Remember “Old Europe”? Remember how Americans used to make the condescending comparison of a young America, charging forward with entrepreneurial banner raised high, while the tired welfare states of Europe lagged behind?
Not any longer. It is becoming more and more obvious that if a serious investment isn’t made very soon in the infrastructure of the United States, “Old Europe” will be replaced by “Old America.”
Fortunately, everybody agrees that the infrastructure needs renewal. It is, after all, obvious, in the most literal sense of something that is plain to see. Like the infamous collapse of the I-35 West Mississippi River Bridge in Minneapolis a few years ago, in which 13 people were killed and 145 injured. The bridge had been deemed structurally deficient in 1990, and wasn’t fixed in time. Or, if you weren’t in Minneapolis to see that, you might have been at Chicago’s O’Hare Airport anytime recently waiting for a flight while planes circled in the air or sat on the ground, waiting, because new runways need to be built.
But since structural deficiency is not usually visible to the untrained eye, the trained eyes of The American Society of Civil Engineers (ASCE) regularly grades U.S. infrastructure. The latest grade for the country overall was a deplorable D+. (New York State got a C-.) According to the World Economic Forum, the U.S. now ranks 16th in infrastructure — behind old Europeans like France and Spain.
The problem has become so obvious that even leading politicians have begun to notice it. As former House Speaker John Boehner (R-Ohio) declared earlier this year, “We’ve got to find a way to deal with America’s crumbling infrastructure.”
In New Hampshire on Sunday, Hillary Clinton unveiled her $275-billion, five-year infrastructure spending plan to refurbish the nation’s roads, bridges, dams and waterways, and, not incidentally, create jobs. Hillarycare for America’s arthritic roads and bridges.
Clinton’s chief rival, U.S. Senator Bernie Sanders of Vermont — apparently in an effort to prove that he can throw more money at national problems than Clinton — has suggested a $1-trillion infrastructure plan. And lest anyone accuse President Barack Obama of neglecting the problem, his 2016 budget includes $478 billion for a six-year surface transportation fixit.
If these figures seem like liberal spendthriftness revisited, consider that the ASCE, just a bunch of engineers who are not trying to get elected, estimated that $1.7 trillion is needed by 2020 just for surface transportation.
The nice thing about this issue is that it really isn’t much of an issue at all. The nation need not agonize over morality or constitutionality. The question is not whether, but how much, and where first — otherwise known as priorities.
Even the usual disincentive of having to finance public betterment through higher taxes doesn’t much apply here. Funding of the federal Highway Trust Fund, which comes mostly from a gas tax, 18.4 cents per gallon, might not even have to be raised.
On the contrary, the cost of not acting is already substantial and getting worse. Due to the Third-World condition of our roads, urban motorists pay $700 to $1,000 per driver in repairs, wear and tear and fuel for their cars, not to mention the time lost due to lower speeds and detours, which we hear is also money.
According to one expert estimate, if the current level of funding persists, the American standard of living will decline drastically. By 2020, annual household income could drop $7,000. Increased transportation costs to businesses in the amount of of $430 billion would lead to a decrease in U.S. exports of $28 billion. Add to that a loss of more than 877,000 jobs. These are not facts, merely projections, but all the projections are going in the same direction, and we ignore them at our risk.
Furthermore, we should act now, while offer lasts! Fortune magazine says that “right now, the costs of investing in our infrastructure are as low as they have ever been… On October 2, the U.S. Treasury was able to borrow for 10 years at an
interest rate of roughly 2%. If we assume inflation is about 2% over the next several years, the ‘real rate’ of interest on this borrowing, which subtracts inflation from the nominal rate, would be essentially zero.”
Add to that the dividends: hundreds of thousands of new jobs and a booming GDP. According to the Economic Policy Institute think tank, even a much smaller program, say, of $18 billion annual investment, would yield a $29 billion increase in GDP and 216,000 more jobs by the end of the first year.
And if the word “borrow” triggers symptoms of post-traumatic stress syndrome, there are other models for upgrading infrastructure that should be easier on the nerves, like Infrastructure Ontario, which has implemented the Public-Private Partnership (P3) idea, with admirable results. Such an approach is sure to be included in some form, along with federal expenditures.
To conclude: Is there any reason not to begin investing now in a renewal of America’s outdated infrastructure?
But there is reason to beware of what goes into the legislation for such a large-scale undertaking. We have had disillusioning experience with multi-billion dollar stimulus packages packed with “shovel-ready” jobs that weren’t. The decision to renovate America’s infrastructure is easy; the decision of just how to do it will not be.