President Obama will hit the road this week to promote his proposal to pump $302 billion in federal funds into highway and mass transit projects in the coming years. He’ll also announce a new executive order to spur further private investment in public infrastructure.
With the bulk of federal highway funds set to run out in a matter of weeks and Congress focused on a quick-fix solution to avert a calamitous shutdown of state highway and bridge projects this summer, Obama’s ambitious “Grow America” proposal seems almost beside the point; it’s unlikely to attract any serious congressional attention until well past the November election.
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The president’s trips, including a tour of a northern Virginia highway research center Tuesday and a stopover in Delaware on Thursday, will highlight the nation’s growing gap between new infrastructure construction and available federal and state funding.
“The president has been clear that we need to improve our infrastructure and rebuild our roads and bridges in a smarter, more responsible way, while supporting millions of jobs,” the White House said in a statement released on Monday. “The president will continue to urge Congress to avoid a lapse in funding of the Highway Trust Fund, which will go insolvent as early as August – putting numerous active projects at risk.”
The House is scheduled to vote today on a Republican plan to replenish the Highway Trust Fund with about $10 billion over the coming year primarily through a series of budget and accounting gimmicks and the Senate will follow suit with its own version. Without that action, the administration warned, as many as 779,000 jobs in the construction and related industries could be lost this year. That would mean as many as 73,572 jobs in California and 57,917 in Texas to 6,766 in West Virginia and 7,846 in Arkansas.
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Regardless of these immediate dangers, Obama and many state officials are warning of more fundamental risks to the U.S. and its economic future unless Congress and state legislatures take action. As China and many other countries seek to enhance their competitive edge by investing in roads, bridges, highways, airports’, shipping channels and other infrastructure, the U.S. has begun to fall behind in very noticeable ways.
“A high quality transportation network is vital to a top performing economy,” a new report by the National Economic Council and the President’s Council of Economic Advisers released yesterday stated. “But today, current estimates indicate that America’s transportation infrastructure is not keeping pace with demands or the needs of our growing economy, for today or for generations to come.”
The U.S. spent more than $215 billion on surface transportation projects in 2011, the latest year for which comprehensive data was available. Yet over the past 20 years, total federal state and local investment in transportation fell as a share of GDP, from about 3 percent in 1962 to only 1.4 percent today – more than a 50 percent decline, according to the new report.
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The last big spending splurge on infrastructure came with passage of Obama’s 2009 economic stimulus program – a controversial package that provided $48 billion for federal transportation projects and a special grant program for critical projects that were difficult to fund. In all, the initiative sparked 15,000 transportation projects across the country and increased employment by more than 2.3 million in 2010 alone, according to the new study.
Since then, however, spending and borrowing for infrastructure projects has declined, as state and local governments cut back on capital projects in order to meet balanced budget requirements. Ironically, governments are cutting back on borrowing at a time when interest rates are still at near-historic lows “Municipalities are missing a huge opportunity to lock in low interest financing before rates rise one day,” said William Glasgall , a program director with the Volcker Alliance, a non-partisan group attempting to spur new thinking in government programs.
There are different estimates of the extent of the problem, but the American Society of Civil Engineers pegs the U.S. infrastructure spending gap at $125 billion a year just to maintain and repair highways and bridges. The National Surface Transportation Infrastructure Financing Commission, meanwhile, estimates an annual gap of $139 billion.
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The civil engineers group in a report card gave the nation’s infrastructure a grade of D+, noting a tremendous backlog and a “pressing need for modernization.”
There was a time when the United States was the global king of job-generating infrastructure, dating back to the development of the Interstate Highway System in the 1950s and 1960s. In the past decade, however, Congress and state governments allowed their capital budgets to wither as they struggled to cope with the Great Recession and budget deficits.
As a result, the U.S. plummeted from 7th to 18th overall in the quality of its roads, according to the most recent World Economic Forum. That puts the U.S. behind countries including Poland, Estonia, Hungary, Spain and Greece.
“I’ve said on so many occasions, America is one big pot hole,” said Ray LaHood, the former U.S. Transportation Secretary.
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“Anybody that’s gone to China sees that they’re going to build 85 new airports, that they’re building new roads, new bridges, new high speed rails,” said LaHood, currently a co-chair of Building America’s Future, a bipartisan group promoting investment in infrastructure. “America is so far behind in infrastructure that we are simply not the leader . . . . We look like we’re a Third World country right now when it comes to infrastructure.”
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