Congress turning a D+ on infrastructure into an F
Refusing to spend money on roads and bridges will cost jobs and prosperity
WASHINGTON (MarketWatch) — Of all the dumb things done in the name of fiscal restraint over the past five years, surely the dumbest was the decision by our government to slash its investments in the future.
We know that the deplorable state of our roads, bridges, ports, airports, schools, hospitals, rail lines, levees, canals, power and communications networks, drinking water and waste systems cries out for more investment in the infrastructure that our economy depends on.
That’s the point President Barack Obama was making on Wednesday, when he stood at New York’s crumbling Tappan Zee Bridge and pleaded for more infrastructure spending.“We shouldn’t watch the top-rated airports and seaports or the fastest rail lines or fastest Internet networks get built somewhere else,” Obama said. “They need to be built right here in New York, right here in the United States. First-class infrastructure attracts first-class jobs.”
But instead of investing more, we’re doing less. Balancing budgets today has become more important than building the economy of tomorrow.
America earned a D+ on its last infrastructure report card, and our political leaders seem determined to turn that grade into a solid F.
Public investments have dropped precipitously since 2009, and reached a new low in the first three months of 2014, when net investment by federal, state and local governments fell to the lowest level in 65 years, just 0.5% of gross domestic product.
I’m focusing here on net investment, rather than on the more widely reported gross investment figures, which show a robust rebound from recession lows. Why look at net instead of gross? Because we have to pay attention to the wear and tear on our existing infrastructure, which is a much bigger deal that you’d expect: Depreciation of our public infrastructure amounts to $500 billion a year. We need to invest that much just to avoid falling behind.
And it’s about to get worse. As usual in Washington these days, misguided concerns about the budget are getting in the way of solving problems we all agree must be solved. Everyone agrees that we must spend more on our transportation and other vital public utilities, but lawmakers can’t agree on how it should be paid for.
The Highway Trust Fund is a major source of funding for highway investment, but its finances are in doubt. The White House warns that a disruption in the trust fund could cost 700,000 jobs.
Raising the federal gas tax of 18.4 cents would be an obvious solution (it hasn’t been increased since 1993), but there’s little appetite in Washington for raising any tax, even one that so directly benefits the people who pay it. Instead, we’re hearing talk about new user fees, perhaps via tolls or a new vehicle fee based on miles driven.
For obvious political reasons, stealth taxes are preferred.
Meanwhile, the authorization for transportation investment expires at the end of September, and it’s uncertain what Congress will do. The issue of funding is so contentious that the leaders of the Senate Environment and Public Works Committee, California Democrat Barbara Boxer and Louisiana Republican David Vitter, have put forth a bill that doesn’t address financing at all, punting that question to the tax-writing Senate Finance Committee.
One possible solution that could break the political gridlock is for the private sector to invest in public infrastructure, either as passive investors or as more active participants. There’s even one proposal to allow multinational companies to repatriate some of the cash that’s locked up in overseas tax shelters by investing in public infrastructure bonds, similar to the successful Build America Bonds from the stimulus bill.These ideas sound appealing, but the devil is in the details. We don’t want to give away the national patrimony.
We won’t be able to invest what we need to until we figure out the financing, but Washington seems to lose its mind whenever the subject of money comes up. That’s short-sighted, because infrastructure pays for itself over time. Unfortunately for America, time is running out.
Every family, every community, and every business needs infrastructure to thrive.Every four years, the American Society of Civil Engineers’ Report Card for America’s Infrastructure depicts the condition and performance of the nation’s infrastructure in the familiar form of a school report card—assigning letter grades based on the physical condition and needed investments for improvement.
The 2013 Report Card grades show we have a significant backlog of overdue maintenance across our infrastructure systems, a pressing need for modernization, and an immense opportunity to create reliable, long-term funding, but they also show that we can improve the current condition of our nation’s infrastructure — when investments are made and projects move forward, the grades rise.
Infrastructure Grades for 2013
Public Parks & Recreation
Estimated 5-Year Investment Needs in Billions of Dollars 2009
|Category||5-Year Need (Billions)||Estimated Actual Spending*||American Recover and Reinvestment Act (P.L. III-005)||Five-year Investment Shortfall|
|Drinking Water and Wastewater||255||140||6.4||(108.6)|
|Hazardous Waste and Solid Waste||77||32.5||1.1||(43.4)|
|Public Parks and Recreation||85||36||0.835||(48.17)|
|Roads and Bridges|
Discretionary grants for surface transportation
|2.122 trillion***||903 billion||71.76 billion||(1.176 trillion)|
|Total Need**** $2.2 trillion|
spending at all levels of government and not indexed for inflation
** The American Recovery and Reinvestment Act included $53.6 billion
for a State Fiscal Stabilization Fund for education, as of press time,
it was not known how much would be spent on school infrastructure.
*** Not adjusted for inflation
**** Assumes 3% annual inflation
Highway Trust Fund Insolvency: 30 Days and Counting
May 1, 2015There has been much discussion on Capitol Hill and throughout the nation about increasing funding for infrastructure. From highways to transit to ports, our nation depends on infrastructure to thrive. Though federal lawmakers are once again looking toward a short-term funding patch for the beleaguered Highway Trust Fund, ASCE continues to advocate for a long-term, sustainable funding solution. There have been several bills proposed by legislators in the past few months. The Update Act and Repatriation bill are two proposals that have garnered considerable media attention. In USA Today, Rep. Paul Ryan lauded the Repatriation bill, aimed at lowering the tax rate on overseas profits earned by U.S. corporations and using the tax revenue for the Highway Trust Fund, as part of a permanent reform going from a worldwide system to a “more internationally competitive exemption system.” ASCE supports these bills to fund surface transportation; however neither proposal has gained significant traction or bipartisan consensus on Capitol Hill. According to a recent poll by Mineta Transportation Institute, 71 percent of voters would be willing to pay a dime more than the current 18.4 cents-per-gallon gas tax if the money is spent on “projects to maintain streets, roads and highways.” In contrast to funding patches, raising the federal gas tax would be a stable source of direct funding for transportation infrastructure. While things at the federal level seem to have stalled, in Michigan voters will soon vote on Proposition 1, which would increase the state sales tax by 1 percent to generate around $1.2 billion a year for roads and at least $107 million annually for public transit and passenger rail. These state and federal propositions are steps in the right direction for restoring our nation’s transportation infrastructure. Given the Highway Trust Fund’s impending insolvency, it is more critical than ever that Congress work together to pass legislation to provide a sustainable, long-term funding solution.
Flat Funding is Flat Outrageous
May 7, 2015
As the deadline to reauthorize the federal surface transportation bill nears, the measure of success for many involved seems to be maintaining the status quo. Last week, leaders in the U.S. House of Representatives began touting “flat funding” as an accomplishment that Congress must work to achieve. But it’s flat out not. Here are some of the things that will happen if Congress simply continues the status quo over the next few years, from ASCE’s economic study on transportation: It will cost each American family’s budget $1,060 every year through at least 2020 America will lose more than 876,000 jobs by 2020 234,000 jobs will force workers to take paycuts in 2020 S. exports will drop by $28 billion in total by 2020 America’s GDP will underperform by $897 billion in total by 2020 Short-changing transportation has a devastating ripple effect on our economy. With so much at stake, increasing our investment into transportation by fixing the Highway Trust Fund is the best choice for all Americans. The benefits of growing the surface transportation program go far beyond protecting those parts of the economy noted above. By increasing investment, we can start modernizing our transportation network so that it’s something Americans can again be proud of. Fewer potholes, less congestion, fewer deficient bridges, fewer off-loaded trains. Safer commutes, more time to spend with your family, better transit options.
A multiyear bill that continues the same amount of funding we’ve had since 2005 through SAFETEA-Lu is the opposite of aspiration. It will not help improve our low Report Card grades for surface transportation, and will do little to strengthen the economy. However, there is a way to not only fill the funding hole of the Highway Trust Fund but also grow the system. By increasing the federal gas tax, we can start investing in the projects America needs to have in place in order to continue to compete globally in the21st century. Every state has dozens of new construction projects that they would like to make a reality if they only had increased investment from all levels of government. Here’s our chance.
To fill the current federal funding gap and grow the federal Highway Trust Fund to address current documented needs, Congress should raise the gas tax by at least 20 cents. This would be the first increase since 1993, and the bump would recoup what has been lost due to inflation and increase funding. For the average driver, it will cost about $187 more a year*. In contrast, right now each motorist is paying $324 a year in additional repairs and operating costs. In addition, Americans spend an average 34 hours a year stuck in traffic, costing the U.S. economy $101 billion in wasted fuel and lost time annually. It’s a savings for your wallet by staying out of the auto mechanic shop. It’s an even bigger savings as it protects that $1,060 mentioned above. There is a lot at stake if we merely continue with the same level of funding of the past 10 years for the next five. It will hurt your personal finances, hurt our already aging transportation system and do little to benefit our economy. Let’s increase our investment so that Congress truly fixes the Trust Fund in a way that allows us to modernize our transportation system.