Since President-elect Barack Obama's inauguration, senior transportation voices within the US have been drawing up wishlists for federal spending on a wide range of issues – rail investment being one of the main priorities. Their proposals call for a radical overhaul in rail policy, across the heavy, light and freight arenas. Obama's own statements of intent on reducing his nation's dependence on foreign oil imports and building a 'green' economy could very well mean that the time is right for investment.

Rail is also being seen as a way to help the US create jobs during the current economic downturn. The value of rail projects nationally as a source for growth and employment seems obvious to many US transport officials and consultants.

Schemes that may have stalled under the Bush administration are being dusted off, and the historical links to a highway-based economy and culture are crumbling as rapidly as the infrastructure on which the nation's near-250 million vehicles regularly travel.

Organisations such as Transportation for America, alongside key local and national governmental figures, argue that the nation must move forward and compete in global markets as a true 21st-century nation with a modern transportation network as its heart.

During his election campaign Obama rallied the call of stimulating the American economy through investment in tangible public works projects. It is also obvious to many that 'infrastructure' was going to be the political buzzword of 2009.

Link this to Obama's previously stated belief in a green economy, and it's easy to see how by the end of his (first) term in 2012 hundreds of thousands, if not millions of Americans, could be employed in lucrative jobs and contracts building transit lines, associated infrastructure and the wind turbines and hydroelectric power plants to power them.

For example, in late October 2008, the key New York Transportation players and their national partners promoted Transportation for America's 'Build for America: A Five Point Plan to Get Our Economy Moving' plan. These proposals have the potential to create 100,000 green jobs in New York alone, and millions more if rolled out nationally.

In New York, the rebuilding of the century-old subways is seen as a priority, along with completion of major projects such as the Second Avenue Subway, Access to the Region's Core (ARC) and East Side Access, along with the development of initiatives such as Bus Rapid Transit (BRT). As well as providing jobs, these will diversify the commuting choices for hundreds of thousands of New Yorkers, cut congestion, reduce the city's carbon footprint and drastically reduce America's dependence on oil.

Elliot Sander, executive director and CEO of the Metropolitan Transportation Authority (MTA) says it is impossible for New York to compete with other big cities around the world without the support of Congress to maintain and improve the city's public transit systems. "Our ridership has grown 40% over the past decade, and this year is up another 6%," he says. "The MTA's mass transit network keeps New York economically competitive, so it is vital to match investment with cities like London and Shanghai that are investing in their transit systems."

Obama – using rail to expand and compete

In 2009, Congress and Obama's administration face the expiration of the $286bn national transportation programme, in which historically oil and automaker lobbies have held a grip. But breaking this hold on the US economy won't solve the funding issue for rail projects altogether. New models need to be developed to fund growth, including partnerships with private industry. Models already in practice worldwide show capital and operating funding partnerships relieve some of the burden on federal finances by matching sums with local and state administrations and the private sector while maintaining public control.

While 78 metropolitan areas in the US have identified $240bn is needed in transit investments to expand or create service, it is also obvious that expenditure of that magnitude has to come from non-traditional, non-federal sources. In this context, the transportation agenda of the Obama Administration can be viewed as a two-stage strategy: a short-term action agenda and longer-term policy. A good portion of the short-term action agenda is already known; it is tied to a job stimulus (or 'economic recovery') bill – a $100bn spending package a portion of which (perhaps as much as $25bn) is expected to be dedicated to roads, bridges and other public infrastructure.

With new figures suggesting the typical American can achieve average annual savings of almost $10,000 by taking public transport instead of driving, immediate and significant projects have already received the popular vote. In addition to the Presidential election on 4 November, there were several state and local referendums to increase taxes and put the resulting billions into public transit.

Of 32 ballot measures in 17 states that asked for new or increased taxes or bond issues, 25 passed. Among these is the $9.9bn bond issue to help build the 340km/h high-speed train service from Los Angeles to San Francisco.

“Transit projects and alternative energy transmission facilities are expected to move to the front of the line for investment.”

In the urban transit sectors, Kansas City voters rejected a light rail line and St Louis decided against a transit-expansion measure. However, voters in Los Angeles County approved a landmark sales tax increase to help build $40bn worth of subways and light-rail lines over the next 30 years.

Further north in Seattle, voters approved a similar sales tax increase to launch a $22.8bn expansion of the region's light rail and bus system. Another item on the short-term action agenda might be a rescue package for some 30 public transit agencies that are at risk of defaulting on billions of dollars of loans entered into from the late 1980s to the early 2000s. The transactions involved selling rail cars to banks, then leasing them back; the arrangement provided banks with a tax shelter and transit agencies with upfront capital.

The deals were guaranteed by the American International Group (AIG) but AIG's 2008 collapse invalidated these, allowing banks to collect their money immediately. Transit authorities are asking the Treasury Department to assume the role as guarantor.

Lobbying for rail and the environment

We can expect Obama to give a nod to his backers in the environmental lobby by giving his infrastructure plan a decidedly green tint – he already personally owns a hybrid car. Transit projects and alternative energy transmission facilities are expected to move to the front of the line for investment and given the industry's relatively low fuel consumption per ton hauled, freight rail projects should do well.

Previous solutions are also proving increasingly cost-ineffective. As oil prices rise, the US's aviation system teeters and metro areas grow ever more central to the nation's economy, a new way of thinking is required to ensure the nation catches up to other developed countries with high-speed rail and world-class public transportation.