Get Specific on Infrastructure
The public will pay for clearly delineated projects, not an amorphous national initiative.
By Robert Puentes | Contributor
Feb. 16, 2017, at 10:50 a.m.
In a 1985 speech, British Prime Minister Margaret Thatcher famously said, “You and I come by road or rail, but economists travel on infrastructure.” Her point? The term “infrastructure” does not speak to the general public.
In the United States today, the need to invest in U.S. infrastructure is seemingly oneveryone’s lips. But despite important progress over the last decade in framing infrastructure as a key economic driver, it remains an amorphous and simplistic discussion. Infrastructure is made up of interrelated sectors as diverse as a water treatment plant is from an airport, a wind farm, a gas line or a broadband network.
In other words, there is not any one definition of infrastructure, nor is there an infrastructure committee in Congress or in state legislatures, nor any federal infrastructure department or agency. There are important subcategories including transportation, water, telecommunications and energy. Others include so-called social infrastructure such as schools and hospitals, green infrastructure like parks and trees, defense infrastructure, installations and military complexes.
This distinction matters because the focus on infrastructure in the abstract tends to lead to unrealistic silver-bullet policy solutions that fail to capture the unique attributes of each of these critical enablers of the American economy. In reality, each of the individual sectors of infrastructure are very different in terms of project design, market attributes and how they are governed, regulated, owned and operated.
Given all that, it is not hard to see why advancing a major national infrastructure initiative is so difficult. Fortunately, several recent efforts to provide tangibility and specificity to the infrastructure debate are making the narrative less ambiguous.
At the tail end of the Obama administration, the U.S. Treasury Department released an important report to figure out what kind of investments deliver the best return on investment. Researchers identified 40 projects in several infrastructure categories: highways, railways, ports and water. These do not represent wishful thinking but are real projects in various stages of development. For example, rather than focusing on whether airports are better investments than seaports, they looked at the economic impact of Manhattan’s Second Avenue Subway extension, rebuilding Cincinnati’s Brent Spence Bridge and constructing dams for flood control on the Red River in North Dakota, among others.
The team found that these 40 projects together would generate around $800 billion in national net economic benefit. Importantly, the report also sought to answer the big question: If these projects are economic slam-dunks, why aren’t they getting built? While some are quick to point the finger at regulatory barriers, far and away the biggest impediment is the lack of adequate funding.
A less formal but equally interesting set of priority infrastructure projects was reported to have been assembled by the Trump administration’s transition team in late January. While those projects are framed as emergency and “national security,” the list also focuses on discrete investments such as expanding the port of Savannah, the M-1 Rail line in Detroitand a huge wind turbine farm in Wyoming. It also addresses part of the money problem by stating that private investment would make up half of the list’s combined $137 billion total.
A good example is playing out right now in terms of transportation funding. The national tax on gasoline provides an important source of revenue for the federal transportation program responsible for fixing roads, bridges and running public transit. That tax has not been raised since 1993, and there is clear recognition that hiking it will be necessary for the program to avoid deficits in the coming years. However, there is very little connection between the taxes being paid and the results that people see on the ground. Therefore, increasing the gas tax is very unpopular and a long shot at best, and dead in the water at worst.
But compare that to what happened last Election Day. By our count, 70.4 percent of the nearly 450 transportation ballot measures were approved by voters from coast-to-coast. These raised somewhere in the neighborhood of $250 billion across all modes of transportation. And 2016 was not an outlier as similar shares pass year after year. The lesson is that when voters are presented with specific details, they are willing to pay for the investments this country needs. The just-trust-us approach is not going to work.
Make no mistake, I am not suggesting the federal government should be picking what gets built and where. Some infrastructure projects are national in scope such as modernizing our air traffic control system and installing positive train control across the country to make our railways safer. Most everything else will be driven from the bottom up, from cities, states and metropolitan areas.