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How to fix America’s woeful roads and bridges
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THE American Society of Civil Engineers (ASCE) gives a grade of D+ to infrastructure in the United States, reflecting both delayed maintenance and underinvestment.
An estimated one out of every nine US bridges is structurally deficient, and 42 percent of urban roads are congested, costing the economy an estimated US$101 billion a year in wasted time and fuel consumption. Deficient and deteriorating transit systems impose another US$90 billion in annual economic costs.
The ASCE calculates that the US needs about US$1.7 trillion of investment in surface-transportation infrastructure through 2020 to achieve a passing grade. It projects an investment shortfall of about 50 percent based on current funding levels.
Most economists agree that underinvesting in infrastructure is economically unwise and fiscally irresponsible.
In a 2013 survey of economists by the University of Chicago, 75 percent of the respondents agreed that, “because the US has underspent on new projects, maintenance, or both, the federal government has an opportunity to increase average incomes by spending more on roads, bridges, railways and airports.”
From a macroeconomic perspective, investing in infrastructure is a “twofer”: It strengthens productivity and competitiveness in the long run and boosts demand and creates jobs in the short run. According to the Congressional Budget Office, infrastructure spending is one of the most cost-effective forms of federal government spending in terms of the number of jobs created per dollar allocated.
The CBO estimates that an increase of 10 cents a gallon would be required in 2015 simply to offset the last 16 years of inflation and fuel-efficiency gains and to maintain current (inadequate) funding levels. A considerably larger hike would be needed to prevent the underinvestment predicted by the ACSE.
But, with a mid-term congressional election in November, there is strong opposition to such an increase, both in Congress and President Barack Obama’s administration. That is entirely understandable.
Strong opposition
I was chair of the Council of Economic Advisers in 1994, when President Bill Clinton successfully championed the last gas-tax increase, of just 4.3 cents per gallon. Some of his “politically naive” economic advisers, including me, advocated a much larger increase, phased in gradually over five years, on both fiscal and environmental grounds.
Clinton’s Republican opponents characterized the increase as the “largest ever increase in taxes on the middle class.” That misleading claim contributed to the Democrats’ deep mid-term election losses that year.
Confronted with implacable Republican opposition, Obama is relying on what the administration calls a “pen and phone” strategy — combining the bully pulpit and executive orders — to move forward on several fronts, including infrastructure.
A pen-and-phone strategy may be the only way to make any progress on addressing America’s infrastructure needs in a mid-term election year. But Obama alone does not have the power to reverse years of underinvestment. That will require congressional action and additional revenues.
Laura Tyson, a former chair of the US President’s Council of Economic Advisers, is a professor at the Haas School of Business at the University of California, Berkeley. Copyright: Project Syndicate, 2014.www.project-syndicate.org
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