The most grotesque outcome I can possibly imagine for the Obama stimulus plan would likely become reality if, on top of a new set of carbon tax guidelines, most of the billions spent on physical infrastructure went to roads and bridges instead of neglected public rail transport. Worryingly, this is exactly the outcome we are headed for now, as an unintentional barbell policy develops where highly sophisticated green advocates shape carbon and climate policy at one end of the stimulus plan, and then the nation’s Governors favor roads and automobile infrastructure over rail at the other end.

Let me try to both clarify and simplify why this would be a fiasco on both an environmental and a macroeconomic level.

First, the lack of sufficient commuter rail and light rail is an enormous macroeconomic problem that the country is struggling with right now, and has been struggling with for years. The lost work hours and wasted capital endured in at least 10-15 large American cities would, if captured, likely represent a non-trivial shift in the nation’s GDP.

I have identified at least five US metro areas where, in my opinion, massive new (or additional) investment in commuter rail and light rail would, over a several year period, reshape downtowns, attract and organize real estate development, and capture lost work hours. They are: Seattle, SF Bay, LA-Orange-SD Counties, Dallas-Ft Worth, and Miami. Notice that four of these are in the West, the portion of the United States that saw most of its greatest population growth during the age of the automobile. Essentially, post-war growth. While all of these cities have made good starts already with some form of rail, it would serve the country well to throw not just billions, but hundreds of billions at all five.

On an environmental level it is nothing less than absurd to entertain sweeping new carbon and climate legislation if we are not going to get cars off the road. Higher fuel efficiency is a worthy goal. But higher fuel efficiency cars make little difference if they join each morning the millions of vehicles stuck in traffic jams across the country, idling their engines.

The value proposition of commuter and light rail is so powerful, on so many different levels, that I cannot understand why it’s not in the Number One position in current discussions of the Obama plan. It should be above Carbon and Climate issues, Solar and Wind issues, vehicle standards issues, and certainly well above Road and Bridge issues. The only comparable investment theme I find in the proposed stimulus plan relates to the Grid. We will indeed need a new Grid to feed power from new sources of utility grade solar and wind, into electrified public rail transport.

The Obama team appears suddenly quite confused on a number of levels, as we approach the inauguration. For example, if one agrees we’re in a liquidity trap and that Keynesian policy holds the answer, then Tax Cuts should be almost completely off the table. They’ll do nothing. Tax cuts–again, if you believe we are in a deflationary liquidity trap–are nothing more than the fiscal equivalent of cutting interest rates.

More importantly, while Obama has sounded the correct economic goal when saying he wants investments that have large, back-end payoffs, there is simply no competition from investment in roads and bridges when compared to rail transport.

The problem the country faces right now is that we already invested in the wrong things. Wrong things have little sustainable payoff. We invested in Houses and Cars, and did so for decades. But houses and cars are really just tools that are supposed to set us up to do the larger work. In the United States the car and the home became economic fetishes. Alot of the country now lives in a home that’s too big, in a town too far from work. Continuing to invest in this structure is crazy, given that oil prices will be sky-high again in the near future. Politically, however, it will be difficult for the nation’s Governors to do otherwise, and therein lies a problem.

-Gregor