Yahoo Finance The triumphs and challenges of Pete Buttigieg's biggest role yet: 'You're gonna get shot at'
The US Secretary of Transportation typically carries one of the lowest profiles of anyone in the president's cabinet.
But for Pete Buttigieg, who cemented his status as a Democratic rising star during the 2020 presidential primary, his tenure in the role has been anything but under the radar given several high-profile issues related to transportation in America.
The official mission of the Office of Secretary of Transportation is to "formulate national transportation policy; prepare needed transportation legislation; help negotiate and implement international transportation agreements; assure the fitness of U.S. airlines and enforce airline consumer protection regulations."
Serving in the presidential cabinet has been a big step up in his career: Buttigieg's only previous experience in elected office came as mayor of South Bend, Indiana. Based on the notable challenges and events detailed below, Buttigieg has learned a lot on the job. And it has not come without controversy or criticism.
Robert Mann, an airline industry analyst and consultant, believes Buttigieg was tapped for his role because of his ability to communicate, noting that Buttigieg, in a way, has become a spokesperson for the Biden administration on "a whole series of issues which are not even tangential to transportation."
"He’s a well-spoken individual," Mann told Yahoo Finance. "He can carry a tune very, very well, often when it has nothing to do with his daytime job. As one of my former bosses used to say, 'Pioneers get arrows in their heads.' If you’re going to go out there and lead something, you’re gonna get shot at."
Challenge #1: Air travel in wake of the pandemic
One of Buttigieg's first tasks in his new role was to tackle the transportation issues that arose during the coronavirus pandemic, particularly in the airline industry.
The American Rescue Plan — a $1.9 trillion bill that provided financial support to federal agencies, local governments, and citizens — allocated $43 billion worth of resources toward Department of Transportation (DoT) efforts to protect and maintain aviation and transit jobs and the overall transportation and logistics economy.
When the pandemic disrupted the travel industry, airlines were struggling. Consumer complaints were higher than pre-pandemic levels as flight cancellations, delays, baggage mishandling, and oversold tickets tarnished the image of many domestic and international airlines, according to a report from the Department of Transportation.
Before Buttigieg took office as part of President Joe Biden's cabinet, the department had enforced a new rule for airlines to refund passengers for cancellations or significant schedule changes made by the airline. Air Canada refused to refund cash to their customers.
The department filed an official complaint seeking $25 million against Air Canada, whose customers had been waiting between five months and a year for refunds. The parties eventually settled in November 2021 with a $4 million agreement. Out of that, $2 million went to the US Treasury, but customers eventually got their refund.
"I think any time you sell a ticket and collect revenue in exchange for a promise to get somebody from point A to point B, you need to be prepared to actually do that," Buttigieg told Yahoo Finance in an interview in July 2022. "And that's a conversation we've been pressing the airlines a lot."
As travel demand rebounded and consumer complaints skyrocketed again, Buttigieg continued to fine airlines for consumer violations and tarmac delays. The department also introduced more consumer protections by providing more resources and flexibility to help it prioritize hearing procedures against unfair practices like deceptive fares of airlines and ticketing agents.
During the 2022 winter holiday season, Southwest Airlines (LUV) canceled more than 16,000 flights, stranding millions of passengers across the country. Southwest had been slow to embrace technological updates to their system, which resulted in staff shortages as they could not reassign crews from canceled flights and had to do so manually.
In response, Buttigieg vowed the DoT would "mount an extraordinary effort" to hold the airline accountable for the disruptions and lost baggage. Southwest Airlines is currently under investigation by the Federal Aviation Administration (FAA).
Along with shortages of pilots and other staff, political issues arose: GOP politicians have proposed cutting federal funding for programs by 22%-30%, according to Democratic estimates, including slashing discretionary spending by DoT. The House Democrats Appropriations Committee asserted that those cuts could lead to the closure of 125 air traffic control towers, which would affect one-third of all US airports, impact infrastructure investments, and interfere with other FAA operations.
"These GOP budget cuts would reduce our ability to hire air traffic controllers," Buttigieg told Yahoo Finance (video above). "I would argue that air traffic control is not optional. It's a very important part of our economy."
More recently, Biden and Buttigieg proposed new rules that would require airlines to compensate passengers under certain circumstances.
"We think that the right way forward is to establish requirements across the board so that any passenger flying on an airline in the US knows what they can expect and knows that the airline can't change the rules on them," Buttigieg told NPR.
Challenge #2: 'We don't want to waste money'
The Department of Transportation under Buttigieg has enjoyed a budget boom, thanks to the Infrastructure Investment and Jobs Act (IIJA), as the Biden administration has put more money into the department than any prior administration.
The $1.2 trillion bill provided funding for improving and building more roads, bridges, railways, air travel, public transit, internet connections, and electric vehicles as well as for increasing environmental protections.
That funding is provided to individual infrastructure projects in each state via grant programs. For example, in March 2022, a total of $409 million was allocated to 70 projects in 39 states over the next five years with the sole purpose of remodeling bus systems and shifting them toward electric public buses.
So far, all states received a minimum of 30% in transportation funds out of the infrastructure bill, according to data from the General Services Administration (GSA). Texas and California received the most amount of funding with $12 billion and $14 billion, respectively. After the money reaches the local and state administrations, it is up to each state to decide how and where they spend the funding.
"I think the challenge is communicating a real vision for what the future of these investments should be," Andy Winkler, director of housing and infrastructure projects at the Bipartisan Policy Center, told Yahoo Finance. "We don't want to waste money. We don't want to just put band-aids on projects. There is a real opportunity to transform American infrastructure."
Buttigieg recently noted that he wanted to spend some of that budget to help ailing city transit systems, particularly in D.C.
"There are flexibilities in the budget that we’re putting forward right now on Capitol Hill to help transit agencies weather the current circumstances they’re in and get to the other side, where there can be a better future for everybody,” Buttigieg said in April.
Challenge #3: Supply chain woes
The chaos within Buttigieg's Transportation Department stretches internationally through supply chain issues.
The pandemic led to the Great Supply Chain Disruption in 2020 as lockdowns, labor shortages, and online shopping sprees led to heavy backlogs and delays at ports and terminals. This was still prevalent when Buttigieg took control of the Transportation Department.
In 2021, the department invested a total of $491 million in ports and small shipyards through two grant programs: the Port Infrastructure Development Program (PIDP) and the Small Shipyard Grant Program. The department stated that the investments were to go directly to improve port facilities and ease the supply chain pressure. The PIDP investment came via the infrastructure bill that allotted $17 billion for ports and waterways.
Some local port disruptions also occurred in March 2022. A 1,095-foot cargo ship called Ever Forward got stuck in the Chesapeake Bay in Maryland. (Last year, the Port of Maryland was also able to receive $15 million in federal funding.)
Overall, however, things have largely calmed since the supply chain disruptions of the pandemic era.
"Right now, at worst, the amount of ships waiting in anchor at the ports of Long Beach is in the single digits, and we’re often seeing that backlog completely gone," Buttigieg said during his tour of the UPS Worldport facility in Louisville, Kentucky, in December 2022. "At the same time, we saw record sales on Black Friday and Cyber Monday."
As of 2023, supply chains gradually returned to normalcy as freight rates fell from record highs.
Challenge #4: A near-strike and train derailments in Ohio
At the end of 2022, rail workers prepared to go on a nationwide strike after being unable to reach a labor agreement with rail carriers until Biden signed a bill to ban rail strikes.
More than 400 groups, including the US Chamber of Commerce, lobbied for Biden to prevent those strikes. It was projected by the railroad industry that a rail worker strike would cost the US economy $2 billion per day, according to CNBC.
Railroad unions had been negotiating with railway carriers since 2019. A Biden- and Buttigieg-backed proposal included a 24% increase in wages and allowed workers to go to medical appointments without being reprimanded, but lacked paid sick leave.
This came at a time when the railroad industry wrestled with employment decline. Less than 3% of the nation's total transportation workforce comprises railway workers, compared to the increasing employment in warehouses and courier services.
The strike was ultimately averted by Congress stepping in, but railroad workers continue to pressure Congress and the White House to address working conditions, while railway carriers have reported record profits and expenses this past year.
And then came a high-profile accident: On Feb. 3, 2023, a Norfolk Southern (NSC) train carrying toxic materials derailed in East Palestine, Ohio. Residents were evacuated due to public health concerns from the chemicals and a "drastic change in temperature in one of the rail cars" that could have led to an explosion.
Barely a month later, a second Norfolk Southern train had 28 cars derail in Springfield, Ohio, though there was no imminent public harm.
"Until the number of derailments is zero and rail workers are confident in being fully equipped to do their jobs safely, everyone involved in our rail system must make safety improvements a priority," Buttigieg wrote in a letter to Norfolk Southern CEO Alan Shaw.
Michael McCormick, a former top FAA official, told The Independent that he would give Buttigieg a failing grade for his response to the train derailments in Ohio.
“He just hasn’t been fast enough and assertive enough in terms of addressing public concerns around these areas,” McCormick said.
After the East Palestine derailment, both Democrats and Republicans criticized Buttigieg, and the Transportation Secretary admitted that he should have visited East Palestine sooner.
At the same time, Buttigieg is the first Transportation Secretary to visit a derailment site. He stated that he wanted the investigators of the National Transportation Safety Board to first finish their evaluation before he responded and stressed that the people of East Palestine take priority. He also said he is now seeking tougher train safety rules.
"As I watch the news coverage, it looks like every politician, from the local level to the federal level, is trying to jump in front of the camera and say, 'I'm gonna save your lives,'" Joseph Schofer, professor emeritus of civil and environmental engineering at Northwestern University told Yahoo Finance at the time. "But we really don't have a good sense of the scope of the problem and whether what we're seeing, particularly the several events in Ohio, are in any way connected."
On average, there are three derailments per day across the US, even though, overall, railway operations have gotten safer in the past two decades. In comparison, there are more hazardous material fatalities on highways than on railroads, according to data from the Bureau of Transportation Statistics.
Facing pressure, Buttigieg again argued that proposed GOP budget cuts would hinder the department's ability to regulate the freight industry.
"A lot of times, they talk about our budget, our spending, as if just anything that wasn't defense was optional," Buttigieg told Yahoo Finance. "I would argue that freight railroad safety inspections are not optional. Lives depend on it."
Challenge #5: Building bridges
With the 2024 presidential race heating up, President Biden is currently on a tour to highlight the "manufacturing boom" of investments in bridges, along with affordable electric vehicles.
The number of bridges needing repairs has remained at 223,000 since 2021. Projections from the American Road and Transportation Builders Association show that it could take 68 years to repair all of America's bridges, while the American Road & Transportation Builders Association is projecting it to take nearly 30 years.
As of 2022, the states with the most number of "structurally deficient" bridges were Illinois, Pennsylvania, and Iowa, all with more than 2,000 "structurally deficient" bridges. In January 2022, a bridge in Pittsburgh, Pennsylvania, collapsed as a bus and some cars were crossing.
Even the bridge close to Buttigieg's office in D.C. is considered "structurally deficient."
"We have changed the trajectory of infrastructure in the US," Buttigieg told Yahoo Finance on February 1. "This is the most funding we’ve put into roads and bridges since the interstate highway system was created in the first place."
Despite the criticisms Buttigieg has garnered since taking office, Mann, the airline industry analyst, said the job comes with the territory.
"The No. 1 issue is these are folks who need to understand the degree to which transportation is at large," Mann said. "This is more than just air transportation issues. This is rails. It’s surface transportation. It’s maritimes, it’s pipelines. It’s all forms of transportation, which potentially provide significant economic growth, but need to be constructively regulated and in some cases reformed."
He added: "You’re always fighting the battle between doing the right thing from an economic perspective, a trade perspective, [and] an environmental perspective in addition to the transportation perspective. These things are all interlinked.”
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Tanya is a data reporter for Yahoo Finance. Follow her on Twitter. @tanyakaushal00.
Adriana Belmonte is a reporter and editor covering politics and health care policy for Yahoo Finance. You can follow her on Twitter @adrianambells and reach her at adriana@yahoofinance.com.
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