The View From Washington: The State of America’s Infrastructure

So. I’ve written a great deal in 2016 about the very unusual presidential race going on down here. If ever there was a campaign for which the phrase “throws more heat than light” applies it is this one. And it will get worse, even for Canadians. In fact we are already seeing and hearing commentary about the “dangers” emanating from our northern border in the form of Syrian refugees, supposedly squishy Canadian attitudes about security and guilt by association with NAFTA.

But there are a couple of issues on which the final three candidates (Clinton, Trump and Sanders) agree. One of them is trade, and the consensus is neither pretty nor constructive. This will be the focus of many articles and books, and it is one to which I plan to return in this space in the future.

The other is much more interesting however. It is the state of America’s infrastructure. All three candidates have spoken about this, and done so with passion. All three agree that that it is a sign of economic weakness and, perhaps, even of American decline (at least Trump and Sanders would put it that way). Indeed, the World Economic Forum, in its competitiveness rankings, has dropped U.S. infrastructure from 1st on the world to 11th.

The current administration seems to agree. This was most famously stated by Vice President Joe Biden when he described LaGuardia Airport in New York as “third world.” Water mains seem to break on a weekly basis here in Washington and elsewhere during the cold weather months and the current sorry state of our subway system in DC is being chronicled daily.

And yet…precious little is done about it. I’ve been in Washington for 37 years, and rhetoric and concern about infrastructure has been a regular feature of discourse around here. I was here for the nickel a gallon tax increase to fund highway construction in 1982 and the increase in 1993 as well. I was here for the great competitiveness discussion in the late 1980’s and early 1990’s during which infrastructure investment got a fair amount of rhetorical attention. (Sometimes even more than rhetorical, a great many commissions and committees, including one I worked on, recommended billions in new spending on highways, ports, rail and airports; the main result was millions in increased spending on commissions and reports). I’ve seen a lot of highway, water, rail and aviation bills pass over the years, including highway and water bills in the recent past. So, what’s the problem?

The problem can be summed up in one word.

I bet you think the word is “politics.” Nope.

The word is…

Money.

I cannot remember a single moment in my 37 years in Washington when there was not a political consensus that we need to improve our infrastructure. That’s especially true now when all the major presidential candidates are talking about it, and you even have the President of the U.S. Chamber of Commerce and the President of the AFL-CIO (who is one of the most rabid labor leaders our country has seen in quite a while) getting together in support of more spending on infrastructure.

But I also cannot remember a single moment during these years when it was easy to do something, anything, about it. Members of the public spend time stuck in traffic, or drive over potholes, or are delayed at the airport. NO ONE gets elected saying we have great infrastructure and there is nothing more we need to do. And yet, nothing.

Some may say that infrastructure legislation recently passed disproves this theory. But I have a very different view.

According to the American Society of Civil Engineers, we are only planning to spend about half of what we need to spend to maintain and update American infrastructure in the next ten years.

Part of the problem, heck the biggest part of the problem, is that our method for raising and spending money on infrastructure is outdated and must be brought into the 21st century. But we have made that almost impossible.

Take highways. The federal highway program, the program that built the interstate highway system, is based on a tax on gasoline (petrol). The problem is that, with more fuel efficient cars we are buying less gas per mile than we used to. Either the tax per gallon has to increase, or we have to come up with another method to raise the money (unless someone can devise a way to build infrastructure without money).

It is worth noting that the last two times the federal gas tax got raised, in 1993 and 1982, the motivations were largely about reasons other than improving infrastructure. In 1982, though President Reagan dressed the nickel a gallon increase in nice rhetoric about improving infrastructure, the real motivation was the 10.8 percent unemployment rate the country experienced earlier that year. Though the rate had fallen below 10% by the time the tax increase was passed, it was still high by any historical standard. I know people who advocate to increase spending on infrastructure like to quote Reagan’s rhetoric about better highways and so forth, but the real reason had much more to do with showing the country that leaders in Washington understood their pain and were taking steps to put people to work. The increase gained support from members of both political parties.

In 1993, the economy was slowly coming out of a downturn. President Clinton had won election based on economic issues (“It’s the Economy Stupid” was the internal campaign motto). He also felt as if he had to show a commitment to balancing the budget. That year, we raised the gas tax, raised the airline ticket tax and imposed a tax on the fuel airlines purchased (for the first time). Some of that was meant to reduce the deficit and some of it was meant to replenish the transportation trust funds. In this case, the Clinton plan passed with only Democratic votes, no Republican supported it.

In 2009, President Obama was elected in the midst of the worst economic downturn since the Great Depression. He proposed a so-called “stimulus” package of almost a trillion dollars. Two-thirds new spending and one-third tax CUTS. But there was no new long term money in the bill, though there was about $100 billion for infrastructure. A pittance compared to the need, but it was something. Again, no Republicans supported the plan, even though it included no new revenues, and it was a one-time expenditure.

Yes, someone might say. But didn’t we pass a surface bill (highway, transit and rail) just a few months ago? Yes, we did. But in the end, the money included in the bill really didn’t do the job. In fact, it took some financial sleight of hand to get it done. There is no really new money in the bill, though it does provide some certainty and stability. Here is a list of some of the “pay fors” (a term that did not exist when I first got here in 1979) that were used to close the gap between what the highway trust fund takes in and what was authorized: Transfer of surplus funds from the Federal Reserve; sale of 66 million barrels of strategic petroleum reserve oil, allowing the Internal Revenue Service to hire private tax collectors; indexing Customs fees for inflation, revoking passports for people who break tax laws; and so on. The basic, broken, funding mechanism remains as before. Passage of a bill was an achievement, don’t get me wrong. But it does not change the long-term picture.

Similarly, the Senate-passed FAA bill contains no new revenue, not even a loosening of restrictions that restrict airports from generating needed revenue. The finance portion of the House version of this legislation has not even been written yet. The concern there is that a new funding mechanism for some form of air traffic control corporation will actual decrease money available for direct investment in infrastructure. I know that in Canada the national government invests little directly in airports, and actually takes out much more in rent payments. But airports in Canada also have much more freedom to generate their own revenue, largely through the AIF.

In the end, our problem comes down to this. We have decided that we can never raise or spend a nickel of new money, unless it is spending for an entitlement program like social security or Medicare. If we increase spending by a nickel we need a “pay for” to show where a nickel is being saved elsewhere (or it can be raised, though the anti-tax mood that has taken this country over during the past few decades makes that almost impossible). We can have a massive bridge collapse in Minnesota as we did a decade ago; we can have water main breaks on a regular basis, we can have subway systems being shut down piecemeal to fix decades of neglect as here in Washington, we can have pothole laced roads causing hours upon hours of backups and lost productivity, we can have airports that even the Vice President likens to third world facilities. We can have all of that going on, and we do. And yet we cannot break free and think anew about how to generate the necessary funds. Even new ideas, like a vehicle miles traveled tax/fee (to replace the gas tax since, as mentioned earlier, more fuel efficient cars reduce gasoline purchases even though the vehicles themselves still wear out the roads at the same pace) are criticized right out of the starting block as former U.S. Transportation Secretary Ray LaHood discovered when he mused aloud about the idea a few years ago.

A corollary to this problem can be summed up by a director of a small airport in the southeast, a self-identified Tea Party voter, who once told me that when he hears a public official talk about making “investments” in infrastructure to help create jobs what he hears is that the official wants to take money from him to put some other guy who is just sitting around to work. While this insight may grate, it is a useful window on how a large portion of the American electorate looks at infrastructure spending. I believe this is because, in part, we often couch the spending in terms focused on immediate job creation to help the economy right at that moment. Remember what I said earlier about 1982 and 1993, when gasoline taxes were increased. The real reasons behind those increases had a lot more to do with unemployment at the time than they had to do with investing in modern infrastructure. In reality, it is rare to hear a public official talk about the long term economic benefits, in a global economy, of a globally competitive infrastructure system. In fact, given the beating international trade and trade agreements are taking in this political cycle, justifying ANYTHING as a way of helping grow international commerce is not likely to work. Simply put, we lack long-term thinking and imagination in this country when it comes to infrastructure. And that warps our ability to think about infrastructure spending in strategic terms. It becomes all about not wanting to raise or spend money today.

So. We are in a mess. And it is largely self-inflicted. We do not want to spend any more money. We are adverse to ideas to fix outdated funding mechanisms such as the gasoline tax or the airline ticket tax which no longer bear any relation to the stresses put on the system. We are skeptical of arguments about the benefits to our ability to better compete in the global economy. All of this, even though it is hard to find anyone who actually thinks we have great infrastructure in this country. There are people who see the problem. The only difficulty is that all the solutions cost money.

As always, I welcome comments. My email is goprincipato@gmail.com and my Twitter handle is @greg_otto