URBAN TRANSIT, STUCK BEYOND THE SHOULDER

It was a nightmare. The band had to tour Greenland by bus. ~ Fred Schneider, a founder of the B-52s 

Have you ridden a bus, hopped on a subway or taken a train recently? Fewer folks than ever have been using public mass transportation to get places near and far. The resurgent Covid pandemic hasn’t helped. Local bus and rail systems – public mass transit – remain stuck, beyond the shoulder of thoroughfares that count, as both customers and transit drivers have abandoned them.

Mass transit is not a pedestrian matter; its status affects millions, can alter our environment and over time has been influenced by many factors. In econo-speak, mass transit has been considered an inferior good, one whose demand declines as consumers’ income rises. It wasn’t always inferior.

After my mother graduated from the University of Massachusetts during an early stage of the Great Depression, she boarded a Greyhound bus in Boston and over the next six months travelled around the country. To visit friends, she first headed to Florida and then across the deep south and south-western US to Los Angeles, where stayed nearly a month. From LA she took train rides on the Union Pacific, Pennsylvania and New York Central railroads during a 5-day jaunt back to Massachusetts.

At that time, trains and buses were the most popular means of travelling long distances. Greyhound had over 4,800 stations across the US. Railroads’ passenger carriage was more than five (5) times what Amtrak’s is now.

Public transit ridership has never since been higher than it was in 1926. Automobiles were certainly present then, but were not nearly as fast or convenient for a single person undertaking a long, cross-country trip. My mother saw first-hand the sights of America at ground-level, riding Greyhounds and the rails. The picture below shows the classic Scenicruiser bus, designed by Raymond Lowey, that Greyhound operated for about 20 years.

A great deal has changed in mass transit during the past 80 years, most of it unfavorable. Municipal transit systems have been owned and operated by city and regional governments since the 1950s. Greyhound remains the country’s largest inter-city motorcoach operator, but now operates in less than 60% of the cities it did at its peak before WWII.

 

The Greyhound Scenicruiser bus, used from 1954 to the mid-1970s.

Transit ridership essentially plateaued with subsequent gradual declines for decades, as the automobile gained dominance. President Eisenhower’s groundbreaking federal funding of the Interstate highway system in 1956 confirmed the government’s commitment that it needed to meet the increasing challenge of evermore cars on US highways. 

It wasn’t until eight years later that the government first began providing sizeable financial assistance to local transit systems with the passage of the Urban Mass Transportation Act (UMTA) in 1964. The UMTA funding paid for two-thirds of the costs of local transit systems’ equipment and facilities. By the 1970s this federal funding had allowed cities to build new, heavy-rail mass transit systems like the San Francisco Bay area’s BART, Washington DC’s Metro and MARTA (not our first president's wife; it's Atlanta's subway system).

During the 1980s and thereafter many cities built less capital-intensive light-rail transit systems, including Philadelphia, St. Louis, Seattle and San Jose. Light-rail, surface systems operate on dedicated rights-of-way with power provided via overhead wires. These additions to cities’ transit coverage have been helpfully modernizing.

Despite this sizeable public investment, the share of US workers commuting by public transportation fell from 12.1% in 1960 to about 5% in 2019. Annual growth in public transit ridership is a minute 0.6% since 2000. Adding to urban transit’s miseries, current ridership now is less than one-half of what it was pre-Covid.

Transit advocates advise that the costs of urban driving are too low and need to increase if transit is to recover ridership. This could involve instituting congestion fees, increasing parking costs and pumping up state and local gasoline taxes.

Manhattan, NY now appears to be edging back onto the roadway for implementing substantial congestion fees. It may work in Manhattan, but it’s not clear there are many politicians willing to brave public resistance to elevating driving-related fees and taxes. Travelling that political pathway to change decades of commuting behavior is likely to be a fully pothole-filled trail.

In November, President Biden signed the $1.2 trillion (T) Infrastructure Investment and Jobs Act. This legislation’s fiscal largesse will be spread wide and far. Confusingly, this trillion-dollar number is not the amount of actual new infrastructure spending. Nope. The large, legislative budget number also includes typical annual expenditures for public roads, bridges, ports, railroads and water infrastructure, such as filling potholes, replacing worn-out pipes and equipment and operations & maintenance expenses.

New expenditures in the bipartisan Infrastructure Act sum to about $550 billion (B). This hefty number represents only 46% of the Act’s total $1.2T sticker-price. It’s these new outlays, not pothole-filling, that the president and Dems proclaim will significantly improve America’s transit infrastructure and consequently its citizens’ lives.

Such efforts will hopefully benefit many folks in many ways, which is a good thing. But this confusing reporting of funding level is an example of how Congress swells the apparent significance of its legislative efforts. Dems believe bigger is clearly better, even though it’s misleadingly stated. So it goes.

Public transit is due to receive $39B, 7.1% of new infrastructure expenditures. This tidy sum will serve to upgrade our 2,200 public urban and rural transit systems nationwide. The Act will also provide money to create new bus routes, electrify bus fleets and assist in making public transit more accessible to seniors and disabled Americans. Interestingly, urban rail lines are already reported to be at least 90% handicap-accessible; buses are 99% accessible.

Berkeley has its own ideas for improving its bus system. The City Council is considering a program that will offer free AC Transit bus rides in a portion of the city. If the Council approves, if they find funding for it and if AC Transit (the bus operator) agrees, one bus route that travels through several low-income neighborhoods will be renewed and fare-free on Sundays for a year. That’s three very big “ifs,” especially the last one. The Council believes this program would remedy in part systemic inequalities that Berkeley, being Berkeley, is very attuned to.

Among several issues with the program, picking Sunday as the free-fare day is regrettable. Sunday has the lowest ridership of any day of the week, and excludes virtually all commuters and students, the bulk of bus riders in Berkeley. Sundays are not a representative day of transit usage for most systems, including Berkeley’s.

The number of Berkeleyans who use buses regularly to commute to work is quite small, less than 8%. It’s not because bus fares are too high. Transit takes much longer to get places and ridership does not depend that much on fare level.

AC Transit studies indicate that reducing bus fares will not produce a significant or proportionate increase in ridership. Factors that promote bus ridership include the lack of a car for personal use, a positive assessment of buses relative to autos and close proximity to the bus route from one’s residence.

Unfortunately for transit, folks have become increasingly wary of traveling where crime and Covid may occur. As elsewhere, Bay Area residents are voting with their steering wheels to lower these risks, opting to drive and not use buses. AC Transit’s ridership dropped precipitously, 70% during the year ending April 2020. Now, its ridership is down a mere 60%.

Free fares are not going to solve these significant issues. It’s hard to imagine how this program will produce worthwhile information that could be useful beyond the one bus route that’s involved. But that’s not likely the true purpose of the program.

The Berkeley City Council has few qualms about undertaking this program that it’s not going to directly pay for. It could follow the Council’s well-established predilection of hurling other organizations’ money at issues like those facing underprivileged people in the hope that something useful might happen eventually.

With enough time, effort and searching, money will likely be found for this interim program. Possible funding sources include the American Rescue Plan Act and the new infrastructure Act. California expects to receive nearly $9.5B from the new Act to improve public transit infrastructure across the state. Berkeley stands ready to claim some.

However, AC Transit, who would have to implement the program, does not favor it as currently proposed by the city. Being very aware of the surrounding politics, AC Transit is on record supporting the idea of a free-fare program, just not this one. So far, Berkeley’s free-fare transit program, like public urban transit itself, seems parked far beyond the shoulder of transportation priorities. 

BUILDING BACK BETTER DREAMS

Striving to better, oft we mar what’s well. ~ William Shakespeare (King Lear) 

The Dems’ much-vaunted and massively comprehensive “Build Back Better” (BBB) agenda was first discussed by Joe Biden before his inauguration last January. Since then, it has evolved on a regular basis. The BBB includes three major pieces: first, the covid-19 relief American Rescue Plan (ARP) with a $1.9 trillion (T) budget that Congress passed via reconciliation in March. Second, the American Jobs Plan (AJP); and third, the American Families Plan (AFP).

I liken the Dems’ process for passing the Build Back Better legislation to constructing a 271-piece jigsaw puzzle, filled with oddly, sometimes changing shaped pieces. There are now 220 Dems in the House and 50 in the Senate, plus the vital, tie-breaking Dem VP, Kamala Harris piece in the Senate, totaling 271. The Dems’ have been wrestling for months among themselves to design and secure the best AJP and AFP programs. At times, their conduct seems as if each and every Dem piece claims to be at the center of the puzzle.

So far, puzzle masters Nancy Pelosi and Chuck Schumer have been reasonably successful in their initial rounds of piece placement. Their efforts produced passage of the important ARP package that the president signed into law on Mar. 11. Sen. Schumer succeeded in the Senate’s passing the AJP on August 10. The AFP is stuck in both branches by the Dems’ internal struggles. The process has a ways to go before a hoped-for victory can be realized. 

This puzzle-making process is complicated. The Dems’ Progs and moderates have distinctly different ideas about what’s best for the AJP and AWP as well as themselves. In no small part because they likely will face different prospects for winning their Nov. 8, 2022 mid-term elections, depending on the BBB’s final construction and its public reception. These elections are mentioned now in the media as if they will happen the day after tomorrow. It’s actually 386 days from today.

The $1.2T AJP, primarily a physical infrastructure component of the BBB, was passed by a bipartisan majority in the Senate 69-30 and is now awaiting a contentious and delayed vote in the House. When the White House first proposed the jobs plan, they budgeted $2.6T expenditures to be spent over 8 years. Negotiations with Congress reduced this initial budget by 46% to $1.2T. This budget apparently includes a mere $550 billion of new funding, whatever that means. Many media outlets now further deflate the AJP to a $1T effort; apparently for Congress and the media $200 billion (B) is rounding error. After hearing these numbers, my sense is they’re at best illusory until the president signs his name on the laws.

This significant budget deflation in the AJP’s initial fiscal scope isn’t that unusual; it’s an almost normal part of the thoroughly arcane legislative process as many expenditure bills wind their way through multiple House and Senate committees to eventual floor votes.

The Dems’ internecine struggle between the Progs and their more moderate colleagues regarding the size and focus of the AFP has occupied media headlines for several months. The Progs outlined an initial budget of a utopian $6T for their family “infrastructure” support plan. Such colossal largess never was in the minds of moderates, fearful of their ensuing mid-term election chances. For a while now, the AFP has hovered at $3.5T. Progressive Dems’ dreams about such fiscal bounty wax mildly euphoric even at this lower budget level.

Altogether, the BBB plan could total $6.6T over the next decade. That is a lot of money, no matter how you dice it. This sum represents $19,800 for each and every US adult and child. The plan covers everything from free infant preschool and community-college tuition, expanded Medicare/Medicaid coverage, new electric bike and increased electric vehicle subsidies, much-reduced greenhouse gas (GHG) emissions to lots of things in-between.

The scope of the BBB plan is so wide-ranging that no one really knows its exact content, only its rough cost – to the nearest hundred billion greenbacks or so. The White House Fact Sheets for the AJP and AFP list 69 different activities these two programs will undertake.

Unfortunately, such dramatic programmatic breadth is not accompanied by a comparably large margin for the Dems’ congressional votes. They have no votes to spare in the Senate versus the Repubs, and only 3 in the House.

This political headwind has struck the Dems in the guise of Senators Joe Manchin and Krysten Sinema or as they’ve colloquially become known, Sen. Mansema. Neither the AJP or AFP will become law without Mansema’s two Senate votes.

Last week the thoroughly enigmatic Sen. Sinema took a brief Parisian jaunt in the shadow of the Eiffel Tower, despite there being no saguaro cactus but surrounded by sublime baguettes. Perhaps her respite will provide perspective allowing her to explicitly state her AJP objections.

Sen. Manchin laid down his political Maginot Line on Oct. 14 when he said he was not in favor of the AJP’s Clean Electricity Performance Program (CEPP). This program will provide incentives for electric utilities to increase their annual investments in renewable power sources, and penalties if they don’t. He also previously mentioned he’d like to see the AJP’s budget reduced to below $2T. Reducing the scope and spending for the AFP is thus a reasonable likelihood.

In response to Sen. Manchin, the White House is seeking alternative mechanisms to reduce GHG, including creating a carbon tax. Many economists have long supported a carbon tax, but it has uniformly failed politically when attempted at the state level.[1] It’s very hard to see how the administration could support such a tax when the president has strongly vowed not to raise taxes on anyone making less than $400,000 and given its singularly unsuccessful political history in the US. Talk of a carbon tax as a CEPP replacement mostly signals desperation within the administration.

Sen. Manchin’s complaint about the CEPP is that it will suffer from a significant free-rider problem, expressing that he has ”concerns about using taxpayer dollars to pay private companies to do things they’re already doing.” I suspect Sen. Manchin’s free-rider criticism is mostly a red herring about green energy policy, given that bituminous coal runs through his veins.

A growing number of regulated electric utilities have increased their green power production because of state-mandated Renewable Portfolio Standards, not federal rules. However, only 38 states have such standards currently.

Last year, renewable power accounted for 20% of US electric power generation, an all-time high, but still just one greenish kWh for every five brownish ones produced. The CEPP will provide uniform, nation-wide incentives and penalties for expanding green/renewable power’s share of national electricity production.

I’m surprised the president folded so soon against Sen. Manchin; he should call Sen. Manchin’s bluff on the CEPP. Without the CEPP, the AJP will suffer diminished projected GHG emission reductions by as much as 33%. That would represent a significant tragedy of the capitol commons and beyond in the real US. If the White House agrees to remove or curb the CEPP in order to pass the AJP, it will also complicate President Biden’s discussions at the up-coming UN Climate Change Conference (COP26) in Glasgow, Scotland.

There’s no doubt that furious closed-door brokering of alternative specifics for the final AJP and AFP will continue on the Hill and the White House for a while longer. Several pieces of the BBB puzzle have yet to be placed on the table. I hope the Dems understand that outlaying ever-larger funds to government agencies does not necessarily mean citizens’ lives will be ever-better or ever-more equitable. Because of their scope, these programs will be subject to hefty amounts of unintended consequences. From their outset, these programs must be appreciated as successful and effective or blowback will hamper the Dems.

It’s worthwhile remembering that the total federal budget for last year (FY2020) was $6.6T, the same dollar amount that the BBB is hoping to spend additionally over the next 8-10 years. Enlarging the federal governments’ duties – and consequent amplification of state and local government activities – needs to be done effectively.

Recent expansions in such obligations have been shaky, include those providing child care and rent relief payments. Fewer than 60% of families with incomes less than $25,000 properly received their due monthly child benefits. California barely managed to distribute less than 2% of its $5.2B of federal rent relief funds during the program’s first 3 months last year. The CA agency responsible for providing this benefit cited problems with its anti-fraud procedures. Perhaps the agency believed if it provided an all too slender amount of relief funds to qualified applicants, they would not have to worry as much about fraud? Such shoddy implementation results in exasperation, as well as the public’s downgraded view of government competency.

Unfortunately, there’s been little if any discussion about how the proposed panoply of significantly large benefit programs in the BBB will actually be implemented. Polling shows that the administration’s wobbly implementation of several recent programs is one factor that has just reduced by more than 20% the public’s support for having the government “do more to solve the nation’s problems.”

This is not good news for the Dems. The institutional stress on public agencies that will have responsibilities for successfully administering these giant, complex programs will be immense.

Dems, particularly Progs, would be wise to head such forewarnings. The Dems require strong, positive public support to extend and broaden their big BBB programs. This can happen by reducing the number and/or scope of several BBB programs, allowing each one to receive relatively more funding and attention, even if the top-line budget is reduced as it likely will be.

Although a majority of the public has all too little knowledge about specific BBB programs, recent polls say the most popular AFP programs are universal prekindergarten and reducing Medicare drug prices, the least popular is free community college.

Assembling the BBB puzzle will take insight, care and modesty. The Dems should remember Shakespeare’s Learian lament that demanding perfection can result in gaining next to nothing. They should consider fewer BBB programs to do better, not all of them and do worse.

 

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[1] Failures include two ballot attempts by the State of Washington to initiate a carbon tax. Several other states have proposed carbon taxes, none have been implemented. The city of Boulder, CO initiated a local carbon tax in 2006; it’s still in effect. A federal carbon tax is regularly proposed in the Congress, but no formal carbon tax legislation has ever passed. 

 

 

TRANSPORTATION AND TRANSFORMATION

Education is all a matter of building bridges. ~ Ralph Ellison 

President Joe Biden and his administration have been discussing their vast infrastructure plan with many people for nearly two months. His $2.3 trillion (T) American Jobs Plan (Plan) will influence and change countless aspects of Americans’ lives during the eight years of planned expenditures. It’s all infrastructure; whether we’re talking about roads, lead pipes, child care, community college or high-speed internet, right? Nope, my infrastructure isn’t necessarily yours. Unsurprisingly, the Repubs and Dems have quite different definitions of “infrastructure.” 

I focus here on two key, oddly-related facets of infrastructure, US roadways and higher education – transportation and transformation. For a long time, attending post-high school educational institutions, and importantly graduating with a degree-in-hand, has been considered the central roadway for transformed career success. These two areas are important parts of the Plan. 

The bipartisan discussions about his Plan paused last week with the Repubs going low, offering a $928 billion (B) package that the Dems argue only represents a slender $32B more than their last suggestion – an unworthy pittance in their budgetary judgment. Progressive Dems, going super-lofty, want the Plan to be more than 4x bigger than it already is. Neither will happen. 

The dispute focuses on what infrastructure is and isn’t. The Dems’ vision of infrastructure is much broader and bigger than the Repubs’. For the Dems, a BA or AA degree, or a pre-school class, is another kind of bridge; like Ralph Ellison states above. Not so, say the Repubs; stick to concrete and asphalt. 

Evermore Dems now want Captain Biden to abandon the sinking bipartisanship effort and push his Plan through the Senate via the convoluted, but hopeful one yes-vote margin reconciliation process. No matter what strategy President Biden ultimately decides on, his Plan’s ideas for transportation and transformation merit consideration. 

Transportation.  The President’s Plan would spend $621B on transportation infrastructure. This includes improving at least 20,000 miles of roads and 10,000+ bridges, plus a great deal more. 

The federal government first got involved in large-scale highway transportation when President Eisenhower signed the Federal Aid Highway Act of 1956 (Act) which created the Interstate system. We will celebrate its 65th anniversary on June 26. 

Interstate highways now cover 46,876 miles throughout our nation. The official title of the “controlled-access expressways” built via this Act is the Interstate and Defense Highways. Defense was one justification for federal funding. Thank goodness eight-wheeled, 20-ton Stryker ICVs (Infantry Carrier Vehicles) have the authority to motor on the I-15 as they head towards Area 51. 

California has the most Interstate miles, 4,257. Washington, D.C. the least, 12 miles. The state with the smallest Interstate mileage is Delaware, where our gear-head, car-guy president could drive his sweet 1967 Stingray ‘Vette over each of Delaware’s 41 Interstate miles in far less than an hour.  Go Joe. 

The 1956 Act specified the expressways would all be built in 10 years; it took a bit longer, 62 years. Now these highways, as well as many state and local roads are in need of considerable maintenance and refurbishment, as shown below. 

    Fractured Freeway 

There are many more types of transportation infrastructure than roads and highways. The Department of Transportation (DOT) provides funding for virtually all of them. 

But not interstellar travel via UAPs – Unidentified Arial Phenomenon – which is governmentese for what the rest of us know as UFOs. Fortunately, President Biden’s national intelligence director will soon release a report to Congress describing what our government allegedly understands about UAPs. Get ready Mulder and Scully, here we come, again. 

But back to Earth-based transportation. The DOT has allocated about 66% of its budget for highways, 20% transit and rail and 13% for aviation. The Biden Infrastructure Plan would invest $115B to refurbish “most-in-need” roads and bridges and $20B to improve road safety. The Plan also proposes spending $174B on electric vehicle (EV) infrastructure, including erecting a nation-wide network of 500,000 EV charging stations as well as replacing the government’s diesel transit vehicles with EVs and continuing EV tax incentives and rebates. Airports would be improved with $25B worth of funding, as would ports and waterways with $17B. 

The Plan likely emphasizes public transit, which makes particular sense in densely-populated areas. Unfortunately, transit historically is what economists label an “inferior good,” meaning as a person’s income rises, she/he uses less of it. “Normal goods’” demand increases as income rises, not transit. How the administration can surmount this long-established challenge for transit is left unresolved. The administration can increase its funding of transit, but convincing more real people to ride it is another matter. This issue echoes Sen. Daniel Moynihan’s insight: government programs are far more successful in creating jobs than in changing the way people behave. 

When it’s enacted, the president’s infrastructure plans will have a colossal impact on the nation and the DOT. I’m concerned how the DOT will rapidly increase its staff capabilities to properly implement and manage all the additional spending. The administration’s proposed 2021-22 budget for the DOT– $88B – is $1B less than it was for the current fiscal year. Huh? My concern equally applies to every other federal, state and local agency that will be responsible for large-scale, federal infrastructure funds; like the Department of Education (ED), discussed below. 

There will likely be a (sizeable) supplemental budget request. In the absence of the agencies buying hundreds of trained Adminbots, my bet is consulting firms that are prominent players as “DC Beltway Bandits” will assume a decent share of these vital, extra tasks. I’m not holding my breath, but hope the Bandits scrupulously attend to the public’s interests in their efforts. 

Education.  The president’s program will include substantial education funding, from pre-school through college. I focus here on the administration’s proposed higher education efforts. 

Higher education has been a principal thoroughfare for personal as well as national growth during the past 50+ years. College enrollment dramatically increased as my Boomer generation started attending and graduating from college in the 1960s. Undergraduate college enrollment rose every year for over 60 years and peaked in 2010; it has risen 26.9% since 2000. 

The president’s infrastructure program includes nearly $300B for college-related actions. Last fall about 16.7M undergraduate students were enrolled in the nation’s four-thousand “degree-granting postsecondary institutions” (aka, colleges and universities). During the current spring semester, enrollment dropped 5.9% compared to last year, due to the pandemic. This decline has upended students’ as well as college faculty’s and administrators’ lives. 

Nevertheless in 2020, 37.5% of US adults (25-64 years old) had received at least a BA degree, an all-time high during the last 50 years, shown in the chart below. This is a stunning set of individual achievements, which has transported the nation onwards. 

Percent of US adults with a BA or higher degree, 1970-2020 

Source: NCES 

President Biden’s educational infrastructure program aims to make all 853 public two-year colleges tuition-free with $109B of funding; 17 states already have zero-tuition community colleges. Another $80B will augment that provided for Pell Grants, and $62B for “retention and completion” (aka, remedial) programs. Separately, $39B will be offered to Historically Black Colleges and Universities (HBCUs) and Tribal Colleges and Universities (TCUs) to cover two years of tuition. 

Two-year community colleges enroll 28.5% of all people attending college; HBCUs enroll 1.1% and TCUs 0.1%. These funds will certainly assist these schools’ current and anticipated students. 

The Pell Grant program was initiated in the 1973-74 school year and named after Sen. Claiborne Pell, who was the chief sponsor. They are grants not loans, thus do not need to be paid back. The president’s proposed addition to the program, which provides needs-based financial support to students (currently capped at $6,195) from lower-income households, represents an enormous 164% increase in Pell Grant funding from 2020. 

This is but one facet of the ED’s proposed, vastly-expanded scope; a giant 41% increase compared to the department’s pre-pandemic budget. 

How the ED and schools will be able to accommodate the expected post-pandemic increased demand in college enrollment unfortunately has not been addressed. It needs to be before these programs are funded, or else there will be large numbers of unhappy students. Why? Because more classes will be unavailable due to excess demand, unless the schools’ available faculty/staff and physical capacity also expand. 

The prospects for transformative benefits coming from more educated men and women are great, if the expanded funds are well overseen. Onward into a smoother-surfaced, better-skilled world where we can all benefit. 

 

THINKING OUTSIDE THE BRIDGE

You and I come by road or rail, but economists travel by infrastructure. ~ Margret Thatcher  

The president’s next legislative project for improving our nation offers a cornucopia of infrastructure improvements. Pretty exciting? Maybe.

Joe Biden’s American Jobs Plan (Plan) is expansively thinking way outside the bridge as far as defining “infrastructure.” Everything from soup (more nutritious K-12 school meals) to beyond nuts (that together with bolts and rivets fasten girders on bridges and in new electric-car battery manufacturing plants) is included.

President Biden and Congressional Dems want to significantly enlarge what’s considered infrastructure. In the modern world of today and tomorrow, they view infrastructure as no longer just bridges and roads, shown below.

 

Traditional infrastructure

 

New infrastructure

 The Plan will fund, construct and improve much more: high-speed broadband for rural areas, electric vehicles, shown above (including 20% of all the nation’s school buses), high-voltage transmission lines, extend Medicaid, public transit systems, sustainable and affordable housing for low-income folks, upgrade and build K-12 school buildings, home and community-based care for the elderly and disabled, clean energy research & development, expand domestic semiconductor manufacturing, workforce development (e.g., training), new community college facilities and replace hazardous lead water pipes to homes.

The president has characterized his Plan as “the largest American jobs investment since World War Two” that will “empower workers” and create jobs with “fair and equal pay.” Dems are very pleased with this depiction, given their long-standing and until this past January 20th thwarted interest in expanding higher-wage (union) jobs for a flourishing American workforce.

This Plan is certainly sizable; 20% bigger than the president’s $1.9 trillion stimulus package that Congress passed last month. The Plan’s expenditures sum to a gigantic $2,300,000,000,000 outlay over eight (8) years, which defies ready comprehension.

Another way to consider such huge dollar expenditures is to think about their weight. The actual weight of $2.3 trillion (T) George Washington dollar bills is an impressive 2.53 million tons. The displacement (weight) of the Ever Given, the giant container ship that recently blocked the Suez Canal, is 293,078 tons. It is almost three (3) times larger than our biggest aircraft carrier. The weight of $2.3T Georges thus equals 8 ⅔ Ever Givens, which could carry 133,400 containers (each stuffed with over 1.7 million Georges). This Plan indeed is a hefty load of money, and infrastructure.

Predictably, Rep. Alexandria Ocasio-Cortez and other progressive Dems have demanded even more spending to boost jobs than the president’s already-massive Plan proposes. They fantasize $10T might be appropriate, a sum that itself represents more than two times the entire federal government’s 2020 total budget.

Senator Mitch McConnell and his Repub colleagues are definitely not pleased with the Plan. Principally because the president wants to partially fund it by raising corporate and wealthy people’s taxes. Bipartisanship has now been tossed under the bridge into the canyon of forgotten phrases. The Repubs’ expressed, new-found belief that infrastructure only refers to large, solid things made out of concrete and steel – highways, bridges and water-treatment plants – has been labelled modern-day Luddism by critics.[1]

Fortunately for the Dems, the Repubs have yet to discover any opposition talking-points to the Plan that the public actually cares about. Do you think many voters oppose raising taxes on already-rich, big corporations and wealthy fat cats? Hardly. Republican politicians oppose these tax increases, but very few voters do.

The president’s infrastructure plan enjoys very broad, bipartisan support. In one poll 85% of voters overall, and 82% of Republicans, agree that “America is in need of an infrastructure improvement.” In the past ever-duplicitous Repubs have supported several elements of President Biden’s Plan as worthy of infrastructure spending that they now oppose.

The Dems got a giant legislative booster jab for their Plan on Apr 5 when the Senate Parlimentarian ruled in their favor, allowing them to use the reconciliation process yet again. All the Dems have to do is convince each and every of their Senate members to vote “yea” for the Plan, and have Vice President Harris bring it home for President Biden to sign.

That could take some doing, especially when moderate Sen. Joe Manchin has already voiced some “concerns” about the Plan. Specifically, he does not want to raise the corporate tax rate to 28% from the Trump tax bill reduction of 21% in 2018. Instead, Manchin said he and “six or seven” other Senate Dems want the new, revised top rate not to exceed 25%, to stay competitive in world commerce. Your play, Mr. President. We’ll soon see how open Joe Biden is to compromise, as he’s already stated.

Negotiations behind closed Congressional doors undoubtedly will continue on multiple infrastructure topics. That may take some time. It’s worth remembering that it required several months for the Dems to pass their covid relief legislation using the reconciliation process.

No matter how the American Jobs Plan ends up, it’s certain the public idea of infrastructure will be changed. The guardrails along concrete and steel infrastructure have been removed. This can be beneficial, given that the majority of our macroeconomy’s undertakings are no longer traditional industrial activities, but services that don't require concrete.

How our economy can effectively absorb several additional trillion dollars of government-directed expenditures remains an open question. Primary apprehensions include

(1) Not to count the Easter chicks after they’ve hatched, but with public expectations high, how successfully this huge, multi-faceted Plan is implemented will make all the difference. Especially before Tuesday, Nov 8, 2022.

(2) How productively can this plethora of funds be managed by federal agencies? This is the third wave of stimulus moneys to be authorized by the federal government. Infrastructure expenditures are notoriously slow to start. Bridges and EV charging stations cannot be mailed to taxpayers like stimulus checks.  Developing cogent rules and regulations for this spending is both necessary and time-consuming. I’ve yet to see any emphasis on prioritizing “shovel-ready” projects (whether they actually use shovels or not). The Biden administration has no more than 19 months from today – election day – to make a visibly positive contribution to the public’s overall well-being.

(3) Some economists have expressed worries that this additional government borrowing may strengthen inflationary pressures. The interest rate on 10-year Treasury bonds has risen 85% since last October to 1.73% this week, in part reflecting the increased amount of the government’s planned deficit financing and rising inflationary expectations.

Here’s hoping the president’s infrastructure Plan achieves many of its stated goals and does not suffer too much from the various, inevitable unintended consequences.

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[1] Luddites were a secret organization of English textile workers in the early 19th century who ransacked textile mills and destroyed new machinery, like mechanized looms and shearing equipment, which they said were being used in "a fraudulent and deceitful manner." 

COBOL AND COVID

My pitching philosophy is simple: keep the ball away from the bat. ~ Satchel Paige 

Infrastructure. You’ve heard this word so many times it no longer perks up your or anyone’s attention. When I think of infrastructure, I imagine roadways, airports and bridges. Merriam-Webster’s rather non-descript definition of infrastructure is: “the system of public works of a country, state or region.”

Infrastructure isn’t exciting or stimulating. That’s basically why there are far more politicians who love to promise they’re going to amp up infrastructure spending than actually put dollars to work improving it. Infrastructure’s considerable value stems from enabling many appreciated economic and social activities to happen. Like Little Red Riding Hood driving her EV on her town’s freshly-paved streets to visit gramma’s house (and avoid the big bad wolf), or using her town’s public water system to clean her fine, red hoodie in her water-efficient washer.

Last fall, the Congressional Budget Office estimated that combined federal, state and local spending in 2017 on infrastructure was $441 billion, roughly 2.3% of GDP. This estimate represents the lowest level in more than 60 years. Infrastructure spending peaked at about 3% in the late 1950s, when the Interstate highway system was being constructed.

The Interstate System is perhaps the best-known Federal infrastructure program. Its 47,000 miles cost about $129 billion, making it the nation’s largest-ever public works program. Every state has an interstate highway. The first segment of an Interstate highway was begun in 1956 in the Show-Me state of Missouri. The state with the most Interstate miles is Texas (3,501.2mi.); the one with least is Delaware (40.6mi.).[1]  

Roadways are an example of traditional infrastructure that’s easily seen and used by the public. The Coronavirus pandemic has exposed a series of failings in our public infrastructure that is more hidden but nonetheless has created calamities for lots of us. I’ll talk here about two types of fading public works.

First, Covid testing. The CDC’s initial requirement of only using state and local government testing laboratories to diagnose Covid-19 in individuals produced tragic consequences. Despite #45’s completely spurious claims, neither the CDC or these public labs have accomplished their clearly-understood objective of providing sufficient, reliable and timely testing.

Six months into the coronavirus’ incessant attack, the US has yet to adequately deliver enough dependable testing in a timely fashion. In August the US ranks 12th of the 91 nations listed in terms of total per capita coronavirus testing – 173.8 tests/1000 people. Luxembourg is first with a testing rate that’s four (4)-times higher than the US. The media regularly reports people having to wait so long for their results that the findings are medically meaningless. Like all too many others, one San Francisco person finally received his test results 16 days after taking it.

Another veiled, unseen form of vital public infrastructure that’s stumbled in its efforts to surmount substantial viral challenges is the government’s digital infrastructure, its computer systems and personnel. These computer systems enable the panoply of federal/state/local government program payments to be received by intended recipients – like Social Security, SNAP/food stamps, Medicaid/Medicare, tax refunds and, of recent note, unemployment insurance benefits (UI). The pandemic has strained federal, state and local governments’ assistance programs beyond anything imaginable over the last 80 years.

Our public digital infrastructure has floundered because many public agencies haven’t prioritized or been allowed to update their systems for decades. They’re typically legacy mainframe systems, with a very capital “L”.

As of July 25, over 54.1 million American workers, representing more than one in three workers in our labor force, have filed for UI. That’s more than 37 times higher than normally expected, pre-virus. The national unemployment rate peaked in April at 14.7%, the highest since the Great Depression. Our real (inflation-adjusted) GDP fell 9.5% during the last quarter. Over 100,000 small businesses have likely closed for good. Well-known retail businesses have also declared bankruptcy like Lord & Taylor, Sur La Table, Brooks Brothers, Hertz, JCPenney and Chuck E. Cheese.

In response to this medical, economic, social and wholly-human catastrophe the Congress passed its first Covid pandemic support legislation on March 27, the $2.2 trillion CARES Act. Among countries, the US is not known for its generosity to the unemployed. However, the CARES Act provided significant fiscal support for workers, firms and many others harmed by the coronavirus, including a $600 per week supplement to the unemployed. This multi-faceted support totaled 13.2% of the nation’s GDP, placing the US program third largest in the OECD, a group of advanced nations, behind Japan and Canada. In this age of “do-nothing” government, the CARES Act embodies an impressive, timely accomplishment.

But nothing lasts forever including this Act, by design. Alas, the Dems and Repubs have wasted time pointing fingers of blame rather than agreeing what the scope and form of a successor Covid support program should be.

The House Dems easily passed their $3 trillion follow-on package, called the HEROS Act, on May 15. Meanwhile the Senate Repubs are tardily drafting their follow-on package, entitled the HEALS Act, that could provide $1 trillion of benefits. [Don’t you just love how every piece of legislation needs an acronymically-suitable title.] The winner of the HEROS v. HEALS political prizefight has yet to be determined.

No matter how the new legislation finally gets squeezed through the Congress’ political meatgrinder, it will likely be very challenging to implement by state agencies that administer unemployment benefits. Why? Because the vast majority of state unemployment insurance agencies use ancient computer systems.

The age of state benefits agencies’ computer systems ranged between 22 and 42 years old, according to a survey that was performed over 10 years ago. These mostly mainframe hardware systems are digital dinosaurs that use obsolete programming languages like COBOL. The first COBOL program ran in August 1960, that’s 60 years ago folks, on an RCA 501 mainframe computer.[2] Because of their nearly-geologic age, state unemployment insurance agencies’ computers are costly to run, fragile, inflexible and error-prone. Their operation requires continued attention by knowledgeable personnel. It’s no surprise that very few computer jockeys know (or want to know) anything about such archaic systems – most have retired long ago. Hiring knowledgeable staff for such computer systems is a nightmare. Doc Brown’s DeLorean might be a useful staffing tool.

During the 2007-09 recession, when these agencies were last obligated to produce rapidly rising numbers of benefits payments, their legacy computer systems regularly failed. No real system changes were needed, only larger than usual volumes. Many shut down for days after the systems attempted to handle the elevated claim levels.

This Spring, the CARES Act implementation required substantial amounts of angst-inducing time and effort by state UI systems’ operators to redesign their systems to add the uniform $600/week federally-funded supplementary payment to qualified recipients. The federal Treasury Department had similar, time-consuming technical difficulties in providing millions of citizens with their $1,200 payment checks. Many of these challenges centered on the agencies’ obdurate computer systems.

Notwithstanding their possible merit, if the provisions of the Senate’s proposed HEALS Act go into effect, such challenges would multiply. States would need to provide supplementary UI money that would equal 70% of an employee’s lost weekly wages (but not exceed $500/week), when added to existing state benefits. This represents a major change from the CARES Act $600/week supplementary payment.

As such, this HEALS Act stipulation would give many states’ UI systems yet another coronary. To make this seemingly straightforward 70% calculation would require rapid introduction of new revisions to legacy software together with likely linkages to additional databases. What could go wrong when changing lumbering, inflexible, archaic hardware/software systems? How long would it take? Don’t ask and don’t hold your breath.

Perhaps these recognized obstacles are the reason the Senate’s HEALS Act surprisingly provides $2 billion to help states “upgrade” their ancient UI systems. Surprising because the vast majority of Repubs are loath to provide any funding that assists state and local governments.

I would be amazed if the final House-Senate compromise legislation includes any payments that depend on such semi-sophisticated computations. The regrettable state of public digital infrastructure will limit Congressional negotiators to arguing about levels of dollars per week, not percentages of lost wages. It’s another case of public law and action being effectively constrained by woebegone infrastructure.

In this confrontation between COBOL and Covid, keeping it simple – following Occam’s razor – is the only expedient maxim. 

August 11, 2020 postscript. Another COBOL & Covid interaction. The CA state health director abruptly resigned on August 10 amid CA’s rising case/death rate and a big snafu with Covid-related health data. Why the problems? From the story: The governor on Monday vowed to quickly overhaul what he described as the state’s outdated information technology systems, which he blamed for not just the testing data snafu, but also for a staggering backlog of unemployment claims .

 

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[1] Until the District of Columbia convinces Congress it should become a state, it’s just a district with 12.3mi. of Interstate. You shouldn’t hold your breath for DC’s latest statehood effort to be successful.

[2] At that time, my father served as the senior RCA executive in charge of its computer systems business.