Focus Shifting From Tax Cuts to Transport Bill : Congress: Some leaders think $100-billion highway package is what’s needed to get the economy moving.

With prospects for a recession-fighting tax cut fading as rapidly as the autumn foliage, Congress has begun searching for other ways to persuade voters that it is trying to do something to spark an economic recovery.

Suddenly, congressional leaders seem to have discovered that very something sitting right under their noses--a $100-billion-plus transportation package that had languished for much of the summer and now awaits action by a House-Senate conference committee.

Senate Majority Leader George J. Mitchell (D-Me.) talked about jobs--not roads and bridges--when he waxed enthusiastic about the legislation, which would rewrite federal aid programs for highways and mass transit for the first time in 35 years.

“That’s a huge program,” Mitchell said in a talk-show interview last weekend. “We need to pump that into the economy to create jobs and get economic activity going.”

Rep. Robert A. Roe (D-N.J.), chairman of the House Committee on Public Works and Transportation, was even more effusive. “There is no other bill pending in Congress today that can provide the same powerful counter-cyclical catalyst for economic growth,” Roe said. “This revolutionary transportation bill is the centerpiece of domestic policy for the country.”

The bill has assumed even greater prominence on the congressional landscape since House Speaker Thomas S. Foley (D-Wash.) ruled out the possibility of action this year on any of the tax-cut proposals that had been circulating on Capitol Hill as possible antidotes for the recession.

Even though congressional leaders estimate that the transportation legislation would create as many as 2 million jobs, and bring longed-for prosperity to the beleaguered construction industry, a host of problems threaten congressional negotiators as they try to jump-start the bill. A 96-member conference committee chaired by Roe met Thursday for the first time to begin deliberations.

Environmental groups have complained that some provisions in the separate House and Senate bills could accelerate the filling of wetlands, reward automobile use at the expense of mass transit and promote urban air pollution. The critics include the Sierra Club, the Environmental Defense Fund and the Natural Resources Defense Council.

In addition, the bill faces a veto threat from the Bush Administration, which objects to more than 470 “demonstration projects” included in the House legislation, and to the 80-20 federal-state funding ratio contained in both measures. Secretary of Transportation Samuel K. Skinner has said states should have to pay 40% of the cost of transportation projects.

And not everyone is convinced that the legislation would deliver all the economic benefits that its supporters promise.

“If you’re worried about the business cycle, using a public works bill to create jobs is probably the least effective thing to do,” said Rudolph G. Penner, an economist and senior fellow at the Urban Institute who studies government fiscal policy.

“It will be long after this business cycle is over that jobs are created by this bill,” Penner said. Even an immediate tax cut, he added, would not have much effect on the economy until the middle or end of next year.

Nevertheless, Rep. Norman Y. Mineta (D-San Jose) said the public’s growing concern about the recession will increase pressure on the House and Senate negotiators to complete their work before Congress takes its holiday recess, expected to begin by Thanksgiving. Current transportation aid programs expired on Sept. 30, at the close of the 1991 fiscal year.

Mineta, one of the principal authors of the House bill, said the sense of urgency was heightened by the result of Tuesday’s special election in Pennsylvania, in which Democratic Sen. Harris Wofford, the apparent underdog, beat former Atty. Gen. Dick Thornburgh. Wofford had accused Thornburgh and the Bush Administration of ignoring the nation’s economic ills.

That view was underscored last week by organized labor. Edward Wytkind, executive director of the Transportation Trades Department of the AFL-CIO, called on the congressional negotiators to quickly complete their work on “the biggest jobs bill in this Congress.”

If the negotiators are unable to work out their differences before the recess, state transportation officials have said that states will start running out of highway and transit funds before a new bill can be passed and signed into law by Bush.

The House and Senate versions of the transportation legislation are distinct not only because of the differing length, scope and cost of the programs they create, but also because of the divergent philosophies that underlie the measures.

Both bills would dramatically alter the shape of federal aid programs for transportation, most of which were created in 1956 to finance construction of the 43,000-mile interstate highway system, which is now all but complete.

The five-year, $123-billion Senate bill approved last June represents a radical departure from the past. Its provisions reflect the view of principal author Daniel Patrick Moynihan (D-N.Y.) that the era of massive road building is over and that the nation must squeeze more capacity out of its existing network of roads, bridges, bus fleets and rail systems.

The legislation would give states unprecedented flexibility to spend highway funds on rail and bus projects, and grant significant new spending authority to planning agencies in large metropolitan areas.

A key component of the Senate proposal is a $45-billion Surface Transportation Program, which could be used to finance either highway or mass transit projects. In addition, another $21 billion would be specifically earmarked for bus and rail construction and maintenance. As a result, the Senate bill is seen by many as pushing the cause of mass transit at the expense of road building.

Because of the emphasis on making better use of existing resources, Moynihan said he does not see the Senate package as primarily a jobs bill, although he acknowledged that it would have a significant impact on the economy.

“We are interested in what Southern California is interested in,” Moynihan said in an interview last week. “That is, how to get more out of the plant you’ve got without wrecking your environment and your economy.”

The House legislation, approved late last month, would authorize $151 billion in spending over six years, including $32 billion specifically set aside for mass transit. The House bill also would give states more flexibility in spending highway funds on mass transit projects, but not as much as afforded under the Senate plan.

To the delight of road builders--and the dismay of some transit advocates--the centerpiece of the House bill is a $37.6-billion program for construction and maintenance of a 155,000-mile National Highway System, which would include the existing interstate network. The Senate bill belatedly included such a system, which was championed by the Administration. But the Senate set aside only $7.5 billion of the surface transportation program funds for the national highway system. (Another $14.5 billion would be available solely for the interstates.)

“The fundamental issue (facing negotiators) is the balance between the highway part of the legislation and the transit part of the legislation,” said Roe.

Aside from funding levels and the shape of specific programs, negotiators will have to grapple with the complex formulas that the federal government uses to hand out billions of dollars in highway aid to the states. The Senate legislation largely leaves in place existing formulas, some of which date back more than 60 years. The House bill rewrites all the formulas.

Environmentalists have criticized the proposed House formulas because they rely on consumption of diesel fuel and automobile mileage, as well as other factors, as standards for allocating state aid. That would penalize states that attempt to reduce the number of cars on their highways by building mass transit systems, some argue. The Senate legislation includes a provision that would reward states that reduce the volume of automobile traffic.

“It would be deeply ironic,” said William J. Roberts, legislative director of the Environmental Defense Fund, “if in 1990 Congress and the President overwhelmingly supported aggressive steps to clean our smog filled cities (with passage of the Clean Air Act amendments) and then in the following year passed legislation that would undermine those objectives.”

Roberts and others also said they are concerned about provisions in both the House and Senate bills that would allow states to establish “wetlands banks.” The program would allow contractors to destroy wetlands lying in the paths of highways if they agreed to create man-made wetland areas.

The problem, the environmentalists contend, is that there is no strong scientific evidence that man-made wetlands in the long run can provide an acceptable habitat for the plants and waterfowl displaced by road construction.

Despite the complex issues that must be resolved, lobbyists on all sides of the debate predicted that the newfound emphasis on the legislation’s economic benefits will hasten its exit from the conference committee, despite any misgivings voiced by economists.