How Much Would You Pay to Fix Broken U.S. Infrastructure?
If you had to give the U.S. government a grade for how well it maintains America’s infrastructure, consider a D+: not quite total failure, but low enough that Uncle Sam should probably get his act together before bad traffic becomes part of the national aesthetic or, you know, a major bridge collapses. And not to dramatize it, but both of these are real concerns. According to the American Society of Civil Engineers (ASCE), U.S. infrastructure is in such poor shape that it deserves that D+ grade.
If personal experience driving on bad roads or using outdated public transit hasn’t convinced you of the same, the ASCE lays out its reasoning in its 2013 Report Card for America’s Infrastructure. The highest grade given to any infrastructure category was B- (“good”) for solid waste management. America’s bridges, ports, public parks, and rail system all earned a C (“mediocre”) of one degree or another, while the rest of the 16 categories were given D’s (“poor”).
Speaking with On Point in June, Rep. Peter DeFazio (D-Oregon) illustrated the issue this way: “We have 140,000 bridges on the national system that need repair or total replacement; 40 percent of the highway surface is so deteriorated you have to rebuild the road bed, not just resurface it; we have a $70 billion backlog on transit systems that’s so bad in places like D.C. it’s actually killed people because of outdated systems.”
While no category was found to be failing, and while America’s infrastructure GPA actually rose from 2009, when the last report card was published, the outlook is still bleak. As a chorus of engineers, economists, and politicians are quick to argue, infrastructure is a critical part of what makes a nation work — so, naturally, bad infrastructure creates a lot of economic friction. As ASCE President Gregory DiLoreto said, “From transporting goods, powering factories, to heating and cooling office buildings, lighting theatres, to enjoying a glass of clean water, we depend on infrastructure as the physical framework for our economy and our quality of life.”
So the problems are pretty bad, and ASCE has put a price tag on the failure to act. According to the 2013 report, if the U.S. doesn’t invest now to fix its infrastructure problems, by 2020, the nation will have given up on $3.1 trillion in gross domestic product and a $3,100 decline in annual personal disposable income per household. Unaddressed, the friction caused by outdated or failing infrastructure will cost businesses $1.2 trillion and households $611 billion over the same time span.
The problem is so severe that Vice President Joe Biden took to the White House whiteboard to illustrate it. The presentation is a bit goofy, but Biden does a good job explaining the basics: America is what it is because of infrastructure, but the system has decayed, and we’re shooting ourselves in the foot if we do nothing about it. The vice president highlights the fact that America is 28th in the world when it comes to infrastructure investment, making it a laggard on the global stage.
The problem with doing something about the massive infrastructure problems facing the country is that it would cost an outrageous amount of money. The ASCE estimates that the U.S. would have to invest $3.6 trillion in order to bring our infrastructure up to simply good repair by 2020. Of that $3.6 trillion, only about $2 trillion is estimated to be funded as is, leaving a funding gap of $1.6 trillion, or about $201 billion per year.
In the video, you can see Biden pitch the GROW AMERICA Act, or — get ready for it – the Generating Renewal, Opportunity, and Work with Accelerated Mobility, Efficiency, and Rebuilding of Infrastructure and Communities throughout America Act. The GROW AMERICA Act would invest $302 billion over four years in mostly transportation infrastructure projects.
The nice thing about the proposal is that, as pitched, it wouldn’t impose any direct costs on Main Street. The act would be funded through “pro-growth, business tax reform, without adding to the deficit.” And better yet, much of the money would go right into the pockets of Main Street America by supporting “millions of good paying jobs over the next several years.” It’s the kind of no-B.S. policy reform that Congress needs to be moving forward right now: Whittle away at something bad and invest in something good.
But Congress’ treatment of the Highway Trust Fund issue at the end of July was uninspiring. Policymakers passed a stopgap measure to keep construction projects funded, but as Randy Over, president-elect of the ASCE, put it, “While this legislation is certainly better than nothing, all it actually does is reset the countdown clock for May 2015.”
The $28 billion stopgap bill, by the way, is funded in part through a process called pension smoothing, a kind of dubious financial wizardry that allows businesses to defer pension contributions, which are tax deductible. The government banks taxes on the now non-deducted business income, but the windfall will smooth out when businesses make larger pension contributions in the future.
The Highway Trust Fund itself is funded through the gasoline tax, which a spectrum of politicians advocate increasing. The 18.4-cent-per-gallon tax hasn’t been increased since 1993. In order to ensure the long-term viability of the Highway Trust Fund, Sens. Bob Corker (R-Tennessee) and Chris Murphy (D-Connecticut) have proposed to increase the tax by 12 cents, which would bring in an additional $164 billion over the next 10 years. This only goes a small way toward plugging the $846 billion surface transportation funding gap estimated by the ASCE, but it’s a start.