initiatives. we were one of the states that was able to put rapidly to use $2.3 billion florida declined. that will in fact expedite the speed of trains coming through rhode island, serving our boston and new york markets. the northeast corridor does go north of new york. i appreciate you recognize that. i think that the boston to washington corridor is an area that is heavily used and should be a national priority to bring it up to speed. there's still many areas which the rails need improvement. i know you're working on it but i want to express my appreciation for that. i also know you're coming up to rhode island in a couple of weeks to speak at brown yfrt. we wi university. we'll be stuck here so i won't be able to welcome you personally. if you have a free mom, i'd like you to go down the hill from brown university at the providence viaduct, which is a

quarter mile long bridge that goes through the middle of providence right by the big providence place mall where people come to shop and enjoy the wonderful new shopping mall we have. it was built in 1964. when you go underneath it, you look up and see plannings across the i-beams. those plaengs are there to keep the road falling in from landing on the road underneath it to go to the mall. if you go where amtrak shoots by underneath the it highway, same thing. they have planks under the i-beams to keep the road that is falling in from landing on the track or on trains. this is a really important project to get rebuilt. it is way overdue. rhode island is a significant state with significant budget issues. there is zero shot that the state is going to be able to pay

for it. in the bill that came out of the environmental works committee is regional significance. i would submit the ibs 95 corridor going through rhode island is a project of regional and national significance. i have no doubt we'll be able to compete successfully for funding in this authorization but we don't presently have funding for it. i would urge your assistance if you could, urge assistance trying to locate funding for that project of regional and national significance. >> first of all, i will be happy to visit the bridge. >> we'll arrange that. it's very close to where you'll be. >> we'll work with your office on that. i will also be happy to work with you and your staff on maybe some opportunities to jump-start this project. so we'll pay attention when we go there. >> i appreciate that, mr.

secretary. let me also say i think the budget committee reflects a variety of different economic views. my economic view is that when home corporate municipal and state economies are they are i thinking and collapsing, that's a good time for the federal government to spend counter-cyclicly adding to the negative economic cycle and worsening the situation. i have seen reports that say that if we had had a balanced budget act of the kind that's being proposed now and had been in place in the recent meltdown, that we would have lost i think 17 percent of gdp. and we would have been in a serious cataclysmic depression rather than just a recession. i don't think it's so easy to throw keynesian economic completely over the side and pretend there's absolutely no

truth to it and austerity is the way to help people when an economy is in recession. in particular it seems to me it made sense to invest in infrastructure at that point. unlike spending that goes out the window, you're left with something. you're left with hard, tangible aset. if you'd been smart about it, america is richer for having an aset. some assets more valuable when they are built than the money went into them. that's how people make money investing in tangible assets. i think the notion if it's spending, that's the om thing we can possibly look at. we should never look at the positive side of the balance sheet where you end up with the highway system so everybody can get their goods to market. travel smoothly to have a modern train system at least the equal of what's being developed in asia and europe. i think it is a misguided

economic theory, both with respect to counter-cyclical value of spending and with respect to the national value that solid infrastructure creates. we haven't talked about it. one other place to look, water and wastewater, less your purview. we have $600 billion of water and wastewater infrastructure needs in the country. that's clean drinking water for people. proper disposal of sewage. that is reaching to meet the growth in our population and we're simply way behind the ball on that. i think the recovery act, i agree with the chairman, i think we have $6 billion in water and wastewater out of $600 we need. 1% of the need. so thank you for your continued emphasis on infrastructure, particularly transportation infrastructure. thank you for agreeing to make that stop in rhode island and again my best wishes to you and to sam. >> thank you, senator. >> thank you, chairman. >> thank you, senator white

house. >> thank you, mr. chairman. secretary lahood, i also wanted to share in the sentiments of my colleague from rhode island. we're all praying for your son and appreciating what he's done for democracy and hoping he comes home soon. >> thank you. >> wanted to ask follow up on the questions to the high-speed rail funding. can you help me where other areas of the world where there's high-speed rail including where we have rail in the united states. has it been able to sustain itself? >> certainly on the northeast corridor it has. ridership is way up on amtrak this year. >> between washington and boston does it make money? >> amtrak on the northeast corridor, i'll put this in the record and be happy to share it with you, amtrak on the northeast corridor, ridership

was way up, and they made money last year. ridership is up this year. >> just to be clear, that will sustain itself without any federal subsidy? >> it's subsidized by the federal government up to about 43%. >> that's my question. where can you tell me where we can sustain rail by based on what people pay to use the rail so we don't have to continually provide federal subsidies. >> we subsidize a lot of forms of transportation. >> my question is simple. >> we subsidize transit. we subsidize highways. >> my simple question to you is can you tell me where we have rail where we don't have to continuously provide federal subsidies to sustain it, where it can pay for itself. does that happen anywhere? >> no. no, it hasn't. >> to my knowledge there's only two lines in the world where that happens and that's actually in tokyo and paris where you can actually have the rail to pay for itself. nowhere else in the world can it

pay for itself. >> you're right about that. >> just to be clear, when we build these, we're going to have to continuously subs dies them going forward. >> just like we do transit and our highways. >> i just want people to understand. >> got it. >> you cited california as an example of productive example of where we should build high-speed rail and yet the estimated cost for the program, which would be the line, as i understand it, to connect madeira to bakersfield, cost from $33 million when it was put before the voters in california in 2007 to at least $100 million in 2012. so therefore the cost of building it have tripled three times of what it was estimated when this issue was put to the voters of california. and i would just point out that

there's serious questions that have been raised by california by independent individuals who have looked at it, including the state auditor who said the california bullet train project has become increasingly risky because of fiscal issues with it, even the first phase they are concerned about it. and with respect to california, the california high-speed rail peer review group, an expert body mandated by state law, not a federal group expressed serious doubts about it and concluded it could not at this time recommend that the california legislature approve appropriation for the bonds of it because the project, quote, represents an immense financial risk. why would we designate additional federal dollars for something thain california itself in looking at it has designated it an immense

financial risk. >> because the governor supports it, because the elected leaders there support it. i just met with the president, which is called the pro tem of the senate and also the speaker of the house. i just met with the governor. i just met with the two u.s. senators from california. this is what the elected officials in california would like to do for the next generation. they would like to have passenger rail in california because california is one big traffic jam. >> so you're asking -- >> they want to get people out of cars and into passenger trains. >> you're asking the rest of the country to put up billions of dollars for something that has been described as an immense financial risk based on the officials of one state. we have to look at the entire whole and i don't think we should provide taxpayer dollars to something we're going to have to continue to provide federal subsidies for number one. second, where we're taking on

immense if anything risk. so that's really the issue, i think, with high-speed rail. i think if you look at the bills that are up right now, one in the house, one in the senate, neither body included money for this purpose. so congress is concerned about, i think, this issue as well in terms of what is the financial measurement, what are the outcomes we're going to get from the investment we put in high-speed rail. the fact it's in neither bill, neither house or senate speaks volumes in terms of where we are on this issue. and that's my concern with it. i do have a question for you. does the president believe we are going to be fighting the wars. we've taken ourself out of iraq.

does he believe we'll be fighting in afghanistan for the next 10 years. >> fighting wars is not in my portfolio. i've never talked to the president about this. what i know is we provided to pay for in our budget this year. the kril criticism for the last two years, this committee and committees on the other side of this capital was where is the pay for. we provided one. >> but you've assumed that we're going to be fighting a war or wars for the next 10 years. in the absence of some indication that that's really going to happen, less just call it -- >> we're not in iraq. we have that savings. >> we weren't planning on being in iraq. how is that? the notion that we were going to be somehow having a full contingency in iraq for the next 10 years i don't think by anyone that looked at that war would come to that conclusion but particularly in afghanistan this notion that you're going to use

savings for something that we weren't going to spend in the first place. groups that have looked at this, including the committee for responsible federal government called it to take credit for a policy that was already intended is stretching the gimmick for budget savings. this is suching a glaring gimmick at such a moment. i understand you took some heat for not having the pay for. the fact that the pay for that is in this budget is a budget gimmick doesn't solve the problem. and to take credit for savings that were never going to happen, i can't go home and tell my constituents with a straight face this is paid for. i hope that we will be working on a real way to pay for the funding. you know, i know that you said we're certainly facing a situation where you're concerned about the infrastructure in this country and i respect that, and

i think that's very, very important. we also have great fiscal challenges here as well. we have to look at these things in a very serious fashion. thank you for appearing today. >> senator. >> mr. chairman, thank you very much. sk, thank you, and thank you -- >> for coming to alaska as you did. we've had conversation, i wish the best. as you know, my brother has been doing work there also for a secular group to try to create stability there. he's been there i think five times now. as we think about your son, we hope it all works out. >> thank you, senator. >> absolutely. i'm listening to the discussion. i'm assuming because i came in late here. the pay for is oco which cbo scored. >> the highway trust fund. >> also. >> in addition to the iraq

money. >> cbo has given a score on. >> that's correct. >> this body has a habit, if you don't like cbo, you say -- i have a lot of problems with cbo. when they score something, they score something. that means there's a value to it. maybe we can argue what that total value is but at least we assume there's a value. i'm all for the pay for. i have no interest in being in afghanistan for 10 years with troops. i'm glad 2014 is a target. if we get out in 2013, i'm glad they are moving in that direction. i want to make the point cbo scored oco which helps pay for the project. >> that's true. >> i missed it. my staff told me i liked your phrase as a former mayor the country is one big pothole. i agree with you. there's no better investment in the infrastructure of the country. when i was mayor in the last

five years built more roads than the last 20 years of mayors. you've got the drive on some of them there. also the work we did on the recovery. always hear around the body here, didn't do anything. i can show you and you saw somewhere we put the money to work building roads, roads that you cleaned up congestion, which in turn made people more productive because they get to work on time, school, whatever it might be. saving fuel. a win-win has a long-term. cbo never scores that. that is the value when you improve the infrastructure of the country, from my perspective on roads. i'm a builder. i love to build everything. roads, verticals, whatever it takes to improve an economy. i think it's important. let me ask you specifically within your testimony you asked about the -- you noted the integration of unmanned aircraft and into airspace.

defense authorization bill, an element we authored, i said on that committee, making sure there's language there. we started designating these areas. faa has a role to designate. first question is i'm assuming the two are coordinating. >> absolutely. >> excellent. >> second, of course, being biased, there's no better airspace in the country than what sits in alaska. military will tell you open airspace especially for unmanned aircraft. so what is your timetable? maybe for the record get it to me, faa looking to say here is the two sites, four sites, six sites that will be analyzed. >> we hope to be able to name those sites this year. i don't -- i'll get it for the record. >> just a schedule. >> absolutely. >> that would be great. of course i'm biased. i think university of fairbanks, university of alaska fairbanks is doing incredible research around this uas. we have an enormous amount of

airspace no one competes against and no neighbors to complain. so i'll leave that for that schedule. second thing i know we've had this, faa reauthorization did not have the $100 foe. we've had this discussion on general aviation. i think general aviation, and i want to differentiate between r lear jets. oncreating a new permit system or $100 fee doesn't seem logical to them when they have a tax, which they have all volunteered in the past to adjust. they see it as a better mechanism to deal with revenues than another system. and pill 100% agree with them because i tried this as mayor, got my head kicked in.

that's not a good system to do this. i worked with the general aviation folks and we came up with better existing structures they already had in place. do you have any comment on that, not the fee but the method versus $100 fee versus tax on gas. any comment on that? maybe you want to give to the record, either way. >> our cfo, i'm going to have him comment on the process. >> in terms hft $100 fee, that was never proposed to be applied to sort of the propeller general aviation sort of for commercial aviation, high-end business jets. we never proposed that for the lower end gm. >> your budget you proposed does not have that. can you get something for the record? >> absolutely. >> we'll probably still have issues but we can have that conversation another time.

in the transportation bill we're now to move through, as you know, i was one of just a few that voted against the move and moving it forward. there's a reason. the indian road component literally takes alaska roads and cuts them in half. and the amount of money coming through and map 21. very concerned because it's hitting most impoverished areas of this country which can have the least ability to afford the development of infrastructure. we're working now with the chairman, chairwoman of the committee and others to try to get something rational here. a 50% reduction is severe for our system within alaska, as you experienced. >> sure. >> and so i'm just putting that on the notice. it's more in our camp right now. i'm sure your folks will be asked a lot of questions about, you know, the distance and the variety of other things that calculate this out.

>> sure. that is senator botcher's bill. we made note to that. we're working with them. but as you can imagine, and now we understand folks from the tribes of minnesota are now concerned and there is -- they're doing the formula and realizing there is a problem here. we'll get in touch with the committee and try to provide technical assistance on that also. >> excellent. let me just close and say that, mr. chairman, just to make sure -- i don't, you know, i have views on high speed rail and the efficiency of it. putting that aside, your point, i want to emphasize it again, is we subsidize roads. big time. i know all the bonds i pass and the rest of my community paid when i was mayor of afrpg wrath may have been in a little small area. but the objective was to create a system, a network that moves people for commerce, krpgs,

individua corporations, commerce and so forth. the senator is concerned about high speed rail. but the point that we, you know, do we subsidize -- we subhe is dies all of it, trans it, roads, ferries, ports, you name it, we subhe is di subsidize it was it's good for business. >> thank you for that. senator johnson? >> thank you, mr. chairman. secretary lahood. >> good morning. >> also i want to express my concern for your son. sounds like you got a pretty capable individuals going over there to resolve the situation. >> thank you. >> until that time, certainly your son and your family are in our thoughts. >> thank you very much. >> congratulations on your bridge, by the way. >> well, i was just going to thank you for that. thank you for your help in kind of breaking the logjam. hopefully we can get that done in the house. >> absolutely.

i'll start out with the example of infrastructure. i certainly understand government is the only entity that really can provide certain types of infrastructure. the question is who should pay for the infrastructure? should itting the federal government? should it be the state and local gofl governments? that is largely funded by the state of minnesota and wisconsin. so they have skin in the game. and when we talk about subsidizing whether it's high speed rail versus highways, what the senator just said is if we do it right. i think that's the main question. first of all in, terms of highway spending, again, i'm new to this. these are legitimate questions. what is the percent that the federal government provides in funding for basic infrastructure

versus state and local governments? >> i'm not sure of the current percent but i believe the majority of funding comes from the state and local governments, not the federal government. most of the money gets spent on the international and highway system. we can get that for you. >> when we make these funding decisions, we really are subsidizing one region of the country or one state at the expense of others. how efficient, how infecti ieff that going on over the years? >> well, it's helped, i think, build an interstate system. we didn't start in all 50 states. >> right. >> you know that. and so was one state disadvantaged when they started in new york but not in i will snil maybe temporarily. but over 50 years, wended up

with a state of the arlt interstate system. if you look at transit systems in america, every community has some form of transit whether it buses or light rail or some communities, street cars. a lot of that was subsidized by federal taxpayers. now, when one community got one and another one didn't have one, does that mean one was disadvantaged? over time, i think it's pretty much evened out. and, you know, the fact that, you know, some things start ahead of other things, eventually i think the country has benefited from a national transportation view which almost every president has had and really congress has had. when i served on the transportation committee for six years, we passed two transportation bills. with over 400 votes in the house and over 80 votes in the senate. it was bipartisan. >> truthfully, a lot of that is

bipartisan going into different areas. to be honest about it. again, i don't want to be contentious. let me, in temperatures of wisconsin, for example -- >> but it did help. >> i understand. >> develop good transportation systems for america. >> i'm supportive of infrastructure. i really am. >> i know you are. in term of wisconsin, the question came for governor walker and has i traveled around the state, a great deal of support for this position. the annual operating cost is about $16.5 million. the estimate was that you cover about $9 million of that by fees and fares. so leaving about $7.5 million per year to be subsidized by the wisconsin taxpayer. they just rejected it. i think that's the question. you take a look at the articles i read on the california high speed rail, you have -- we have airlines. we've already invested in that infrastructure. and air travel can take care of some of that. i just have a real question of how long government can

subsidize operations as something that will never, ever be economically viable? highway system is different than high speed rail system that there are real questions as to whether or not those will ever be economically viable and should they be subsidized by taxpayers long term. >> governor walker decided he didn't want high speed rail. probably for the reasons you just stated. but other governors say they want it. governor snyder decided he wanted it in michigan. >> generally elected officials like bringing bacon home to the state. they're not going to be around to be paying the bills in 4, 8, or 12 years sometimes. their term is over. it's a thing that is a basic fact. >> but my point is this, senator -- we didn't shove high speed rail down anybody's throat. we didn't. when governor scott and governor walker and governor kasich made

their decisions, we said fine. you're the ones that got elected. there's a pent up demand in america, as i said, for the $2.3 billion in florida. it was $10 billion worth -- from governors. not from ray lahood. >> i would say for bringing home the bacon to districts and irrespective of how economically viable the projects will be long term. for wisconsin, he would have liked to have seen the $150 million go to deficit reduction. that's where i would have liked to see it go. let's talk about in general this transportation bill that we're arguing over right now. in terms of the level that the gas tax is not funding it. i mean just kind of restate. what is that amount? that's being covered by the oco? >> half. about half. just generally about half. >> which is about how much? >> 200 and what? $230 billion. >> part of it, as i come to town, part of the reason our gas tax rev senue is down is becaus

fuel efficiency is up. it's poisonous to think about increasing the gas tax to refund that -- or refill that revenue stream. why not look more seriously at utilizing energy resources as a funding mechanism? you know, more drilling in the gulf, opening up anwar? >> i assume, you know, when we put out -- when the president puts out a pay for, i assume that's what the debate is going to be about, senator. that's what they're debating over in the house now. they to split the bill up into three bills. one is transportation. one of them is energy because they're trying to figure out a pay for. >> i was just asking your opinion. do you think that's a good idea? >> i like the idea of the president put out. i like the idea of half of it highway trust fund and half of it iraq money. i think it's a pretty good formula. >> okay. appreciate it. thanks. >> yes, sir. >> thank you, mr. chairman. >> i thank all senators who participated. i thank the secretary very much for being here. as i've said many times, you