said, ‘‘Build up, build up the road! Remove

the obstacles out of the way of my people.’’ And so here we are

today to discuss our roads, our bridges, and our airways. We are

here to discuss our transportation infrastructure: what it is, how

it is funded, and how we can improve it. We are here to see whether we can remove some obstacles out of the way of the people.

And there are many obstacles.

Economists tell us that road congestion costs Americans $78 billion a year in lost hours and wasted fuel. Engineers tell us that

more than 1 out of every 4 American bridges is structurally deficient—like the bridge that collapsed in Minneapolis last August.

Even on our Strategic Highway Network—which supports U.S.

Military operations—more than 1 out of every 7 bridges is structurally obsolete.

They tell us that our transportation network is getting more

clogged. We wait on the tarmac. We wait in traffic jams. We spend

more of our lives waiting to get somewhere.

And the trends are daunting. By 2020, U.S. freight volumes are

projected to increase 70 percent above their level 10 years ago. By

2050, the U.S. population will reach 420 million, 50 percent more

than it was in 2000. As America grows, our infrastructure also

needs to grow. If it doesn’t grow smartly, we will suffer the economic consequences.

2

To complicate matters, the sources of funding for transportation

infrastructure are in jeopardy. The Highway Trust Fund, established in 1956 to fund our national transportation infrastructure,

now faces a severe revenue shortfall. The Congressional Budget Office, represented today by Director Peter Orszag, tells us so. So

does the Office of Management and Budget.

In February, OMB estimated that the highway account would face a shortfall in 2009 of more than $3 billion. What was bad news

in February has become even worse news today. The Highway

Trust Fund relies on fuel taxes for 90 percent of its revenues. And

as fuel prices have risen to record highs, people have cut back on

driving and bought less gasoline. As a result, receipts of those fuel

taxes have declined sharply.

In May, the Treasury Department reported that, compared to last year, Highway Trust Fund receipts are down more than $2 billion. We will get Treasury’s revised estimate of Highway Trust

Fund balances next week when OMB issues its mid-session review.

This Congress must act to make sure that the Highway Trust Fund

can remain solvent.

Failing to do so would cause Federal transportation funding to

be cut by more than one-third. Industry experts have calculated

that funding cuts of this magnitude result in about 380,000 lost

jobs. That is almost as many jobs as have been lost in the entire

economic slowdown since the beginning of this year.

America’s infrastructure is crumbling. America’s economy is

stumbling. In times like these, it would be deeply irresponsible for

Congress not to provide a short-term fix to the Highway Trust

Fund.

This committee has been trying to shore up the Highway Trust

Fund’s finances for more than a year. We tried to do so most recently in June as part of an extension of another vital infrastructure program—the Federal Aviation Administration.

But a small number of Senators blocked our efforts. So, we will

try again, however, perhaps this month.

Some suggest holding off on fixing the Highway Trust Fund until

the next long-term reauthorization of the program. That is due in

2009. I strongly disagree.

When Congress passed the last transportation bill, it provided

funding guarantees to States through fiscal 2009. As we turn our

attention to the next reauthorization, we must honor those guarantees. Now is not the time to revisit the carefully balanced compromises of the last bill.

I am not suggesting that the system is perfect. The Government

Accountability Office will testify today that our surface transportation programs are short on more than money. GAO says that our

transportation programs are also short on objectives and accountability.

GAO contends that what began as a bold national plan to establish an Interstate Highway System has become a disparate series

of programs lacking a clear national purpose.

I look forward to exploring GAO’s testimony on how we might

improve our surface transportation programs, how we get more

purpose. I look forward to working through these difficult issues,

as we prepare for Highway Trust Fund reauthorization for 2009.

3

* For more information, see also, ‘‘Overview of Selected Tax Provisions Relating to the Financing of Surface Transportation Infrastructure,’’ Joint Committee on Taxation staff report, July

8, 2008 (JCX–56–08), http://www.jct.gov/publications.html?func=startdown&id=1283.

And I also look forward to hearing CBO elaborate on its recent

transportation infrastructure work. Last year, Senator Grassley

and I asked CBO to analyze spending on infrastructure by Federal,

State, and local governments.

CBO produced a major report on public spending on the construction, operation, and maintenance of our infrastructure. And the report’s findings are the basis of the testimony that we will hear from

Director Peter Orszag today.

CBO and GAO’s work suggests that we should take a longer

view. It suggests that, in enacting the next surface transportation

bill, we should consider a wider range of transportation modes and

financing mechanisms.

We must recognize that these modes and mechanisms may not

apply equally in all areas of the country. But we must also recognize that, in the long term, we cannot sustain the status quo.

So let us examine how we build the roads, the bridges, and airways. Let us see if we can remove some obstacles. Let us see if we

can clear the way for all of the people.*

Senator Grassley?

OPENING STATEMENT OF HON. CHUCK GRASSLEY,

A U.S. SENATOR FROM IOWA

Senator GRASSLEY. Well, everybody knows that the next Congress is facing a monumental task, probably greater than a lot of

the transportation bills that I have worked on, as we go through

this process of reauthorizing our surface transportation laws.

The Senate Finance Committee obviously, from the standpoint of

our fundraising responsibilities, plays a vital role in the process. Of

course, it is going to take more than one hearing to have us understand the problems that we face.

So, in this first meeting I want to commend the chairman for focusing on improving transportation, which is essential for our economy, our trade, and the vitality of our States. He has been a true

leader for many years in this area, and I am pleased to continue

to be his partner in pursuit of sound, sustainable highway policy.

We started this effort in 2001 when I was chairman with a look

at the epidemic proportions of fuel fraud throughout the system.

Through multiple bills signed into law by the President, we have

shut down billions of dollars of fuel fraud scams to bring more financial stability to the trust fund, and more importantly to make

sure everybody pays their fair share.

In addition, we have totally updated the fuel system to recognize

the Nation’s need for alternative fuels. The volumetric ethanol excise tax credit, commonly known as VEETC, also stabilized the

trust fund with billions of new dollars and gave State and local

governments and schools refundable excise credits of 50 cents per

gallon for all alternative fuels that they use in their vehicles. These

are all good solutions produced by hardworking people on this committee.

Our current system is no longer sustainable to meet our country’s transportation needs. I am not sure that this is fully underVerDate 11-MAY-2000 14:07 Aug 25, 2010 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 57901.000 TIMD PsN: TIMD
4

stood by the country at large, and that is very important for us to

change. These hearings will help in that regard, but it is not the

only way it must be done.

The testimonies we will hear today will provide us with many

things that we need to carefully consider as we develop the next

bill. Just a few of the questions are: how to define the Federal role

in surface transportation; how to more rigorously evaluate, analyze,

and assess projects; how to create a sustainable surface transportation program; and how much funding is needed for the next bill,

with emphasis upon the last one being decided by what we decide

as policies in those first three questions.

Finally, we cannot forget that we are, right now, facing an immediate crisis before we get to the reauthorization of the surface

transportation bill. The Highway Trust Fund is expected to have

a shortfall in funding at the authorized levels of SAFETEA-LU for

fiscal year 2009. That stands for ‘‘Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users.’’ Chairman

Baucus and I have committed ourselves to filling this shortage of

funds, and, at least as part of one bill within the last 6 months,

we voted out provisions to do exactly that. So, I think we have

shown our commitment to keeping that promise.

The Senate Finance Committee has aggressively included ways

to fill the short-fund. However, these proposals have not yet been

enacted into law, and we must get that done. It is vital that Congress hold up our end of the current law and keep the Highway

Trust Fund whole in the short term so that we can focus on longterm policy and financing solutions as we meet our surface transportation needs.

It is my hope that we can have an important national dialogue

in the coming days so that Congress can act in a prudent manner

to reauthorize the highway bill, and I hope that that national dialogue goes well beyond the Congress of the United States.

And, finally, with regards to one of our witnesses, Jayetta

Hecker, I understand that she is going to be ending a long, successful career as a government servant, or retiring. It is my understanding she has been a strong partner with this committee over

the last 7 years, at least that I know of, and I wish you my hearty

congratulations and appreciation for your dedicated work.

If I could, Mr. Chairman, I would like to recognize that this is

Elizabeth Paris’s last participation in a hearing before this committee. She has worked for this committee since before I got here,

and in that process she has done great work for our committee. She

is going to be sworn in within less than a month as a judge on the

U.S. Tax Court. So, thank you to Jayetta, and thank you to Elizabeth.

The CHAIRMAN. Thank you very much, Senator.

I would now like to introduce our two witnesses. First, Dr. Peter

Orszag, Director of the Congressional Budget Office, who is well on

his way to becoming a member of the ‘‘Frequent Witness Club.’’

[Laughter.]

And second, Jayetta Hecker, Director for Physical Infrastructure

Issues at the Government Accountability Office. As Senator Grassley noted, this may be Ms. Hecker’s last hearing after a career of

nearly 40 years. Ms. Hecker has testified 90 times before Congress,

5

about 5 times before this committee. She is plainly a member of the

‘‘Frequent Witness Club.’’

Also, as Senator Grassley said, I would like to commend, honor,

and recognize Elizabeth Paris, a staffer of the committee for many

years. I think this could be her last hearing before she becomes a

member of the Tax Court, and we thank her as well.

So, Dr. Orszag, why don’t you proceed?

STATEMENT OF DR. PETER R. ORSZAG, DIRECTOR,

CONGRESSIONAL BUDGET OFFICE, WASHINGTON, DC

Dr. ORSZAG. Thank you very much, Senator Baucus, Senator

Grassley, members of the committee.

I would like to make five points this morning. First, Federal

spending on infrastructure is dominated by transportation, and

within transportation, dominated by highways. This first chart,

which you should also have in front of you, suggests that in 2004,

according to our definition of ‘‘infrastructure,’’ the Nation spent

about $400 billion, of which the Federal Government accounted for

about $60 billion, and of that $60 billion, about half was dedicated

to highways. So, in other words, at least in terms of the Federal

Government’s involvement, highways loom large in infrastructure

spending.

Second, growing delays on our roads and air travel suggest that

targeted additional infrastructure spending would be economically

justifiable. For example, over the past decade, Vehicle Miles Traveled have risen by about 15 percent, whereas lane miles have risen

by only about 3 percent. Those differential trends are expected to

continue.

The next chart shows you that estimates that we have reviewed

on the spending levels that would be required to maintain current

levels of services and that would pass economic cost/benefit analyses suggest additional spending could be warranted. So, for example, just to focus on highways, the Nation is currently spending a

little bit under $70 billion a year on highways; spending that would

be required to maintain current levels of services is closer to $80

billion, and economically justifiable investments—that is, the investments that would pass an economic efficiency test—are close to

$130 billion.

Third, the economic returns to the projects vary significantly. So

it is not correct to just say, oh, put an additional $10 billion, or $60

billion, or $70 billion into highways and you are all set. It depends

very sensitively on which investments are made. Those numbers

are dependent on specific projects, so again, project returns vary

substantially.

In addition, those estimates are dependent on the current system

of basically lack of pricing of infrastructure. The Federal Highway

Administration has suggested that widespread use of congestion

pricing would reduce the necessary investments by $20 billion,

which is striking because that suggests that, with widespread use

of congestion pricing, the investments needed to maintain current

levels of services would actually be slightly lower than what we are

currently spending.

Fourth, Federal support itself could be much more efficient. The

GAO has found that roughly half of the grants made by the FedVerDate 11-MAY-2000 14:07 Aug 25, 2010 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 57901.000 TIMD PsN: TIMD
6

eral Government for highways have been offset by reductions in

other State spending, and that that share increased during the

1990s. Another major form of Federal support for infrastructure

spending is the tax exemption on State and local bonds. The document that the Joint Committee on Taxation produced for this hearing raises questions about the efficiency of that form of support for

infrastructure spending.

For example, if you look at the observed yield spread between

State and local bonds and other bonds, anyone who is above a 21-

percent marginal tax bracket in 2006 or 2007 yielded a greater

benefit. In other words, the cost to the Federal Government was

larger than the benefit delivered to the State and local governments.

This suggests that that form of support through the tax code is

relatively inefficient. Alternative forms—for example, tax credit

bonds—could be a more efficient way of supporting State and local

government activity. I would make a broader point. There are inefficiencies often associated with a deduction/exclusion approach to

Federal support of various activities, whether it is retirement saving, infrastructure spending, health care, or what have you. Tax

credit approaches are often more efficient from an economic perspective than a deduction exclusion approach.

Finally, with regard to the Highway Trust Fund, or in particular

the highway account of the Highway Trust Fund, our March baseline did suggest that it would be exhausted in 2009, and an imbalance of roughly $1.5 billion would occur during that time period.

Since March, gas price increases have caused gas consumption to

decline since that March baseline was put together, and so the incoming revenue will be lower than what we projected in March.

Therefore, the imbalance in 2009 will be more significant.

Many people have wondered why this is occurring. I would just

point out that the Congress purposely saw the balance in the Highway Trust Fund and tried to have it exhausted by the end of 2009

in the SAFETEA-LU Act, and you are going to come pretty close.

You are going to be off by months, but in terms of what you were

trying to accomplish, the reason that the trust fund is being run

down and exhausted in 2009 was an explicit decision to increase

spending because there was a balance in the trust fund that policymakers wanted to run down.

Thank you very much.

[The prepared statement of Dr. Orszag appears in the appendix.]

The CHAIRMAN. Thank you, Dr. Orszag.

Ms. Hecker?

STATEMENT OF JAYETTA Z. HECKER, DIRECTOR, PHYSICAL

INFRASTRUCTURE ISSUES, GOVERNMENT ACCOUNTABILITY

OFFICE, WASHINGTON, DC

Ms. HECKER. Thank you very much, Mr. Chairman, Senator

Grassley, and other members. I am very honored to be here.

This is, as you have said, a critical juncture in transportation

policy, and the challenges facing the Nation are quite substantial.

The work that I speak to represents a body of work that a number

of professionals here have worked on for many years, and I thank

7

them. It is their hard work that supports the broad observations

that we have.

What I will cover is four broad points: the performance of the

system; a framework that we have proposed for restructuring the

Federal role in transportation; and then I will try to spend most

of my time on the funding and financing issues. As you know, we

have a recent report on public/private partnerships and the protection of the public interest in those, and I will try to summarize

some of the critical issues and focus on the tax issues that came

up during that review.

The first issue about the structure and performance of the system, very briefly. I think you have seen our work. We have concluded that the whole system is broken. It does not have clear

goals, it does not have clear roles for different levels of government,

it does not have performance built in, it does not have accountability, it does not use the best tools.

It is basically structured the way it was largely 50 years ago, and

it is not sustainable. There is not much to commend other than, it

is in place and it represents a lot of political compromises, but it

is not really getting the needs of the country addressed. In your

opening statement you called for the building up of the roads. We

do not have a policy that is really doing that in a rational, effective

way.

That has led us to call for comprehensive, systematic reform. We

like to help the Congress by giving you the guidelines of what we

think the steps would be to really formulate a strategic, targeted,

efficient transportation policy that really meets the needs of the

Nation.

The first step is absolutely getting the goals clear. Not goals in

preparatory language—we have always had language there that

talks about the national interest, and competitiveness, and performance and efficiency—but getting real goals, quantifiable goals,

performance goals that then become the structure of performance

and accountability; in effect saying, ‘‘This is what we want to buy,’’

whether it is about congestion relief, whether it is about the maintenance and rehabilitation of the interstate highway system—an

asset that in many places is crumbling and its performance is

being impaired—whether it is safety goals, or whether it is metropolitan mobility, or freight mobility, which actually isn’t even part

of the current program.

So getting those goals defined is absolutely step one, including

getting them clear, and defining the relative roles of government.

That has gotten very muddy post-interstate. Basically everything

we give the States, they can largely use for everything, so the concentration of where the national interest is and where the Federal

focus is is very muddied.

As I said, once you get those goals right, it leads to the performance outcomes. That is what you want to buy, that is what you are

going to incent, that is what you are going to reward. Then you

build in the accountability for that. As I said, the tools are outdated. We think the key tool for expending program funds at work

is return on investment.

We were asked to do a review of the role of cost/benefit analysis

in transportation. We went State by State by State. We found that

8

rarely is it done and, where it is done, it is hardly ever the key

factor for how States invest transportation resources. So we have

a need for new kinds of tools and decision making, and then of

course we need a sustainable program.

That allows me to turn to my third point—the issue that is perhaps of most interest and the focus of the role of this committee

on funding and financing options, and I have three main points

here. I do not have easy solutions, so do not be too disappointed

in the points, but I think they help clarify and sharpen what the

funding and financing issues are.

The first thing: everyone is talking about needing more money.

We disinvested, and even Peter has said there are probably some

economically justifiable needs for an increase. But there are only

two real sources of public funding for anything, and it is taxes and

fees. They could be general taxes, they could be income taxes, they

could be property taxes, they could be tire taxes—but the government gets money from either taxing people or activities or services,

and that is where the revenue comes from.

All of the other ideas on the table are financing mechanisms.

They are not the real money. Those are tools. They are not unimportant, and they are not irrelevant. We all buy our houses, or

most of us, with the income that we will earn in the future. So you

need an institution to certify that we have a stream of income to

allow us to buy that house, to basically borrow against our future

income. So financing mechanisms work, but they are not new

money.

So, where are you going to get the money? We have current

taxes, and Peter, I am sure, can talk to you a lot about the dwindling value in purchasing power of the gas tax. There are a lot of

other issues on the table, either medium-term or long-term.

The carbon tax is one I know this committee has looked at, and

CBO has evaluated. That would generate a lot of money from

transportation, which generates a lot of carbon. So, that is one

source of potential revenue. Additionally, there could be taxes on

freight that could be new sources of revenue to finance a national

freight program.

So those are the first two points about money. The last one is

very similar to Peter’s point: how you raise the money affects how

much you need. So the task is not just coming up with a certain

amount of money, but recognizing that the methods that are used

to fund transportation—and the closer they are to direct user

fees—can reduce the total amount of money needed. Similarly, the

more effectively you invest it, the more you will reduce the total

amount needed. So these estimates that are very popular, these big

numbers that we need $100 billion more, those are not dynamic,

they are not reflecting the need for smarter investment, as you, Mr.

Chairman, talked about, and the impact of sending the right signals with how we raise the money.

My final point is on public/private partnerships—and this is a

very complex issue. I guess we will get into it more in questions

because I see I have exceeded my time. Public/private partnerships

are, again, mostly a new financing tool. There is not really a lot

of new money coming in.

9

People talk about how there is $400 billion of pension funds just

dying to be invested in infrastructure, and this amount is probably

real, but the managers of these funds are dying to lend it to people

at a price and at a future cost to road users and a cost to the taxpayers in terms of the depreciation that is a big part of the attraction to private companies. Nevertheless, I do not want to leave you

with the sense that we do not see real opportunities and potential

benefits in some areas and in some environments for public/private

partnership.

Often in the U.S. we do not do a very good job of delivering, managing, and operating our systems. Having gone to Australia, Spain,

other countries where the role of the private sector is central, there

are a lot of efficiencies in the performance, the management, the

operation that can be achieved with public/private partnerships.

But there are costs and there are risks, and they have to be transparent. So that concludes my statement, and I look forward to your

questions.

The CHAIRMAN. Thanks, Ms. Hecker. Thank you very much.

[The prepared statement of Ms. Hecker appears in the appendix.]

The CHAIRMAN. I would like to ask both of you maybe, beginning

with you, Dr. Orszag: some have suggested a national infrastructure bank as a way to boost infrastructure development in our

country as an alternative, or maybe a supplement, to the usual

ways that we finance, say, our highway transportation system.

Your thoughts about a national infrastructure bank. Is that more

efficient? What is the appeal of that, and what is the down side?

Dr. ORSZAG. Well, I think that sort of speaks a bit to the question

of not getting too confused by financing as opposed to what the actual investments are. So let us talk specifically about a national infrastructure bank. I think there are a couple of questions.

Why would a State and local government, thinking about financing a new infrastructure project, want to borrow from a national

infrastructure bank rather than issuing debt? I think that is actually a very important question, because currently State and local

debt has a tax exemption associated with it. It is not efficient, as

I mentioned. It is not fully efficient, but it is a benefit. The result

is often that State and local governments can borrow at lower rates

than the Federal Treasury rate itself.

So, if the national infrastructure bank is borrowing at the Federal rate and then presumably lending at that Federal rate, it

would need an annual subsidy, and that means that a State and

local government can issue debt at a lower rate in normal market

conditions—current market conditions are a little different, and we

can talk about that—than it could borrow from the national infrastructure bank.

Now, many State and local governments have requirements that

they not issue debt exceeding some limits, so maybe that is a rationale for why they would want to borrow from the national infrastructure bank instead of issuing debt. But I think an important

question is, what are you accomplishing that the existing system

does not? Unless you are putting in annual subsidies, it is not clear

to me that many State and local governments will want to borrow

from that bank as opposed to issuing debt.

10

The CHAIRMAN. I understand that market rates of interest might

be a little higher.

Dr. ORSZAG. Yes. So, for example, Montana has an AA rating

during normal market conditions. So, if you look back, say, in 2007,

AA bonds at the State and local level were yielding something like

4.5 percent, and the U.S. Treasury rate was 5.3. So, if you can

issue debt at 4.5 percent or borrow from an entity that, unless it

is being subsidized on an annual basis would have to lend to you

at about 5.3 percent, why choose the 5.3?

The CHAIRMAN. Would you also talk a little bit about—and Ms.

Hecker, both of you—this public/private partnership idea and the

role of depreciation. How efficient is that to U.S. taxpayers? For example, compared with the usual way of financing these highway

projects, it begs the question, where do we get the revenue? There

are gasoline taxes, user fees of some kind, and it goes back out to

States.

Dr. ORSZAG. Sure. Let me go first.

The CHAIRMAN. Yes. Sure.

Dr. ORSZAG. Just very briefly, I think the key thing on public/

private partnerships is the involvement of the private sector allowing a more efficient allocation or choice of the projects and more efficient maintenance and pricing of that infrastructure than would

otherwise be the case.

On the pure financing side, it might look attractive because you

have less up-front government money that needs to go in, but you

have to remember, as was pointed out before, that is not free. The

private company is going to demand a return on its money. So the

users of the road or the facility are ultimately going to pay for that,

and the private company will demand a return. Part of the return

often does involve accelerated depreciation relative to the length of

the lease or the length of the arrangement, but that is only part

of the return to the private company.

The CHAIRMAN. Ms. Hecker?

Ms. HECKER. Yes. As I said, we did a review of all of the major

deals in this country—highway long-term concessions—and spoke

with all of the folks, the tax lawyers, and all the financial advisors.

What the unequivocal story was, is that a critical factor in the

length of these deals, 99 years, 75 years, was the tax code. For the

entities, the concessionaire, to show effective ownership of the

property, to be eligible for the accelerated depreciation, usually on

a 15-year timeframe, the term had to be beyond the useful life of

the asset.

In some cases, such as the bridge in Chicago, it was determined

that the useful life could be over 60 or 70 years because of the steel

structure. The advisors, even though the city said, ‘‘The terms of

the concession seem a little long, why don’t we go shorter,’’ said you

are not going to get much money from the bidders if they do not

get this tax deduction.

So at the end of the day, what is not transparent and what is

very important about this is that the assets that a State is monetizing are basically an opaque transfer from the Federal Government to the State. You do not see it, it is not quantified, but those

States—or the city of Chicago, in that case—monetizing that asset

basically got a Federal subsidy for that deal.

11

The CHAIRMAN. Thank you very much. My time has expired.

Senator Grassley?

Senator GRASSLEY. In SAFETEA-LU—and this will be for both of

you—I advocated a broad-based national study to look into the Vehicle Miles Traveled concept. While this study is still being conducted, Oregon has completed a study in their State which shows

promise in this area. What are the merits and concerns that you

could analyze with this type of system, and should we be moving

forward with this concept in the next reauthorization?

Dr. ORSZAG. I am sorry, I want to just make sure, you mean a

tax based, or a fee based on Vehicle Miles Traveled, not just——

Senator GRASSLEY. Yes.

Dr. ORSZAG. Yes.

Senator GRASSLEY. As opposed to the gas tax.

Dr. ORSZAG. Right. And Oregon and other entities are experimenting with GPS-based systems for imposing that kind of fee. We

have moved technologically to make that much more feasible.

There are certain efficiency benefits. It depends on what you are

trying to accomplish, but there are certain efficiency benefits from

basically imposing a fee on Vehicle Miles Traveled rather than gasoline consumption.

In fact, I would just note, there have been proposals to transform

auto insurance from a fixed cost to basically a variable cost based

on Vehicle Miles Traveled also. So I think it will depend on what

you are trying to accomplish, and technology is evolving to make

it more feasible.

Senator GRASSLEY. Do you have a view on that?

Ms. HECKER. Yes. Historically, the gas tax, when it was devised,

was seen as the best way, given current technology, to have a userbased finance system. The gas tax has deteriorated as a good

proxy. A lot of the research and the pilots have shown that different types of VMT—and they can vary quite a bit—would basically move us back in the direction of having users perceive more

fully the costs that they are imposing, and the benefits that they

are receiving from the infrastructure they use. There can be simple

VMTs, there can be complex VMTs, but I think the next authorization is really an opportunity to build on the study that you promoted in the last authorization and to perhaps get more pilot activities—I think certain States would be interested—because it is

a huge transformation.

One of the challenges in Oregon was getting gas stations to be

willing to be part of the monitoring. That is where the reconciliation came, and it took the State a long time to get gas stations

to move in the right direction. So it holds a lot of promise. It is not

something that you can move to immediately on a national level,

but you cannot do anything long-term until you start doing the

building blocks. The promise of it merits much more further applied study.

Senator GRASSLEY. The GAO ‘‘Report on Surface Transportation,’’

March 2008, states: ‘‘Rigorous analysis is not a driving factor in

most investment decisions by State and local governments.’’ The

concept goes on to state that ‘‘political or public opinion holds more

sway than costs and benefit of a project.’’ The same could be said

of any Federal program. As part of the evaluation of the Federal

12

role in transportation, how should we evaluate the State and local

role in how we provide Federal assistance?

Ms. HECKER. That is the $100-billion question. That is the whole

thing, really, how should we do it? I would go back to that structure. It is honing in on clearer, national interests and national

roles. For example, we probably have an interest in the maintenance and continuing performance of the interstate system—that

could be a performance goal of Federal assistance to States.

Then, the way States get the money would be related to the performance of the interstate system. As another example, there is a

very strong argument that there is a Federal interest in freight

movement, but we do not have that as part of our program. It is

an after-thought, ironically, given the essence of interstate commerce.

You could have a program. You need new money because you certainly do not have enough money, but you could have a program

that would focus on freight mobility. A drag on the economy is actually occurring because of the deteriorating performance of freight

infrastructure and freight movement. So it is getting the goals

right and then building in the accountability in the flow of the

funds.

Senator GRASSLEY. Do you have a reaction?

Dr. ORSZAG. I would just add, again, that one could condition

Federal support for infrastructure on more efficiency at the State

and local level, so the projects that are subsidized by the Federal

Government would have to pass a more rigorous cost/benefit test.

Even if you wanted to encourage more congestion pricing, I would

note that that does have a very big effect on the necessary investments here. You could condition Federal support on appropriate

congestion pricing at the State and local level also.

Senator GRASSLEY. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you.

Senator Bingaman?

Senator BINGAMAN. Let me just follow up on that. Could you be

more specific, Peter, in describing what—you referred in your opening statement there to ‘‘widespread use of congestion pricing.’’ How

is that being done? How can that be done in a practical way?

Dr. ORSZAG. Congestion pricing is now being used in isolated

places. Not isolated, but in a few examples, the most prominent of

which is in London, where, to enter the inner part of London, there

is a system for pricing. It has significantly reduced congestion in

the inner part of London. Congestion pricing is now being used—

and we go through this in the testimony—in a few other places

within the United States.

It has major potential to reduce and shift the way that people

drive, basically. So where it has been used, including in the New

York/New Jersey area, you shift people toward off-peak hours,

which means you are getting more out of your infrastructure, and

the people who absolutely need or want to get somewhere quickly

are still able to do so and are willing to pay the price for doing so.

Basically, we can get a lot more out of our infrastructure if we

make sure that the people who really want to use the infrastructure at particular points in time can use it more easily, and then

13

people who are more able to shift what they are doing have an incentive to do so.

Senator BINGAMAN. So the idea is that you would essentially be

charging a higher fee to people who wanted to come into New York

City during the height of the business day or during rush hour, or

whatever, than if they decided to come in at 3 o’clock in the morning or at some other time. Is that it?

Dr. ORSZAG. That is correct. Now, one of the concerns, as is often

the case with economic efficiency, is one of fairness or equity, and

whether you are imposing a disproportionate burden on lowerincome or moderate-income workers. There have been approaches

trying to adjust for that, whether through a fixed payment—as

technology evolves, you can imagine, and it sounds a little too Big

Brother-ish, systems where the fee depends not only on what you

are doing or where you are driving, but also on income or the type

of car you are driving. We are rapidly evolving towards a technology system where that sort of adjustment would be possible. If

you are concerned with getting the efficiency benefit, it could be regressive.

Senator BINGAMAN. All right.

Ms. Hecker, did you have a thought on the value of congestion

pricing, or any other aspect of what we were talking about?

Ms. HECKER. Yes. Congestion pricing has enormous value in

helping users understand the full costs that they are imposing on

the system. In very few assets or areas of the economy do we build

for peak demand. By not differentiating the cost of using infrastructure at peak times, that demand goes up and up and up. So

getting the price clear—and we have it. For example, we have it

in transit, we have it in telephones, we have it on a lot of bridges.

So, it is a normal part of signaling that using something at a congested time costs more, but there are very different forms that are

already taking place in transportation.

In London, there is a cordon, a whole area, where there is a congestion fee charged for any entry during congested times. It is a

flat charge, either you are in the area or you are not. There are

other forms of congestion pricing, such as the conversion of underutilized HOV lanes to HOT lanes, or high-occupancy toll lanes.

What they do is, they take that capacity and they open it to singleoccupancy drivers for a fee, and the fee is set at a level to keep the

traffic free-flowing. So it is an absolute guarantee.

In California where they have this, and in a few other places,

you have a choice of using the free lanes, which probably takes you,

let us say, an hour to get from here to there, or you have a sign

at the beginning saying, today it is $7.50 to ride that highoccupancy toll lane. It is often completely booth-free, it is all electronic. You are notified. It’s like you have an EasyPass, and the

charge is just deducted from your account.

In addition, a lot of studies have been very focused on the equity

issue. A lot of people accuse these of being ‘‘Lexus lanes,’’ yet it is

clearly documented that it is people who value the time who use

these lanes; for example, if you have to get to the baby-sitter and

you are going to pay a $20 fee if you are not there at a certain

time. People of all income classes are using the tolled lanes when

they need the reliability. What is important about that is an opVerDate 11-MAY-2000 14:07 Aug 25, 2010 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 57901.000 TIMD PsN: TIMD
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tion. We have studied this across the country, with different States

assessing tolling. Providing tolled lanes gives the public an option,

with the tolled lanes guaranteeing the free flow. And buses benefit,

because what you do is you have bus rapid transit on that same

lane, and that is part of the equity trade-off as well.

Dr. ORSZAG. Could I just add this very quickly on the business

side? We often, in our heads, have congestion pricing for passenger

vehicles, but trucking and business, where it may be more natural

to think of charging trucks different prices depending on when they

go, and maybe the businesses have more flexibility, you do get a

significant response among trucking companies to congestion pricing.

I would also note on that point, we also do not impose fees on

trucks, or taxes in a way that reflects the wear and tear that they

impose on the highway system. Basically, the wear and tear that

is imposed depends on the weight per axle, and that is not the way

that we tax trucks.

The CHAIRMAN. Thank you very much.

Senator Kerry?

Senator KERRY. Thank you, Mr. Chairman.

Ms. Hecker, thank you for your years of service. We really appreciate it. I noted that you went to Boston University. I do not know

if you come from that area or not.

Ms. HECKER. Brighton.

Senator KERRY. Brighton. See, I thought that accent was familiar. [Laughter.] I thought there was more than 4 years of college

in that.

Anyway, we really appreciate your many years of contribution in

a number of different areas.

Ms. HECKER. Thank you.

Senator KERRY. It is folks like you who really help make things

work, and we want to say thank you.

That said, I am concerned that this hearing is sort of falling into

a context of business as usual in a funny way. And I do not mean

that in any negative sense about the hearing; I am very grateful

to the chairman for having this hearing. But there are, what, four

of us here now, and there were six of us total. As far as I am concerned, this is one of the most demanding, critical issues in front

of our country.

The goals that you sort of talked about, I mean, the goals are

huge and obvious. We are on our way to becoming a third world

country in many parts of this Nation. We have an airline system

where we cannot even get the next generation air traffic control

system funded properly and in place.

We are fighting just to hold on to Amtrak, not to actually put in

place a new rail system. We have colleagues here who tried to zero

out Amtrak in the last 10 years. I mean, this is a fundamental confrontation with what kind of country we want to be and how you

get there. If you go to Shanghai today, you can get on a mag-level

high-speed rail and go 12 minutes from the airport to downtown

Shanghai. We all know about the Bullet train and the TGV and

other fast rails in other parts of the world.

In the last month, we have seen the Department of the Treasury

reports that, because of the high price of gasoline, people are now

15

being forced into a different mode of thinking, and so ridership is

up on heavy rail, light rail. We have had, I think, what is it, an

8-percent increase in Boston; Amtrak ridership in the Northeast

corridor was up 11 percent. So, clearly there is going to be an increasing demand.

The Department of Texas Transportation Urban Mobility Report

says that ‘‘traffic congestion is continuing to worsen in every single

city in America.’’ That is not free. People need to understand that. According to their report, it is a $78-billion drain on the U.S.

economy. Then there is 4.2 billion lost hours of productivity and 2.8

billion gallons of gasoline, of just wasted fuel. We are supposedly

worried about our security, worried about sending money to dictatorships and so forth. In 2007, domestic flight delays cost the U.S.

economy $41 billion and consumed about 740 million additional

gallons of fuel. I mean, this is crazy.

We have not had a serious proposal on the table in the last 8

years from an administration saying we ought to be building the

infrastructure of this country. I am told that we have a $1.6-—depends on the figure—to $2-trillion infrastructure deficit. We have

500 bridges in Massachusetts that are in need of repair, some of

them unsafe. We have already had a bridge in Minnesota fall

down.

We have a train that goes from Washington to New York that

could go 150 miles an hour. It does for a few seconds in a few

places. It cannot even go underneath the tunnel in Baltimore at a

decent speed because the vibrations make the tunnel unsafe. I find

this shocking that we are where we are.

Yesterday when Ted Kennedy was here, briefly talking in his

wonderful visit, he talked about how he noticed, as he drives every

day now back and forth to the hospital, how rough the road is, how

unrepaired it is. I drove across the country a couple of summers

ago after the campaign. I was stunned by how bad the roads were

in so many parts of our country.

So it seems to me, and I just sort of say to you, do we not have

to sort of lay these goals out in a bigger, more authoritative way

and offer some leadership and push-back against this? I can see

some of our colleagues saying, oh, we cannot raise taxes. Oh, my

God, that would be terrible if we raise taxes. So we are living off

the infrastructure that our grandparents and parents built, and we

are unwilling, ourselves, to build for the future.

So I would like you to comment about sort of the larger mission

here. This creates jobs, as far as I know. It is one of the best job

creators, job return on investments that you can make. Here, we

have an economy that is going slow. This is a way to put Americans back to work. But we are not. We are just sitting here, except

for the chairman’s willingness to have this hearing and talk about

how we are going to do this.

Incidentally, in global climate change, one-third of global climate

gases, CO2, comes from the transportation sector, 60 percent from

automobiles. So, if you are going to do something about global climate change, that has to be factored in, I assume.

So give us a sense of the package here. How urgent, compelling?

What is the overriding goal? How do you package that?

Dr. ORSZAG. Senator, first——

16

The CHAIRMAN. Somewhat briefly, please.

Dr. ORSZAG. Yes, I will be brief.

Let me just say, based on personal experience, that what one

needs to go through to become a member of the Federal Witness

Program is a lot more enjoyable than what one needs to go through

to become part of a Frequent Flyer program on any major airline

these days.

As I already mentioned, studies do suggest that there is significant additional infrastructure spending that would be economically

justifiable, that would pass a cost/benefit test. It is very projectdependent, so you cannot just say, spend more. You have to be very

careful about where it goes, according to the principles that have

already been delineated. It also depends on how that infrastructure

is priced and used. So I think it is clear that more infrastructure

spending could be economically beneficial.

Senator KERRY. But do we not have to factor in a whole set of

variants that we do not factor in in terms of savings, plus on productivity hours, plus on savings on biofuel, security, other things

that we do not even touch today?

Dr. ORSZAG. The productivity in the sort of economic part of it

is factored into those calculations. The security associated with energy dependence is typically not, or only indirectly.

Senator KERRY. Ms. Hecker?

Ms. HECKER. Our work has shared your sense of urgency. There

is an urgency on infrastructure. As I said, it is functioning as a

drag on the economy. But the impetus to think that the answer is

largely to balloon the Federal contribution, as some of the proposals have been, really misses the fact that, for the past decade

or more, Federal contributions, and even the State expenditures of

their own money, have gone up and up and nearly doubled or more

in some cases, and yet the performance is going down.

So putting a lot more money, because of the sense of urgency, on

the existing system without reforms on how well we use the existing system, how well we get better, more cost effective investments

and decisions at the project level, presents risks. We need reform

of the system so that the leadership that you want to bring to address the problem really solves the problem.

The CHAIRMAN. Thank you.

Senator KERRY. Can I just ask one last part of that?

The CHAIRMAN. Very briefly, please.

Senator KERRY. Is that dependent on the private sector’s oversight and accountability standards and best practices, or is that dependent on the regulatory oversight component?

Ms. HECKER. It is the structure of the programs. There is a role

for the private sector, if well-managed and well-structured by public entities. But even in Australia, where all the roads are largely

built by the private sector, it is a public responsibility to define

what they want, where they want it, under what terms. For some

of their projects, the competition is for the lowest toll level, not how

much money can be cashed out up front. So, it is a different perspective.

Senator KERRY. Thank you.

The CHAIRMAN. Thank you.

Senator Salazar?

17

Senator SALAZAR. Thank you very much, Chairman Baucus.

Thank you for putting the spotlight on this question, which I am

sure we are going to be addressing in significant ways in the coming months and in the years ahead.

Let me start out with you, Ms. Hecker. That is, when you talked

about performance goals and your conclusion is ‘‘the system is broken,’’ and you talk about the need for real goals and performance

goals on congestion relief, on maintenance, on safety, on a whole

host of other things that can be goals and that can be measured

in terms of whether or not our system is in fact working, hasn’t the

Department of Transportation, under Secretary Peters, been doing

that, or is it just a failure of incompetence to be able to develop

what is commonsensical in terms of managing a transportation program for the Nation?

Ms. HECKER. I think the Secretary has tried to focus on performance, but the structure of the highway program that we have—

right in the statute it provides States ‘‘sovereign rights’’ to choose

projects, to do whatever they want, where they want, how they

want. We do not really have a Federal program. GAO has called

it revenue sharing. The Federal Government has some ideas and

we have some pots of authorized funds for different purposes, but

States can move most of the money around. So it really is not possible, with the current structure of the program, to hold a State accountable for using scarce Federal funds to achieve specific performance ends. So it is a wholesale change that is needed.

Senator SALAZAR. Let me then ask you the corollary question,

which is, what kinds of recommendations would you have for this

committee in terms of making sure that we at the congressional

level, as we work with the next administration in coming up with

meeting the needs of our infrastructure system for America, including transportation, how would you come up with a system that is

different than the one that we have today? I mean, from what you

just said it seems that Secretary Peters is caught in a position

where she has to implement a system which is a strait-jacketed

Federal system, and so you are saying we have to do something different. What would that be?

Ms. HECKER. There are two different ways that the Federal Government gives money to States for transportation. One is by formula, or an apportionment, and there are defined factors that drive

allocation. The other method is through competitive programs. The

apportionment determination is a proxy for need but has nothing

to do with performance. Yet that is where most of the political

focus is, how much return is going to come to my State.

Senator SALAZAR. All right. But could we add performance measures then into that formula?

Ms. HECKER. Absolutely. Absolutely. What you do, though, is create political risk that you are not going to have a table before you

pass the new program that is going to say, how much is going to

go to Colorado, for example? It so happens I know that Colorado

is trying to focus on performance in corridors and experimenting

with new approaches, but basically you are not going to get a formula—if you have an apportionment that is going to be more performance-based. How much each State or region gets is going to depend on their performance. It could still be based on need, but it

18

would be linked to performance. There is another approach besides

the apportionment.

Senator SALAZAR. Quickly.

Ms. HECKER. There is a competitive program. Basically, a competitive program like the New Starts program has a little bit more

of a link to performance. You have to show that you are really

going to move people, that it is going to solve problems, that it is

going to improve mobility, maybe improve air quality. So that is a

totally different way. There may be a lot more promise for more

competitive programs if they are selected on the basis of merit

rather than congressionally designated.

Senator SALAZAR. We are going to need all of your expertise and

help to solve this huge problem for the Nation. I very much agree

with Senator Kerry in his description of the challenge that we face.

Dr. Orszag, a question for you relative to the Highway Trust

Fund and what is happening now in terms of the price of gas and

people traveling less. Do you have any projections in terms of how

the reduction in consumption will impact the amount of money

coming into the Highway Trust Fund?

Dr. ORSZAG. It will reduce it.

Senator SALAZAR. I know that is the answer, but do you have a

quantification of how much?

Dr. ORSZAG. We will have updated specific numbers when we release our update later in the summer, so I do not have specific

numbers for you now. But as you have already noted, both Vehicle

Miles Traveled and gasoline consumption are down by a few percentage points relative to last year and they are lower than we projected in our March baseline. So, revenue will be lower than we

projected.

Senator SALAZAR. All right. If you take a long-term look at—one

of the things that is going to come out of this gas crisis that we

are in is a major push for greater efficiency in terms of our fuel

mileage. Certainly this committee, and Senator Baucus and others,

have been leading in that direction.

How do you foresee us dealing with that reality in terms of having hopefully, at some point in time, hybrid plug-in vehicles that

will make 100 miles to the gallon? How do you then foresee us having to deal with the fiscal challenge that that creates in terms of

how we fund our highways?

Dr. ORSZAG. It is often the case that lots of things that you use

as a tax base, and that you have some other policy objective that

you are sort of hoping will reduce, that that actually happens. So

in climate change, if you tax carbon emissions, part of the goal is

to reduce the tax base. It may well be the case that eventually gasoline consumption declines as we move towards higher energy efficiency.

But I would say we are probably far away from a setting in

which the tax base evaporates. That is a separate question from

whether, as was raised earlier, it would be more efficient or desirable to move towards, for example, a Vehicle Miles Traveled tax or

some other form of taxation.

Senator SALAZAR. All right. Thank you very much.

The CHAIRMAN. Thank you, Senator, very much.

Senator Snowe?

19

Senator SNOWE. Thank you, Mr. Chairman. Thank you for your

testimony extending our vision and explaining the dimensions and

the breadth of the problem that we face.

I know we have a vote under way, but I wanted to ask very

quickly, how do we project the future with respect to the Highway

Trust Fund reauthorization that is scheduled in 2009? Obviously

we face significant shortfalls now in the trust fund, projected shortfalls for the future, not to mention the gaps that exist in the disrepair and deterioration of our infrastructure that was underscored

by the National Transportation Commission that said we have

about a $140-billion under-investment in upgrading our infrastructure across the country in terms of what we are doing today.

How should we approach the Highway Trust Fund reauthorization? Should we just scrap it altogether and start over? Should we

set the goals? Should we have a national planning strategy developed before we weigh in on the reauthorization and preparation for

it? How would you suggest we go about it?

Finally, should we eliminate the 6-year reauthorization, given

the scope of problems that we are facing in terms of financing it

for the future?

Dr. ORSZAG. I guess I am not really allowed to use the word

‘‘should’’ any more, but let me just say that it would not seem desirable simply to reauthorize the system and just fill a gap without

addressing some of these efficiency questions. You have before you

an opportunity to address some of the shortcomings that have been

discussed today in terms of how projects are selected, how the

whole system works. Presumably one would want to address that

as part of a reauthorization.

Senator SNOWE. Ms. Hecker?

Ms. HECKER. The scope of what we have talked about is undoubtedly beyond a single reauthorization, so it is breaking into pieces

and building blocks what can be tackled and reach some consensus.

It seems to me we do have a consensus about a national interest

in the Interstates. Some focus on that could perhaps be more

performance-based.

The challenge is, with the dwindling resources of the trust fund,

as a Nation we know we need to start addressing freight problems

and freight mobility and bottlenecks, but we do not have any funds.

This is a committee that looks at resources. Freight benefits from

free flows and freight mobility, and economic growth suffers as that

performance deteriorates.

Some serious consideration could be given to identifying some

kind of fee on the movement of freight that better incorporates the

real costs of freight and then setting up some kind of new program.

We have a skeleton of such a program in the ‘‘Projects of National

and Regional Significance,’’ but I am sure you know that that is

100-percent designated, so it is not clear if it is targeting national

freight mobility problems.

Senator SNOWE. Well, it seems to me we are going to have to do

some pre-planning before we weigh in on the entirety of the reauthorization and how we approach it in the final analysis. It may

be well that the Congress and the administration work on developing those priorities and how we are going to go about approachVerDate 11-MAY-2000 14:07 Aug 25, 2010 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 57901.000 TIMD PsN: TIMD
20

ing the whole reauthorization before we begin that process legislatively.

Ms. HECKER. There is a marvelous parallel in England where

they took a former minister and basically said, we know our system

is broken, where is the vision? How do we really move forward? So

he knew all of the existing programs, and he was a thoughtful person, Sir Rod Eddington. He put together what is well-known

around the world as the Eddington Report, and it provided a transformative vision. The country is working on it in building-block

ways. It will take many decades, but it was a deeply insightful,

strategic analysis by a very informed and respected former member

of the Parliament to basically do that kind of charter and strategic

thinking.

Dr. ORSZAG. And since Ms. Hecker is retiring, perhaps she could

be appointed. [Laughter.]

Senator SNOWE. All right.

The CHAIRMAN. That was exactly my thought. Great minds think

alike. I was thinking exactly the same point.

Senator SNOWE. Thank you very much.

The CHAIRMAN. Are you through?

Senator SNOWE. Yes. Thank you.

The CHAIRMAN. All right. Thank you very much.

We have a vote going on. In fact, we have to leave right now.

This has been a very, very good hearing, very provocative, lots of

great ideas. Ms. Hecker, for your last appearance, you should get

an Academy Award for your performance. [Laughter.] It was very

good.

And, Dr. Orszag, you gave your usual stellar performance as

well. But thank you both very much. I just turned to my staff, and

I said, boy, we have to talk to Ms. Hecker more about how we put

together this reauthorization.

Ms. HECKER. It would be my honor.

The CHAIRMAN. Next year I have this surface transportation subcommittee. But man, we have a daunting challenge ahead of us.

You have made some very, very good suggestions, and I just thank

you very, very much, and for your service to GAO and to the country. Thank you very much.

Ms. HECKER. Thank you.

The CHAIRMAN. The hearing is adjourned.

[Whereupon, at 11:09 a.m., the hearing was concluded.]

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