Economic report compares two proposals for federal transportation spending

According to a report released Tuesday, the House Committee on Transportation and Infrastructure’s proposal to spend $375 billion on highway and transit systems over the next six years could have drastic effects on the economy.

The study, which was published by Global Insight Inc., compares the economic impact of transportation funding in the Bush administration’s fiscal year 2004 budget proposal with the Transportation and Infrastructure Committee’s funding proposal.

In 2002, the government spent $31.8 billion in highway improvements. In the committee’s proposal, a recommendation was made to spend $40 billion on the federal-aid highway program in 2004, with that amount growing to $60 billion in 2009. In contrast, President Bush’s 2004 proposal included a $29.3 billion request for transportation, which would also increase over the next six years.

According to the study, there is a direct correlation between an increase in highway spending and an improving economy because the increased spending would lead to a rise in employment, an increase in manufacturing and the expenditure of new disposable income. If the committee’s proposal were adopted, the report estimated it would add $290 billion more to the nominal gross domestic product over the next six years than the administration’s plan. In comparison, it would also increase consumer disposable income by $129 billion, a six-year total of $1,100 per household.

“This economic study is the first major report that has been conducted on the wide-ranging, positive economic benefits [of] our bill,” said committee Chairman Don Young, R-Alaska.