Chao says private investors can help boost transportation

by: JOAN LOWY, Associated Press Updated:

WASHINGTON (AP) - The incoming Trump administration is looking to "unleash the potential" of private investors to boost the national transportation networks that underpin the U.S. economy, the president-elect's pick for transportation secretary, Elaine Chao, told lawmakers Wednesday.

Economic gains are being "jeopardized" by aging infrastructure, rising highway fatalities, growing congestion and a failure to keep pace with emerging technologies, Chao testified before the Senate Commerce, Science and Transportation Committee.

Chao, 63, is expected to be easily confirmed by the Senate. She was labor secretary during George W. Bush's administration and deputy transportation secretary under President George H.W. Bush. Her husband is Senate Majority Leader Mitch McConnell, R-Ky.

When McConnell introduced Chao at the hearing, he stole a line from former Senate Majority Leader Robert Dole: "I regret I have but one wife to give for my country's infrastructure." Dole's wife, Elizabeth, is a former transportation and labor secretary.

Chao joked, "I will be working to lock in the majority leader's support tonight over dinner."

But she hasn't been immune from criticism. Unions say that as labor secretary, she mostly sided with industry when enforcing labor and safety rules.

Chao advocated using "innovative financing tools" that can "take full advantage of the estimated trillions in capital that equity firms, pension funds and endowments can invest." She said private investment should be encouraged with "a bold, new vision."

She didn't detail those incentives, but a paper written by two economic advisers to President-elect Donald Trump recommends providing $137 billion in tax credits to infrastructure investors. His advisers predict that will generate about $1 trillion in investment over 10 years.

But transportation experts note that investors are interested only in transportation projects that produce revenue, such as toll roads, and there are relatively few large projects like that. They say states need financial aid from the federal government to help with a growing backlog of maintenance and repair projects for aging highways, bridges and transit systems. Providing tax incentives also runs the risk of providing a windfall to investors for projects that would have been built anyway.

Sen. Cory Booker, D-N.J., asked Chao if she and the incoming Trump administration would support infrastructure legislation that includes direct federal spending on transportation in addition to efforts that generate private financing.

"I believe the answer is yes," she said.

That could put the new administration at odds with conservatives who insist that federal spending be restrained. Sen. Mike Lee, R-Utah, urged Chao to consider greatly reducing the federal gas tax that pays for most highway and transit spending, and leaving nearly the entire responsibility for transportation to states.

"I am open to all ideas," she replied.

Trump repeatedly promised during the campaign to spend $1 trillion on roads, bridges, railways, airports and other types of infrastructure. It's one of the main ways he said he would create jobs. But he has said little about this since the election.

Republican congressional leaders have said they'll wait to see what Trump proposes before tackling a public works bill. Trump has said he expects to be occupied early in his administration with cutting taxes and repealing President Barack Obama's health care overhaul. Infrastructure isn't expected to be dealt with until late spring.

Democrats at the hearing tried to pin Chao down on contentious issues such as whether to privatize air traffic control operations and whether she would enforce a deadline for railroads to install train control systems that can prevent many derailments and collisions. Chao said those decisions would be up to the Trump White House or that she hadn't been briefed on the issues yet.

As transportation secretary, Chao would be responsible for regulating auto, truck, train, transit, pipelines and aviation safety. The department frequently faces pressure from industry to relax safety rules and block new ones.

Chao, who has been associated with conservative think tanks, is likely to lend a sympathetic ear to industry pleas for less regulation.

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