June 1, 2009
thought leaders | The DC Velocity Q & A
Norm Mineta has wielded more influence over transportation than perhaps any public official in history. He's 77 and out of the public limelight, but he still has considerable skin in the game.
Few individuals in the last 30 years have made as indelible an imprint on transportation and public service as Norman Y. Mineta.
From his days as mayor of San Jose, Calif., through the years he spent in Washington serving as chairman of the House Aviation Subcommittee and the House Public Works and Transportation Committee, as secretary of commerce under President Clinton, and, under President George W. Bush, as the longest-tenured secretary of transportation in DOT's 42-year history, Mineta's knowledge, political skills, and integrity put him above the typical Beltway bickering and partisanship. In what might have been the ultimate nod to his reputation and experience, Mineta became the only Democrat to serve in the Bush cabinet.
After his retirement from public life in July 2006, Mineta was named vice chairman of Hill & Knowlton, the huge public affairs, public relations, and communications consulting firm. He holds that position today and estimates he spends 40 percent of his time on transportation and infrastructure issues.
Recently, Mineta sat down with DC VELOCITY to discuss his accomplishments, his frustrations, the present and future of transportation in America, and the current DOT secretary, Ray LaHood, who, like Mineta, was plucked from the other side of the congressional aisle to serve at the pleasure of the president of the opposition party.
Q: You have spent most of your career in public service. What is your role now that you are in private life, and how does it differ from what you were doing as mayor, congressman, and cabinet secretary?
A: I spend much of my time on the broad issues of business development and strategic initiatives. When it comes to transportation and infrastructure, we know there are limitations because of restricted available financial resources. It may be that there is not enough money coming from public funds. We then look at the potential for utilizing such strategies as public- private partnerships, and for determining if there are private sources that can match or supplement existing public funds to build certain types of infrastructure. I'm not doing that much differently than I did as a public official, except as a public official I had designated pots of money to work with, whether for roads and bridges or for emergencies.
Q: Who are your clients and what are you telling them today about the state of the economy and the capital markets?
A: I'm not at liberty to divulge the names of our clients. What I can tell you is that we're doing a lot of what would be considered "bridge financing" of projects. For example, a port authority may do its own financing and underwriting for a project, but come up, say, $80 million short of what is needed. My work involves facilitating the involvement of outside sources of capital. But there are questions as to whether companies can step up to the table today. Whether it is debt financing or equity funding, funds are hard to come by. The credit window has closed to a great extent. People are in a holding pattern until they see things improving.
Q: Do you see that happening any time soon?
A: I do.
Q: Do you see any improvement in freight activity and demand?
A: The question is will there be money to improve major freight corridors connecting, say, ports of entry with distribution centers. The stimulus package does not come up with a lot of money. In his initial stimulus proposal, President Obama proposed somewhere around $300 billion in transport and infrastructure. The final bill allocated some $58 billion.
Maybe right now, with the economy down, it's not a big deal. But in two or three years when the economy comes roaring back and we are not ready with the facilities to match the increased flow of goods, it will have an impact.
Q: Is the money allocated for infrastructure in the final stimulus plan enough to meet President Obama's twin goals of job creation and infrastructure improvements?
A: What the president submitted to Congress was a pretty healthy package. But what came out of Congress was much lower. I don't see it generating the 3.6 million jobs the administration is striving toward.
Q: The Highway Trust Fund is up for reauthorization later this year in an environment where the motor fuel tax, the traditional mechanism for paying for infrastructure improvements, is bringing in less cash due to the economic downturn and the proliferation of more fuel-efficient vehicles. The major trucking groups advocate an increase in the federal fuel tax, which has remained at 18.4 cents per gallon since 1993. Others are promoting alternate approaches like a tax based on the number of miles that a vehicle travels. Where do you come down?
A: I don't believe the gasoline tax is a sustainable source of revenue for highway and transit construction as we have relied on it the past.
A: Even with vehicle miles traveled going up, the total flow of funds into the highway trust fund is coming down. And, as you noted, this is due to significantly increased fuel efficiency of today's vehicles. I have said that, by the end of President Obama's second term, the majority of the cars will not be powered by gasoline. You have increasing ethanol use—right now, it may represent 10 to 12 percent of each gallon. But let's say it gets up to 60 percent. So look at the total picture. You will have more electric cars—you can't apply a gas tax to them. You will have greater use of ethanol, which means less gasoline consumed per gallon, so there is less to tax. Then you move into fuel cells powered by hydrogen—you can't apply a gas tax to that. We have to move away from the gas tax.
Q: What funding alternative would you support?
A: I think the "Vehicle Miles Traveled" program ought to be seriously considered. Even if you go to a VMT, you still have some form of tax. But the beauty of the VMT approach is that all you look at is how many miles you travel on the highway. It captures activity regardless of energy source.
Q: You ran DOT on 9/11, and in the years to follow you presided, along with the Department of Homeland Security, over the biggest ramp-up of transport security in the nation's history. Nearly eight years after the fact, are you comfortable saying that security has improved since 9/11?
A: My answer is a definite yes, though it would be hard to imagine, say, getting to a point where we can screen 100 percent of all ocean containers without compromising the speed and reliability of an intercontinental supply chain. If we can get to 85 percent screening, that would go a long way.
Q: But in screening air freight moving in the bellies of passenger planes, we are at 100 percent physical screening, albeit mandated by law?
A: I did not support that approach at the time it was being debated. To me, the idea of physically screening everything would be too costly and time consuming. The "known shipper" concept had a lot of merit when it was being implemented, and it still does. A combination of technological applications and the risk-based, known-shipper program is the ideal way to go.
Q: Like you, Secretary LaHood was a seasoned lawmaker chosen by the opposition party at the start of an administration to run DOT. Yet you had significant transportation experience going into the job, while he did not. Is that going to be a problem for him?
A: Ray LaHood was a great choice. He has a very close relationship with the president and chief of staff (Rahm Emanuel). He may be lacking in terms of getting into the weeds on specific issues, but he will surround himself with knowledgeable people and he is a quick study. He was also a member of the House Public Works and Transportation Committee, so he has had exposure to the issues.
Ray is widely respected on both sides of the aisle. That is important, because working with Congress is a critical part of that job.
Q: What are the biggest challenges facing those who work and depend on transportation and infrastructure?
A: The biggest challenge is finding a sustainable revenue source for infrastructure construction, operations, and maintenance. Another is working to improve productivity and reduce congestion on our freight corridors—and that means reintroducing intermodalism. We put a great deal of emphasis on intermodal in past reauthorization bills, and we have to get back to that. It stands to be an efficient and cost-effective way to move goods, and we can ill afford to give up hard-won productivity gains.
The other key challenge, which ties back to the first, is working to raise awareness of transportation issues and how they affect our lives. I have never understood why there has not been more attention and concern expressed by the public about transportation. Every form of economic activity is based on transportation. It impacts everybody every day, but unless there is a tragedy, people take transportation for granted.
After the collapse of the I-35W bridge in Minneapolis, (Rep. James) Oberstar (D-Minn.) proposed a 5-cent increase in the gasoline tax to fund bridge improvements. It took about 45 days to kill that proposal. I thought, "Holy cow, is the shelf life of a discussion of this magnitude only 45 days?"
Q: Looking back, what do you consider to be your greatest accomplishments and frustrations?
A: My greatest accomplishment was setting up the Transportation Security Administration, meeting the 36 mandates in the law creating the agency, and doing it within the prescribed time frame. The biggest mandate was establishing security operations at all U.S. commercial airports by Nov. 17, 2002. What many people don't realize is that, when completed, the TSA was the largest single mobilization of any workforce since World War II.
My biggest disappointment? In 2001, knowing the next highway reauthorization was set for 2003, we developed a six-year funding mechanism that called for a 2-cent-a-gallon gas tax increase in the first year, a 2-cent-a-gallon increase in the third year, and another 2-cent-a-gallon increase in the fifth year. As I recall, that would have been a $330 billion proposal and left us with a $7 billion unobligated trust fund balance after six years. We went to the Oval Office, and after we went through the entire presentation, President Bush takes a marker, circles the gas tax increases, and says, "Norm, I don't want any of those tax increases. Get those out."
So we went back and put a CPI inflator on the gas tax in the fifth year. Keep in mind that the gas tax had not been raised since 1993. We returned to the Oval Office, went through the presentation, and afterward President Bush said, "Norm, that's a tax increase. Get that out." So I then took all the unobligated surplus, left $1 billion in the highway trust fund, and used the balance to build a $267 billion surface transportation program that Congress finally passed in 2005. Not long after, the administration asked for an $8 billion infusion of general funds into the highway trust fund so it wouldn't be running a deficit by 2007.