Earlier this year, now-presidential candidate Bernie Sanders proposed a bill to spend $1 trillion over a five-year period in order to “rebuild America’s crumbling network of roads, bridges and transit systems.” Yet his refrain about the need to repair the nation’s “crumbling infrastructure” invites the basic question, just how bad is America’s infrastructure?
The most comprehensive and authoritative diagnosis comes from the American Society of Civil Engineers (ASCE). Its 2013 report card assessed 16 components of the country’s infrastructure. Averaging out its grades, which ranged from a D- for levees and inland waterways to a B- for solid waste, the ASCE determined America’s infrastructure “GPA” to be a lowly D+.
The report’s executive summary outlined some of the costs associated with outdated systems, designs, and equipment. It estimated that congestion and delays at the nation’s airports cost $22 billion in 2012. Similarly, it found that roadway congestion annually costs the economy $100 billion in wasted fuel and time.
The ASCE report recommended investment projects and spending goals as well, many of which come with a large price tag. Citing the approximately 240,000 water main breaks that occur each year, the report estimated that replacing every water pipe would cost $1 trillion alone over the next few decades. However, some of the proposals promise a return on investment. The report highlighted, for instance, that levee repairs saved $141 billion in flood damage in 2011.
On the whole, the report recommends total investments that far exceed those in Sanders’ bill. The ASCE calls for $3.6 trillion in spending by the year 2020, a 260 percent increase over Sanders’ proposal.
These figures dwarf the federal government’s current spending levels on major transportation projects, which are primarily channeled through the Highway Trust Fund (HTF). This fund dispenses approximately $50 billion to the states each year, but the HTF has struggled to maintain even this level of spending.
This is because the HTF raises 90 percent of its revenue from gasoline taxes, a funding stream that has proven difficult to sustain given an increase in cars’ fuel efficiency and a national trend away from motor transportation. Moreover, the last adjustment to the tax rates on gas and diesel fuel was in 1993, when regular gas only cost a little more than $1 per gallon.
In short, the HTF has suffered from stagnating revenues coupled with moderate increases in outlays: as a result of this structural deficit, Congress has had to bailout the HTF several times by diverting billions of dollars to it from the general fund.
In light of the growing deficit and the public’s general allergy against raising taxes – including gasoline taxes – some have argued in favor of devolving the fiscal responsibility for infrastructure spending to state and local governments, which today collectively fund 75 percent of the nation’s infrastructure projects.
However, there are several issues with saddling local governments with financing these projects.
First, evidence shows that while reparation projects are more effective and affordable than new construction projects, officials tend to support the latter. As Vox‘s Brader Plumer put it, this is because “politicians prefer shiny new roads: they get to enjoy a good ribbon-cutting, and they don’t have to hassle drivers with orange cones and repair crews.”
Second, since the recession, debt-laden state and local governments have been reluctant to launch ambitious and expensive infrastructure projects.
For example, lawmakers in Kentucky and Ohio have failed to agree on how to finance a $2.6 billion upgrade of the Brent Spence Bridge that spans the Ohio River and connects the two states – a project that becomes $7 million more expensive each month it is delayed.
Similarly, in October 2010, Gov. Chris Christie of New Jersey canceled the construction of a commuter train tunnel from New Jersey to Manhattan – then the largest scheduled public works project in the country – that would have created 45,000permanent jobs, removed 22,000 cars from the road, and prevented the emission of 70,000 tons of greenhouse gases each year.
Despite a majority of the funding coming from the federal government, Gov. Christie nixed the project, calling it “a dollars and cents issue” and a burden that he could not place “upon the citizens of the state of New Jersey.”
In light of these financial restraints, state and local governments have turned to a new mechanism to finance transportation projects: public-private partnerships (PPPs or P3s).
This funding mechanism has been applied across the country, including in Pennsylvania, where 23 percent of the state’s bridges are rated “structurally deficient.” In 2012, the legislature passed Act 88, a bridge replacement program that uses the P3 model. Using simpler, replicable, IKEA-like designs, the Pennsylvania Rapid Bridge Replacement project aims to rebuild 558 bridges in three years.
However, there are critics of the P3 model on all sides: those who support the free market see the model as a recipe for crony capitalism, while progressives fear that the model leads to the privatization of – and profiteering from – an essentially public good.
With governments at all levels suffering from deficits and debts, and with the concern that raising taxes – even on gasoline – could hurt consumers and the economy, it is unclear if, when, or how the country will repair its infrastructure.