The Obama Infrastructure Plan, and Another Shipyard Closes

As President Obama announced his robust infrastructure investment program touting an immediate infusion of $50 billion for improvements to the nation’s infrastructure, images of a newly revitalized U.S. maritime industry swirled around me in a twilight zone moment. The six-year plan is estimated to cost about $350 billion to fix 150,000 miles of broken roadways, 233,000 miles of dilapidated railroad track, and 150 miles of aging airline runways. Yet not a word was uttered about increasing funding for America’s Marine Highway Program or rejuvenating the shipbuilding industry.

Perhaps the president’s advisors had forgotten to remind him about the gridlock stifling the nation’s cities and highways. Or about the car and truck pollution that kills an estimated three percent of the population each year. In an era of rising fuel costs, dense smog and roadway congestion, personnel at the Department of Transportation (DOT) should have pointed out to Obama that there are 15.5 million commercial trucks on U.S. highways, of which two million are tractor trailers, and that they log about 435 billion miles each year while consuming approximately 53.9 billion gallons of fuel. Now add the estimated 136 million registered cars and about one million buses to the highway equation and you have a horrific traffic jam of 152.5 million motorized, fuel-burning vehicles bogging down freedom of the roadways and polluting the populace.

As the president deals with the 2010 $1.3 trillion budget deficit calculated to be 9.2 percent of GDP, which is slightly less than the shortfall of 9.9 percent of GDP ($1.4 trillion) posted in 2009, he is also confronted with $130 billion (2010) for U.S. operations in Iraq and Afghanistan that the Congressional Budget Office (CBO) estimates will cost the nation $745 billion between 2011 and 2020. With unemployment hovering around 10 percent due to the Great Recession that began in late 2007, federal revenues from corporate income taxes fell by 55 percent ($166 billion) in 2009, and individual income taxes declined by 20 percent ($230 billion). Additionally, for the first time since 1946, taxes from Social Security and Medicare declined 1 percent or $9 billion. And, of course, there is the $7.5 trillion owed by the government to domestic investors ($4 trillion-52%) and foreign investors ($3.6 trillion-48%) at the end of 2009.

With this bleak economic picture staring the nation in the face like a double-barrelled shotgun, it’s no wonder that America’s shipyards are closing at record numbers and the number of U.S. mariners is declining rapidly. And forget the Jones Act, because if there are no U.S. yards or mariners there won’t be any need for U.S. cabotage laws.

To all the anti-Jones Act folks screaming protectionism costs consumers too much and that American shipyards and ships cannot be competitive in the new global economy, I say the U.S. government will have to beef up its police forces, Coast Guard and National Guard to ensure a catastrophic event by terrorists or criminals doesn’t shut down U.S. ports or waterways. Because freedom isn’t free and a bigger government means more taxes. Really, grandma can pay the extra dollar for the iron at Walmart. Besides, if the U.S. maritime industry ceases to exist, who will run the supply lines the next time the U.S. military is deployed overseas?

DOT’s budget in 2010 is $73.2 billion and it’s scheduled to increase to $79 billion for 2011. In 2011, highways will get $42.1 billion and rail will receive $11 billion. Meanwhile, the Maritime Administration’s (MARAD) budget gets smaller: $433 million in 2009, $363 million this year, and $352 million allocated for 2011. The vast majority of MARAD’s budget goes to the Military Security Program, which stays constant at $174 million. Assistance to small yards in 2011 is zero, while getting rid of the Ready Reserve Fleet has been allocated $10 million. An additional $49.3 million currently goes for operations and programs. Does that mean there might be some loose change rattling around for America’s Marine Highway Program?

The U. S. is exceptional among nations as it has 95,000 miles of coastline and 25,000 miles of navigable inland waterways and lakes. In moving domestic cargo, the math is simple: Move a ton of freight by truck and a gallon of fuel will get 155 miles down the road; by rail, that gallon will go 413 miles; but by towed barge that gallon will move the ton of freight nearly 576 miles. Furthermore, trucks are the dirtiest form of ground transport. In the past decade, automotive emissions have risen 3.3 percent, while truck emissions have risen nearly 77 percent. The evidence is clear, and throwing more money at the crumbling highway system so that more and more trucks can clog the roadways to move a few tons of freight seems ludicrous.

America’s Marine Highways are plentiful and renewable. A barge moving over 400,000 tons of cargo 2,300 miles would only consume 9,000 gallons of fuel, whereas that same cargo being moved by trucks would require 53,000 gallons. Since the mid-1990s, more than 40,000 U.S. merchant mariners, 38,000 longshoremen and 200,000 shipyard workers have lost their jobs. And over the last 50 years more than 60 shipyards have gone out of business. Northrop Grumman is closing its Tallulah yard in Louisiana by the end of 2010 and its much bigger Avondale yard by 2013…and another shipyard closes.

Recently, the internal Revenue Service did an “Audit Techniques Guide” for its agents regarding inland waterway transportation. The report concluded, “Barge shipping is by far the most energy-efficient mode of transportation, extremely safe, causes little congestion, produces little air/noise pollution, has minimal land use or social impact.” The report went on to say, “The goods exchanged between states using the waterways exceeds $100 billion, and the industry supports 70,000 jobs while supporting 800,000 jobs in related industries. River states represent 54 percent of the population, 56 percent of heavy manufacturing, and 61 percent of agricultural jobs. And the waterways’ transportation industry provides $1.6 billion in fuel tax.”

The CBO study cited earlier declared that national highway congestion resulted in 4.2 billion hours of delay and 2.9 billion gallons of additional fuel used at a cost of $78 billion. The proposed remedy is for the federal government to impose a policy of “congestion pricing.” This policy would charge drivers to use highways-roadways. More money out of your pocket during heavy traffic and lower prices in opposite circumstances, and check this one out: “Nationwide implementation of congestion pricing could provide governments a ‘social benefit’ of $19 billion to $45 billion per year.”

President Obama needs to realize that we cannot pave our way or railroad our way to inevitable growth. The cost would probably be around $350 billion over six years. Obama and Secretary LaHood need to sit down with a few of us in the maritime industry so we can explain to them that the way to alleviate congestion and pollution and save billions of dollars in fuel costs is by transporting goods over water. Think of the creation of jobs at shipyards, on vessels, and in ports. Imagine a budget surplus for the arts, education, mass transportation, and health care for the poor. Imagine….