En Route Miami, Florida–(ENEWSPF)–March 29, 2013 – 10:55 A.M. EDT
MR. EARNEST: Bienvenidos aboard Air Force One as we make our way to Miami today. Typically, at the beginning of gaggles like this, I’ll have a little presentation to preview for you the remarks of the President and give you a sense of the argument and the case the President will be making. Rather than doing that myself today, I’ve actually brought along an expert, Alan Krueger, who is the President’s chief economist.
Prior to working at the White House, Alan worked at the Treasury Department, where he was instrumental in putting together some of the administrations’ proposals related to the infrastructure bank and to the Build America Bonds that have proven to be so popular and helpful in stimulating economic growth and creating jobs all across the country. So I want to give Alan the opportunity to give you a sense of the case the President will make today about the infrastructure proposals that the President will be laying out, and the impact it would have on the economy and creating jobs. Alan can then take your questions about the event, and then we’ll open it up to other questions you may have on other topics today.
All right. So, Alan, do you want to give us a little opener here?
MR. KRUEGER: Sure. So why don’t I say a few words at 30,000 feet about how infrastructure is the right thing to invest in in the economy right now.
The U.S. is underinvested in our infrastructure. If we invest more in infrastructure, we’ll be more competitive — businesses tell us that. Businesses tell us, and the President cites this in his speech, that if we improve our infrastructure, that will bring more jobs back home to the U.S. Other countries that we compete with economically have been investing quite heavily in infrastructure.
On top of that, now is a particularly good time to invest in our infrastructure. No industry was harder hit by the downturn than construction. Fully 20 percent of the jobs that were lost from the end of 2007 to the end of 2009 were in the construction sector. The unemployment rate for construction has come down, but it still remains over 15 percent. So we have resources that we could put back to work today to improve our competitiveness tomorrow. It makes a great deal of economic sense.
The President today in Miami is going to discuss three proposals to make smarter, more leveraged investments in our infrastructure. And this builds on his previous announcement for the Fix it First initiative, and a good deal of research suggests that maintaining our existing infrastructure has a very high payoff.
One area where we do a very poor job in terms of infrastructure, given the siloed nature in which we select projects and fund projects, is infrastructure that crosses different modes — like today, we’re going to go to a port, but there’s also a tunnel being built to connect the port, also rail connected to the port. We do a very poor job in the U.S. when it comes to integrating different modes of infrastructure.
The President’s three proposals today will help address that as well as to leverage additional funds, as well as to select projects of national significance.
The first proposal is for a national infrastructure bank. The President will propose capitalizing the bank with $10 billion. This builds on earlier proposals and earlier bipartisan proposals for a national infrastructure bank that can pull in private sector funding and select projects that will do the most good for the country.
Secondly, as Josh said, building on the Build America Bonds, which were part of the Recovery Act — and over $180 billion of Build America bonds were issued over a two-year period and helped state and local governments attract funds for infrastructure investment, which they were cutting back on at the time — the President is going to propose a new version called America Fast Forward Bonds — AFF. America Fast Forward Bonds will be direct subsidy bonds. Instead of relying on high income tax investors to buy tax-free bonds, with these bonds, the issuer will get a direct subsidy of 28 percent of the borrowing costs, and as a result, will be able to attract a wider set of investors, which is exactly what happened with Build America Bonds. And, of course, municipal bonds will also continue.
What we found with Build America bonds is that state and local governments saved around $20 billion in present value from the bonds that were issued, lowered their borrowing costs on 30-year bonds by around 80 basis points. So that’s the first proposal — sorry, the second proposal is the America Fast Forward bonds. First was the national infrastructure bank.
The third is to build on our success on the TIFIA and TIGER grant program. TIFIA supports surface infrastructure and has been increased by seven fold over the last two years. The Port of Miami project was supported by a TIFIA grant, for example. And those funds are highly leveraged — over the last 13 years, they’ve been leveraged about seven to one.
So the President is proposing expanding the TIFIA program and also expanding the TIGER grants that were part of the Recovery Act at a total of $4 billion for those two programs. I’m happy to go into some further details. There are some parts of private activity bonds, part of our AFF bonds I didn’t go into, but I don’t know if you have that much interest.
MR. EARNEST: I think that’s a good place to stop and see if you guys have any questions about the event today or other questions about the infrastructure proposal from the President.
Q What’s the total cost going to be of this — the new proposals?
MR. KRUEGER: Of these?
MR. KRUEGER: Of these three proposals, they will be budget-neutral, revenue-neutral. So our budget, which will come out on April 10, will explain how they’ll be funded. But the capital that will be leveraged for the economy comes to — ten plus seven plus four — $21 billion, and that’s on top of the Fix It First initiative, which was $40 billion? Is that right? That’s on top of the $40 billion Fix It First initiative, which the President previously announced after the State of the Union.
Q But you’re saying the total cost was $21 billion, did you say?
MR. KRUGER: $21 billion for these three new initiatives. Of course, their impact on the economy will be substantially greater because they will be leveraged two to one, three to one, four to one, up to seven to one depending upon the particular program. And as I mentioned, they will not increase the deficit by a dime because they are paid for in our budget.
Q These are all proposals that require congressional approval, is that correct?
MR. KRUEGER: That’s correct.
Q And the $21 billion includes the bank, which is not a new proposal, right?
MR. KRUEGER: The $21 billion includes the bank. The bank has been in our budget before.
Q And what makes you think after the bank, for example, has been proposed I think every year that I can remember you guys being in office, that there will be any more chances of getting congressional approval for that now?
MR. KRUEGER: Well, I think if you look at the history of infrastructure investment, it has tended to be a bipartisan area. Businesses support it, labor unions support it, it makes good economic sense. So one argument is just the merits — it’s good for the economy now, it has support, it will put construction workers back to work today and improve our competitiveness tomorrow.
But also, if you look at the recent history, there has been some bipartisan support recently for the TIFIA grants, for example, which, as I mentioned, have increased seven fold. So we’d like to build on that record of success with the Congress.
Q But do you think with the bank specifically that there’s more appetite now than there was two years ago, three years ago?
MR. KRUEGER: I think the case is just as strong. We’re going to continue making it. The American Society of Civil Engineers gave us a D-plus on our infrastructure. Now, that’s raising our grade from a D; it’s moving in the right direction. But I was a professor before — nobody is happy with D-pluses. So we have a tremendous need, I think a bipartisan need, for more investment in infrastructure.
MR. EARNEST: I’ll just add to that with one thing, which is that there’s no reason that there should be — to cite the example that Alan just cited of the tunnel at PortMiami — there is no reason that this should be a Democratic tunnel or a Republican tunnel. These are projects that are helpful to the economy and shouldn’t break down along partisan lines. There’s an opportunity for us to do something helpful and constructive for the economy.
You will find Republicans at the local level and the state level are supportive of these kinds of projects. There’s no reason that Republicans in Congress shouldn’t support them too.
Q Is the fact that you’re pushing a lot of these things that incentivize the private sector to get involved a reflection of what Jeff was alluding to, which is that there’s not a whole lot of appetite in Congress right now to outlay a whole lot of new money on these things?
MR. KRUEGER: I think it’s a combination of factors. I think they’re good investments for the private sector to get into. And that’s what we hear from investors, that we should use innovative ways to try to bring the private sector in to invest in our highways, our ports. They benefit from those investments. They benefit in a number of ways. And we’d like to leverage that investment, and we think we’ll all benefit.
Q I’m sorry, I missed it — did you have a job number estimate for how many jobs this might create?
MR. KRUEGER: I don’t have a job number for you because it depends on how much it’s leveraged. It depends on a number of factors. I can tell you when economists have looked at infrastructure investment in the past, they find it has a very high rate of return for the economy. And I think that’s especially true at a time when the unemployment rate for construction workers remains at 15 percent.
Q These proposals today, have they been — were they in the State of the Union? Have they come out before? What is actually new-new today?
MR. KRUEGER: The details are new. The President alluded to infrastructure investment in the State of the Union. He mentioned the Fix It First fund to try to improve existing — deferred maintenance on our infrastructure. The details of the infrastructure bank are new. The details of the AFF bonds, America Fast Forward Bonds — expanding them for private activity bonds — and also, the details of what we would like to do to expand the TIFIA and TIGER program.
MR. EARNEST: Any other questions for Alan? Okay. I’ll stick around and answer a couple more questions if there are other things you’d like to talk about.
Q North Korea — Russia has said that today it’s increasingly worried this situation is going to spiral out of control. How does the White House balance a desire to project strength and support for its ally, South Korea, against concern that this could escalate? How are you trying to de-escalate the situation?
MR. EARNEST: Well, I can tell you, Stephen, that the bellicose rhetoric emanating from North Korea only deepens that nation’s isolation. The United States remains committed to safeguarding our allies in the region and our interests that are located there as well.
The recent passage of United Nations Security Council Resolution 2094 is a pretty clear indication that there is a unanimity of opinion across the globe about the need for North Korea to live up to their international obligations. The passage of that Security Council resolution is also an indication that we’re coordinating pretty closely with not just our allies, but also with Russia and China that also have a significant stake in resolving this situation peacefully.
So the path to peace for the North Koreans is pretty clear. They need to end the provocative acts and the bellicose rhetoric. They need to abandon their nuclear program. They need to live up to their international obligations. And upon doing so, they will be welcomed back into the international community. That would, of course, require the regime to put the interest of their people first; to focus on their well-being, their ability to have access to food and medicine. But by putting the interest of their people first, there is a path for them to come back to the international community.
Q You’ve been saying for some time that this bellicose rhetoric really is not helpful and doesn’t help them achieve their goals, but it seems like these threats from North Korea are getting more and more specific. At what point does this become a more serious thing where the security apparatus has to really address these specific threats?
MR. EARNEST: This administration is not the first administration to confront bellicose rhetoric and provocative actions from North Korean regimes and North Korean leaders. So we’ve made very clear that we have the capability and willingness to protect our interests and our allies in the region.
As you know, there’s an ongoing military exercise that the United States military is engaged in with the South Korean military. That should be some pretty clear evidence to the international community and to the North Koreans that we have the capability and willingness to protect our interests and allies in the region.
But again, the path here to resolving the situation is very clear — that the North Korean regime should put the interest of their people first. They should abandon their nuclear program. They should live up to their international obligations. And upon doing so, they will be welcomed back into the international community.
Q Are you concerned that the military exercises that you spoke about, specifically the use of the stealth bombers even if it was part of a planned exercise, if fueling a kind of back-and-forth escalation that’s already in process?
MR. EARNEST: No, it’s clear that the escalation is taking place from the North Koreans based on their rhetoric and on their actions. These military exercises are something that take place on a regular basis, and they are a clear indication — something that we have been resolute about in the past. The United States has the capability, and we have demonstrated the willingness to use that capability to protect our interests and our allies. There’s no reason that it should come to that.
The path to peace is clear. But it will require the North Korean regime living up to their international obligations and abandoning their nuclear program.
Q Josh, do you have any concerns about Italy’s lack of ability to form a government?
MR. EARNEST: Well, as I mentioned I think in a briefing earlier this week, I have no hesitation about weighing into American domestic politics, but the domestic politics in other countries is something I’m hesitant to weigh in on. So I think at this point we’ll reserve comment and allow the Italian people to make the decisions that they feel are appropriate in terms of determining their elected leadership in their country.
Q The health of Italy, though, is important to the world economy and important to the U.S., as well, I would think.
MR. EARNEST: It is. We’ve talked quite extensively over the last several years about the role that senior officials at the Treasury Department are playing in working with their colleagues in Europe. It does remain in the economic interests of the United States for the Europeans to resolve some of the financial instability that’s taken place on the continent there. That certainly has an impact on domestic politics in Italy and other countries as well.
So I’m going to withhold judgment in terms of those domestic political considerations. But there is an interest the United States has in the — in greater stability in the financial and currency markets in Europe.
Q Josh, can I ask, is EPA today going to be putting out a new rule on gasoline?
MR. EARNEST: I don’t want to get ahead of any announcements that may be made by the Environmental Protection Agency.
Q They’ve already made — they made the announcement this morning.
MR. EARNEST: Did they? Okay. Well, I haven’t seen their announcement. I’ve seen the reports about their announcement. The reports indicate that that announcement is actually a proposal — a proposal that will go through a review process that will include extensive public comment. But what I have seen about that proposal is something that is strongly supported by the auto makers in the U.S. It’s strongly supported by a range of state and local governments as well, because of the impact it could have on cleaning up the air.
Now, the cost that’s estimated with this — again, according to analysis done by the EPA — is that this could have an impact of about a penny or even less than a penny per gallon of gas. But the benefit that would be enjoyed as a result of these changes would be a reduction in respiratory ailments by about 20,000, and we would also see on a regular basis about thousands of lives be saved.
So the tradeoff between less-than-a-penny increase in gasoline — in a gallon of gasoline for tens of thousands fewer cases of respiratory ailments like asthma in children and thousands of lives saved is an indication that they’ve done a lot of work on this and a lot of analysis. But there will be an opportunity for public comment, and we’re going to continue to work with industry and other relevant stakeholders to put a policy like this in place. But again, we’re in the proposal stage, not in the final rulemaking stage.
Q Because some in industry are estimating it could be as much as 9 cents a gallon cost to implement this rule.
MR. EARNEST: That’s different than the detailed analysis that the Environmental Protection Agency has undertaken.
The other research that the EPA has conducted indicates that it’s only a handful of refineries that would have to be — that would have to undergo significant infrastructure changes in order to comply with the proposal that’s contemplated here. So it is — there is plenty of evidence to indicate that the impact on prices is pretty small, the impact on the industry is limited, but the health benefits that would be enjoyed if a rule like this is put in place are significant.
So we’re going to work our way through this rulemaking process. But for additional detailed questions like this, I would refer you to the Environmental Protection Agency.
Q Can I ask you about Egypt? It’s been a — the President — or the authorities have issued warrants for the arrest of a number of political activists, accused them of being — promoting unrest. We’ve also seen over the last few days reports about increasing sexual violence against women over the last few months. How concerned is the White House of the political developments that are taking place in Egypt?
MR. EARNEST: The White House has seen those reports. We’re aware of them, and we’re deeply concerned about them. Sexual violence, including gang rape, has occurred during recent demonstrations in Egypt, and this is a cause of great concern to the United States, the international community, and to many Egyptians. These victims are the mothers, wives, daughters and sisters of Egypt.
The Egyptian government has a responsibility to take legal measures to prevent sexual violence and to prosecute people who are involved in such crimes. The idea that some Egyptians are blaming the victims for being raped and assaulted is abhorrent. We strongly condemn these views and reaffirm the rights of women to express themselves in public squares alongside men, as well as the responsibility of the Egyptian government to protect them.
We urge the government to make good on its promises to govern for all of its citizens, and we call on the Egyptian people to exercise their rights peacefully and respect the rights of their fellow citizens.
I’m sorry, I forgot the week ahead.
On Monday, the President and the First Family will participate in the White House Easter Egg Roll. The event will feature live music, sports courts, cooking stations, storytelling and Easter Egg rolling. This annual event is something that families across the country, military families and even the First Family, looks forward to every spring.
On Tuesday, the President will welcome the Prime Minister of Singapore to the White House. The United States and Singapore have strong economic and security ties, and our strategic partnership reflects a shared commitment to working together to ensure the continued peace, stability and prosperity of the Asia Pacific region. The President looks forward to discussing with Prime Minister Lee a broad range of strategic and economic issues affecting the Asia Pacific region.
On Wednesday, the President will travel to the Denver area, where he will continue asking the American people to join him in calling on Congress to pass common-sense measures to reduce gun violence. The President will meet with local law enforcement officials and community leaders to discuss the new measures the state has recently put in place, including closing loopholes and a background check system to keep guns out of the hands of criminals and others who should not have access to them.
Later in the day, the President will travel to San Francisco, California to attend events for the DCCC. He will remain overnight in San Francisco.
On Wednesday morning, the President will attend events for the DNC in Atherton, California. He will return to Washington, D.C. that evening.
And on Friday, the President will participate in the Easter Prayer Breakfast at the White House.
Q Atherton, California?
MR. EARNEST: Atherton, yes.
11:15 A.M. EDT