WHY IT MATTERS: Infrastructure

Written by Muleskinner Staff

The issue:

From bridges to broadband, America’s infrastructure is supposed to be speeding along commerce, delivering us to work and piping energy and water into our homes and businesses. But just repairing all the breakdowns and potholes would cost tens of billions more than we’re currently spending each year. Experts warn the resulting infrastructure and innovation deficit is jeopardizing our global economic competitiveness. Traditionally nonpartisan territory, spending for transportation and other megaprojects is now routinely caught up in politics, with Democrats and Republicans divided over how to pay for public works and which ones.
Where they stand:
President Barack Obama has favored stimulus-style infrastructure spending plans, talking up highway, bridge and rail repairs as job creators, and pushed for innovations like high-speed rail and a national infrastructure bank to finance projects with the help of private capital. But Republican opposition to increased spending and taxes has blunted many such plans.
Mitt Romney favors less involvement by the federal government in infrastructure, preferring to let states lead the way. Romney shuns the idea that public-works spending is a good way to jumpstart the economy, saying decisions on worthy projects should be based on need and potential returns. Romney also wants to privatize Amtrak by ending federal subsidies for the money-losing passenger rail system. He’s OK with borrowing to pay for megaprojects if there’s a revenue stream to pay the money back, like tolls or port fees.
Why it matters:
Much of America’s infrastructure, including its interstate highway system, is more than half a century old and in need of serious work to keep pace with a rising population. Highway, rail and airport bottlenecks slow the movement of goods and commuters, costing billions in wasted time and fuel and even measurably slowing the economy.
The World Economic Forum put the U.S. 24th last year in the quality of its infrastructure, down from fifth in 2002. The rest of the developed world sets aside on average about 53 percent more of its gross domestic product on transportation infrastructure than the U.S. does, according to the Council on Foreign Relations.
The dilemma facing any president is how to maintain critical public works at a time of fiscal austerity and to exert enough leadership to get plans through a divided Congress. That challenge was apparent in the partisan wrangling earlier this year over a long-term bill to reauthorize federal transportation spending, which finally passed after nine temporary extensions.
Both parties highlight the need for infrastructure investment, but neither side has been willing to take the politically painful step of proposing an increase in the gasoline tax or some other way to pay for it. The main source of federal transportation aid to the states, the Highway Trust Fund, is going broke. The gas tax that feeds it hasn’t been raised since 1993 and does not keep pace with inflation.
Trying to work around those logjams, cash-strapped states and cities are experimenting with creative alternatives, including public-private partnerships with financial institutions that are being invited to put up the initial cash in exchange for a slice of revenue from tolls, other user fees and the like. The idea has support from both Democrats and Republicans but is most heavily promoted by conservatives.
Proponents say such deals get projects off the drawing table faster than traditional routes. Skeptics warn the model could end up turning control of critical public works projects to entities more concerned with profit than serving the public. A focus on projects that generate the most revenue could also neglect rural areas and poor inner-city neighborhoods.