IN his inaugural pledge to “lay a new foundation for growth,” President Obama mentioned “roads and bridges” as the first thing on the list. For America to get the modern infrastructure that it needs, though, he’ll have to get a stimulus bill that looks nothing like what the House proposed last week.
The House bill won’t do much for road and rail assets – though that was supposed to be one of its major goals.
Of the $825 billion bill, only $40 billion – less than 5 percent and less than $1 billion per state – is earmarked for transportation and transit.
But it would take more than $70 billion a year in new spending to even begin to do the asset upgrades that the Department of Transportation says the nation needs.
Worse, the bill pretends that run-of-the-mill work such as paving and surfacing is a radical investment in the future. With much of the meager $800 million a state going for that, the bill would barely let us keep up with current neglect, never mind make real improvements.
Then there’s the bill’s emphasis on “shovel-ready” projects, directing states to “initiate” the spending of roughly half the infrastructure money in the first four months or lose it. Problem is the best projects to support the private-sector economy might not be the easiest, quickest and cheapest.
Another issue: The bill’s muddled definition of “infrastructure.” Its $15 billion worth of spending on public and “affordable” housing, for example, is actually social spending.
Meanwhile, it devotes just $9 billion – split over two years – to transit projects nationwide. Yet bottlenecked mass transit is one of the biggest obstacles to increasing private-sector productivity in crowded metropolitan areas, which generate a lot of federal tax revenue and need to keep up with the rest of the world.
So how should Obama and Congress rethink this bill?
First, realize that we only get one chance to do this. So they should encourage projects that most increase the private sector’s productivity for each dollar spent. Drastically cutting commutes through modern technology would do that.
They should also encourage state and local governments to embark upon at least a few technologically challenging projects. To wit: Boston’s Big Dig, for all of its flaws, offers huge benefits to far-flung infrastructure planners. It laid 21st-century technology down on 19th- and 20th-century infrastructure – something that other places badly need to do. Its engineering “firsts” – both successful and not – are a treasure trove of data for other places looking to embark on similarly ambitious projects to transform commutes.
This stuff is hard – but we have to do it. Spending $20 billion refurbishing school buildings – even to be “green” or “wired” – doesn’t offer the same opportunity for dramatic, and badly needed, innovation or the same potential lessons for future projects.
Plus, the bill should make the states prioritize their own spending. Their failures here have contributed to the current sorry state of American infrastructure. Instead, it does the opposite – i.e, devoting $79 billion to operating aid for states, much of it to “prevent cutbacks in critical education” spending.
In fact, states like New York have long allowed education and medical spending to crowd out necessary infrastructure investment. Discouraging states and cities from making long-overdue cuts in bloated programs – and forgoing the chance to encourage them to rethink how they spend money without results on the most politically popular but ineffective parts of their budgets – will make this problem worse.
Just as bad, the bill does nothing to encourage states to look at their unsustainable labor costs in operating projects once they’re built or fixed. Overly generous union contracts in states like New York have left governments unable to afford basic maintenance on physical assets.
With the auto-industry bailouts, the feds are making the carmakers rethink their generous contracts – something that they’d already started to do themselves. The same isn’t true in, say, New York’s public sector.
Finally, it should require states and cities to plausibly show that at least a few of their projects would achieve obvious results – which is different than being “shovel-ready.”
Quick projects like new traffic lanes for buses, walled off from cars, would mean faster transit in both cities and suburbs. Taxpayers could see that they’re getting real bang for their buck. That would build popular support for more state and local tax money going to regular infrastructure spending.
As it is, this bill is an inducement to keep up the status quo of slow deterioration rather than to launch reinvestment to keep up with the rest of the world.
That’s worse than doing nothing at all – because the public won’t be interested in a do-over if it sees billions of dollars wasted on poorly thought-out “infrastructure.”
And with trillion-dollar deficits, the global bond markets – where we’re borrowing all this money from – may not let us try this again for another generation.
Nicole Gelinas is a contributing editor to City Journal and a Chartered Financial Analyst. From city-journal.org.