By Michael Laris and Ashley Halsey III
The Washington Post
WASHINGTON — In the depths of recession, just weeks out of her eight-year gig as President George W. Bush’s labor secretary, Elaine Chao had tough words for the incoming Obama administration’s massive stimulus package, which included tens of billions of dollars for transportation.
“Beneath the warm and fuzzy bipartisan rhetoric is the same old tax-and-spend crowd that has now taken control of our government and is implementing policies that will turn our country into Europe,” Chao told activists at the annual Conservative Political Action Conference in 2009.
Wednesday, during her senate confirmation hearing, President-elect Donald Trump’s pick for transportation secretary delivered remarks consistent with that earlier skepticism of “traditional” government spending.
“The government does not have the resources to address all the infrastructure needs within our country,” Chao told the committee. “It is important to note the significant difference between traditional program funding and other innovative financing tools, such as public-private partnerships…It’s also important to recognize that the way we build and deliver projects is as important as how much we invest.”
Advocates say such partnerships, which include toll roads and bridges, are designed to pull in private capital and tap market forces to make government projects more efficient. But critics point to high profile failures where taxpayers were left both paying tolls and funneling government revenue to private firms in deals that can be locked in for generations.
As a candidate, Trump assailed the sagging state of U.S. infrastructure, promising a $1-trillion infusion to fix it. Bipartisan transportation advocates hoped that might mean a new investment of federal funds, in the spirit of earlier grand building projects such as the interstate highway system. But many Republicans in Congress have long opposed a big spending increase for such an initiative.
During his campaign, Trump pushed a tax-incentive plan his advisers say will produce an outpouring of private investment, though some economists have voiced skepticism.
It remains unclear whether the new president and his transportation secretary, who is expected to be easily confirmed, will eventually push for a hike in the gas tax or other such old school yet potent revenue sources for federal transportation projects.
But while Chao indicated that plans were still being drawn up, and that a “mix of practical solutions — both public and private” will be explored, her remarks echo Trump’s approach.
“In order to take full advantage of the estimated trillions in capital that equity firms, pension funds, and endowments can invest, these partnerships must be incentivized with a bold new vision,” Chao said. As the testimony proceeded, details remained scarce.
Chao’s husband, Senate Majority Leader Mitch McConnell, R-Ky., said last month that one thing he doesn’t want “is a trillion-dollar stimulus,” and that any package should be crafted “carefully and correctly” with an eye on how it will be paid for.
McConnell himself showed up as the first witness for Chao, a tradition of hometown senators.
With the Trump plan for infrastructure heavily dependent on private investors who may be unlikely to put their money into rural projects, South Dakota Sen. John Thune, R, the committee’s chairman, asked Chao to address the rural-urban funding issue.
“I’m very, very familiar with the balance that needs to be kept,” Chao said.
Sen. Bill Nelson, D-Fla., raised a major issue that will face the new Congress, the effort that springs primarily from the House side to privatize the more than 14,000 air traffic controllers who work for the Federal Aviation Administration.
Calling it a contentious conflict between the House and Senate, Nelson asked whether Chao supported privatization.
“I’d like to get confirmed first,” she joked, adding, “It’s obviously a major issue. The administration has not made a decision on this point. I am open to all ideas.”
Chao, whose father founded an international shipping company, immigrated to the United States from Taiwan when she was eight years old. She didn’t speak English, but eventually graduated from Harvard Business School before working as a transportation banker.
She has a three-decade history in Washington. Her stints as a White House fellow, at the Peace Corps and in the departments of Transportation and Labor were punctuated with periods on corporate boards, at think tanks and leading the United Way.
In a Trump cabinet that promises to be a mix of outsiders and Washington hands, Chao will serve as a voice of experience, colleagues said.
“She could be a great mentor for other cabinet secretaries that have never been in government. My sense is she probably will be,” said Samuel K. Skinner, who headed the U.S. Department of Transportation when Chao was deputy secretary from 1989 to 1991. “She knows who to call, she knows how it works, and she knows how to put the pieces together.”
But that will also come with knowledge of the inner workings of the private sector, Skinner added. “Most people don’t have both those,” he said.
It is the nature of this political moment — and her many years in what Trump came to call “the swamp” — that Chao has faced criticism not just from the left but from conservatives and the Trumpian right as well. But barring some stunning revelation, even skeptics expect her to breeze through the confirmation process.
Still, there have been some jabs.
Blogger Paul Mirengoff, a retired Washington lawyer and writer for the conservative site Power Line, wrote that Chao’s selection was “neither a conservative choice nor a Trumpian one — it’s Bushian.”
As labor secretary for eight years under President George W. Bush, she presided over the swamp but “did little to drain, or even disturb, it,” Mirengoff wrote, adding that Chao was bent on “not upsetting the liberal status quo.” Trump’s “uninspired” choice “seems more like an attempt to check boxes – female, minority, married to Mitch McConnell, avoided trouble for eight years under Bush — than an effort to make a stellar appointment.”
The accusation that Chao is a creature of the status quo and represents some kind of revenge of the establishment completely misreads her, said Cameron Findlay, who served as deputy labor secretary when she headed the department.
“You just don’t know Elaine if you’re saying that,” Findlay said. “She has been in Washington a long time, so she knows Washington very well. But there’s still a little bit of rebel in her … She likes to challenge settled assumptions. I think you’ll see that at the Department of Transportation just as you did at labor.”
Findlay cited Chao’s decision to dig deeply into how unions spent their members’ dues, an area where the government largely had been hands off. “Elaine believes in transparency, so she put in place rules that required unions to tell their members what they are doing with their members’ money,” he said. It was not a universally popular move, Findlay said.
Some labor leaders saw Chao’s overall approach, and tone, as part of an effort to undercut unions more broadly. After one particularly tough meeting early in Chao’s term, then AFL-CIO President John J. Sweeney said he and others were left feeling insulted. “I said that in all my years in labor, I’ve never seen a secretary of labor so antilabor,” Sweeney recounted at the time.
Chao has pointed to other accomplishments in the department, including updating overtime regulations for white collar workers and overhauling workforce retraining programs, and a number of unions have offered statements of support.
In some cases, liberals have been left to essentially grade Chao on a curve.
“Donald Trump’s cabinet picks are so extreme, the mere fact that Chao thinks the Department of Transportation should continue to exist is offered as a reason Democrats should support her,” said Kevin DeGood, who heads infrastructure policy at the Center for American Progress, a liberal think tank.
DeGood said the chief uncertainty moving forward revolves less around Chao and more around Trump himself. While Trump has repeatedly highlighted America’s crumbling infrastructure, “the question in my mind has always been how much of this was just straight-up campaign rhetoric, and how much was him actually caring about Congress spending money,” DeGood said.
Ray LaHood, a former Republican congressman tapped as transportation secretary by President Barack Obama, said Chao “is the right person for the job.”
“She has the experience. She had run a big department for eight years. She knows how to get things done,” LaHood said.
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