Hearing of the House Transportation and Infrastructure Committee: Investing in Infrastructure: the Road to Recovery
Statement
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REP. ELEANOR HOLMES-NORTON (D-DC): Thank you very much, Mr. Chairman. I know you know how much I appreciate this hearing because I've been -- I have been pressing for an economic recovery package or some time, as you have, Mr. Chairman. I believe -- I certainly do believe because we got to do some kind of bailout for the top of the economy, for those in credit markets and financial institutions. But I believe that the anger of the American people came from seeing a bailout at the top of the economy while the real economy was left struggling, and that time I thought we would have been much better off if we had done the economic recovery simultaneously. Actually, the House tried; because before we left we did get an economic recovery package of some kind out. Of course it failed in the so-called other body. Now we're back and we're going to have to do an even bigger one because the longer you wait, the more you have to pump in quickly.
Now, the motto of this committee has long been jobs, baby, jobs, if you'll forgive me; because when the transportation and infrastructure programs create jobs, they will have the most beneficial effect on a failing economy -- because TNI ripples through the rest of the economy and wakes up other sectors; pure and simple, that is the history of TNI.
As chair of the subcommittee responsible for federal real estate and development, I know first-hand the beneficial effect federal construction can have on employment and overall economic development to us, the United States. In the 106th Congress, for example, in a bipartisan bill in this Congress we passed the Federal Center Public/Private Development Act, and this was a very short piece of legislation. It has transformed a part of Southeast Washington. The federal development along M Street brought in the private sector with new office buildings, hotels, housing and the neighborhoods in the National's baseball stadium.
Now the GSA owns 196 million square feet of space and leases an additional 150 million square feet throughout the United States. You can't lease if people aren't building, and we lease much more than we buy. This scale of ownership and leasing makes the GSA the most important factor in the commercial real estate market. When the economic recovery and jobs bill is enacted, GSA, I want to assure you, Mr. Chairman, is ready to commit within 90 to 120 days several nation- wide contracts for major repair and alteration projects and energy conservation and alternative energy projects with a value of approximately $1.5 billion. GSA is also prepared to infuse an additional $500 million into the economy with contracts for federal construction.
Two other entities close to home, Mr. Chairman, with significant real estate needs are the Smithsonian Institution and the Architect of the Capitol. Those entities are posed to commit contracting funds within 90 to 120 days after enactment of the economic recovery and jobs bill. The Smithsonian has identified the arts and industrious -- industries building and repairs at the National Zoo as pressing needs. The Office of the Architect of the Capitol is also ready to immediately commit $22 million for construction projects grounded in energy savings and energy conservation.
If I may say so, Mr. Chairman, if the federal government starts out this alternative energy sector by indicating that we are prepared to put our -- (inaudible) -- in there and invest, then you will see the prices go down and you will see others more rapidly use energy alternatives and conservation. The federal entities, Mr. Chairman, are ready and eager to participate in the economic recovery, and along with federal leasing and construction, to stimulate the private sector which we know stands ready to continue if there is the kind of stimulus that would get private sector development moving again.
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REP. ELEANOR NORTON (D-DC): Thank you very much, Mr. Chairman.
Mr. Crosbie, I'm really excited about the high speed rail because the first is going to go from New York to DC and back, but you've got so much, we've neglected your infrastructure for so long you've got a lot of work to do before we get to high speed rails. So let me go on to Representative Edwards where we face -- I'm sorry to Dr. Scott following up on the question from Representative Edwards with whom I've been working on the Ramada (ph) matter and then a short question for Mr. Kiernan, these technical defaults -- or let me just put it this way, we are your proxy, there are 31 transit systems, and everybody would understand this, these are all metropolitan areas, this would shut down the United States of America virtually because these are all big city transit systems which connect into metropolitan areas. Now you were doing these, and I don't blame you at all, you were getting back some money from the banks for the way in which they did these particular transactions but the IRS has essentially moved to shut down this type of transaction.
Now Ramada (ph), Ms. Pelosi and some of her staff, Ms. Pelosi's staff went to the Treasury yesterday and I don't like the kind of questions the Treasury was asking frankly, you know like what does this have to do with the Federal Government when of course the Federal Government's backing of AIG ought to be clear, ought to make it clear what this has to do. And if we're interested in bailing out more than the AIGs of this world, and in the stability of this region, Treasury better educate itself very quickly.
In our case, this Belgian bank, which was in fact like all the banks so far as I know receiving its payment, is not true, were not all the banks receiving payments as of now?
MS. SCOTT: Yes, yes they have in fact I, and I want to really commend John Cadell (ph) publically because there have been a number of us that have been --
REP. NORTON: This is the head of our own Ramada (ph).
MS. SCOTT: Yes, heading Ramada (ph) that have been working just very closely together on this because literally as we sit and speak, various systems, I'm one of them, are receiving letters from some of the investors from some of the banks that are demanding, we've called it tantamount to a ransom notes, okay.
REP. NORTON: Well they are. You know, they're saying, oh, the Federal Government's there, you know, give us our money.
MS. SCOTT: Yeah.
REP. NORTON: And of course I don't blame the Treasury for saying just a moment this is a stickup.
MS. SCOTT: Yeah.
REP. NORTON: On the other hand, the consequences that if treasury does not act is what I want to get into because reports that from the meeting yesterday, were disquieting again this is reporting so I, you know, I can't vouch for this but from trustworthy sources that treasury showed no great urgency even asked whether it had the authority. And these are people who found the authority actually to invest in banks when I don't think anybody here contemplated that at the time of the bailout. But they found authority to invest in all manner of corporate bailout. So they're not sure they have the authority. And if they need some authority, one of the first things I will do, and I'm sure my colleagues will join me is to ask in this package that they be given the authority, but have no doubt in my mind that they have the authority.
But I'd like you to lay on the record so we know what will happen to Ramada (ph) you're getting your letters, Ramada's (ph) was postponed something because Ramada (ph) threatened the TRO, they were going to go to court and so they said okay let us count the day and make sure when this really runs out so they think it's October the 31st. Now suppose Treasury continues to hang back, all you're asking Treasury to do is take AIGs place as the guarantor. AIG, triple rated AIG, was a guarantor so they say instead of being as I understand it the guarantor for AIG, you the Treasury of the United States is the guarantor, you're not asking for any money from the Treasury, is that right?
MS. SCOTT: No, we're not asking for money from the treasury. In fact, the majority of these are backed up by Treasury, by securities.
REP. NORTON: So suppose Treasury doesn't find its way by the 31st, DC will be the first one to go down and you all will cascade right after it, what will be the effect while we're trying to get something through the Congress?
MS. SCOTT: I can't speak directly for Ramada (ph) but I can tell you that with the hundreds of millions and I'm not trying to make this be a hair 'em-scare 'em but it is so real, there are hundreds of millions of dollars, one transaction could wind up being the difference of having to make an immediate payout of $100 million, couple hundred --
REP. NORTON: Do you all have a $100 million in capital --
MS. SCOTT: No, there is no way that we could wind up, we --
REP. NORTON: Because the capital markets are frozen, no I didn't get any money --
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REP. NORTON: Even though of course you're paying, this is why one wonder why Treasury didn't get it immediately.
Mr. Kiernan, I searched your testimony for the words National Mall because this has been a very high profile issue throughout the country. 20 million people come here every year, it's not just you know my folks who go down there and Representative Edwards folks, in fact we're a tiny minority. It is everyone who comes to sees member of Congress, it's everybody who wants to see our monuments. In theory I had $100 million in its appropriation and its appropriation never got up because of dig, dig, dig. I mean, they were insisting that for them to get out, Congress had to approve this digging stuff.
Now in the case of, the reason I ask you about the National Mall and was surprised to find it not in your testimony, in the case of the National Mall, it's had, which is our front yard for the nation, what, it's got a private sector, one of our developers of raising, when he's already raised $1 million he just got started a few months ago, it's a centennial challenge project. So here you have some money coming in, the need for the private sector ready for matching funds, don't you think the National Mall would be, I know for a fact, just happen to know for a fact that they've gotten any ready to go projects, don't you think that the National Mall of all places would be a worthy place to put federal funds in this package at a time when the Americans will be looking for some evidence that this package accomplished something, would run down National Mall not worthy of the name any longer be a suitable place for some of these national park funds to go?
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REP. NORTON: Well Mr. Kiernan thank you. I will check on that but I can tell you the place is so decrepit that the park service is kept from doing the necessary things like keeping the benches and the rest up simply because it doesn't have the funds to do it. But I will check on that. Thank you very much for this testimony.
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REP. ELEANOR HOLMES NORTON (D-DC): Thank you very much, Mr. Chairman.
All of you, I think, have been entirely convincing that desperately needed work -- that this is the time to do desperately needed work. Unfortunately, I can't question all of you. I have questions for Mr. O'Sullivan and Mr. Leyden, in particular.
Mr. O'Sullivan, in this region, I've worked very closely with the laborers. Indeed in this region we've put points in the request for proposals -- (it was ?) longer for this crisis -- for certified apprenticeship programs, so that you not only have to tell us how many projects you've done, da, da, da, da, but as you know, apprenticeship programs certify for programs.
And increasingly the programs that we are finding are important, the pre-apprenticeship programs, save employers or contractors money because they have people who know how to do the work.
I was -- to hear the testimony of all of you is to wonder how anything gets built today, given the sustained losses you have received.
I'd like to -- one of you talked about how contractors who just -- any work they can get now.
I'd like to talk about, ask you about people to do the work. Now, we know that -- this work is not as attractive as it was, let's say, a generation ago, and certainly in the heyday post, let's say, World War II when we were rebuilding America, because a lot of these young guys would go off in some dot-com-something, and so they're not where their fathers were. And this is still very high-paying work.
In fact, we have seen in this region -- and I really commend the laborers in particular, because the laborers have been instrumental in helping to train people who really are desperate work, like ex-offenders who wouldn't have been trained, let's say, a generation ago. But with --
This is heavy work. This is work that has people getting up in the morning early and being out there in the cold, much colder than it is today in Washington.
I have -- the last stimulus, which is the way we've been doing them since 1990, was not my favorite. And I hope we don't do it in this one, this -- give people some money. That doesn't make any jobs for anybody.
In fact, the Saudis are spending that last stimulus -- (chuckles) -- as I speak, because the gas prices were going up and people put it right there or they paid (it on ?) their credit cards. That's why we didn't get anything from it.
But I want to talk about shortages of personnel in construction. Is the industry ready, if there's a stimulus of some kind that affects the industry that all of you have testified about, willing and able to train people sufficiently so that we could get workers in this country who would do the work -- laborers and others?
I'd like to hear your discussion of the construction personnel shortage in the United States and how we were dealing with that even in the heyday that's passed us by now.
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REP. NORTON: And you think this is in the other trades as well?
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REP. NORTON: But I heard some -- I saw some heads bobbing. Does that mean all of you believe you can meet the labor force demands of a stimulus package of maybe close to $100 million -- with workers in this country?
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REP. NORTON: Yeah, I got news -- (inaudible).
Mr. Leyden, I have a question for you about the workforce, whether the workforce would use the same workforce that we've been using in other highway and construction.
But I'm a big solar proponent, right here in sunny -- (chuckles) -- in sunny, windy D.C. I recognize we use solar throughout the United States, and that the technology allows that. I even want solar in my hybrid; the sooner you can get to that, the better.
But I was heartened to hear your testimony, because frankly I have been disheartened by the comparison between the almost self- starting innovation that occurred in technology where these guys funded themselves and whoops! They were -- finally had a bubble.
And alternative energy, which is even more desperately needed, in my view, seemed to start up with the venture capitalists, for example, much more slowly. And today we read that the venture capitalists are looking for safe bets. Whatever happened to their entrepreneurial spirit?
I was heartened about what you said had been the growth in the last few years. But I am wondering whether this industry -- solar, wind and the like -- need a big actor like the federal government in order to really take off.
Is that what the -- what it would take to make wind and solar, which a lot of people pooh-pooh now because they don't see it coming on line fast enough, really viable as an industry, a big industry in our country?
Does the federal government need to get in there big-time and then others will follow, and reduction of costs, et cetera? I wish you'd talk about that, because I'm very concerned about what seems to me to be a fairly slow start, especially if you compare it to places like Europe.
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REP. NORTON: Would the federal government in there, in this stimulus package, help bring down the costs?
MR. LEYDEN: Absolutely. Through federal leadership, we can reduce costs. We can build infrastructure -- I'm talking about industry infrastructure -- sales jobs, installation jobs, service jobs, manufacturing.
REP. NORTON: Would you use the same workforce that your colleagues on the panel speak of using in their own work?
MR. LEYDEN: Yeah. We typically have people that are roofer types and electrician types. That's -- and then --
REP. NORTON: How much training does it need to convert from that to solar, for example?
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REP. NORTON: Would the federal government in there, in this stimulus package, help bring down the costs?
MR. LEYDEN: Absolutely. Through federal leadership, we can reduce costs. We can build infrastructure -- I'm talking about industry infrastructure -- sales jobs, installation jobs, service jobs, manufacturing.
REP. NORTON: Would you use the same workforce that your colleagues on the panel speak of using in their own work?
MR. LEYDEN: Yeah. We typically have people that are roofer types and electrician types. That's -- and then --
REP. NORTON: How much training does it need to convert from that to solar, for example?
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DEL. NORTON: Mr. Chairman, I have one more question. It's really for the entire panel. I'm looking to make sure, just as I did in my earlier question about the workforce, I'm looking to make sure that there are not obstacles that somebody's going to jump up and cite as we move forward. So this is for any and all of you. And it's really based on what I have seen in my own work with GSA and economic development. And I must say, I saw a reference to it in Dr. Buechner's -- am I pronouncing your name right?
MR. BUECHNER: Yes.
REP. NORTON: Buechner's testimony about the really enormous drive in construction costs over the last four or five or so years with what I believe is material price escalation that we see in this town in transportation budgets, for example, in particular.
Now, if we do a package, a substantial package, will the costs go down in the same way that you speak of people looking for jobs in the construction industry? Will the cost that we've seen over the last four or five years stand in the way of quickly getting the materials to, in fact, go in the ground? What is your view of the escalation in material price costs on an economic rescue package for the real economy?
MR. : Since 2003, the cost of highway construction has gone up by almost -- it's been 65 to 70 percent. So the dollar just does not buy as much construction today as it did. But the need for the money is there, and I don't see any --
REP. NORTON: Would it be -- would a lot of it be eaten up on these costs rather than in labor, in putting people to work? Somebody else may want to answer that who would have to deal with it.
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REP. NORTON: Well, I hate to see the -- that we had to get into a recession in order to reduce the cost of oil but I can think -- I think I can say with some confidence given the testimony we've heard from economists and those before you that we haven't even begun to hit bottom yet.
And as result of what we have seen, Mr. Chairman, with the crowding of Amtrak, buses and trains, maybe the American people have learned their lesson and won't quickly go back to raise the cost of oil by hopping back into their SUVs any longer in any case.
Thank you very much for really a very important hearing, Mr. Chairman, that -- which I think sends a message in and of itself, whatever we do that we were all looking at the real economy where the average American spends money, is out of a job, and now, perhaps sees that we were as concerned with them as we were with the top of the economy. It's one economy; we need to rescue it all or it doesn't get rescued.
Thank you, again, Mr. Chairman.
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