The Hope and Need for an Infrastructure Bill
By Brad DeSanctisPublished November 15, 2017Infrastructure: it's what politicians can't stop talking about, but can never start doing anything about. The United States has long had a large and growing need for more infrastructure spending. Most Americans agree that the country's infrastructure is in bad condition, and 89% think that spending more on infrastructure would strengthen the economy. But despite this, America's spending on infrastructure is falling, to 1.4% of GDP in the second quarter of 2017, the lowest level on record. To make matters worse, last year saw 34 states spending less on infrastructure projects than a decade ago, which is particularly problematic since most spending on infrastructure is from state and local governments.
This reduced spending is interfering with our ability to carry out long-needed improvements and repairs. The Bureau of Economic Analysis puts the average road at 28 years of age, and many Americans have taken notice of aging airports and schools. Because of slowing population growth, the U.S. has gotten away with less spending on new projects. But the lack of spending on maintenance and repairs may soon catch up with us, and according to some metrics, it already has. Just last week, New York City's Independent Budget Office estimated the true cost of the subway delays that so many New Yorkers frequently complain about: $307 million a year. Declining population growth, combined with an aging population, has also reduced the tax revenue necessary for infrastructure spending. A third of public works spending is on roads. The largest source of revenue to fund such projects is the federal gas tax of 18.4 cents a gallon. On its own, the tax has lost 40% of its value to inflation since it was last adjusted in 1993. In the future, fewer drivers and more efficient cars will further erode its effectiveness.
It is perhaps unsurprising then that infrastructure became a main focus of the 2016 campaign for multiple candidates. Hillary Clinton put forward a $500 million infrastructure plan, while both Donald Trump and Bernie Sanders called for $1 trillion dollars in spending. At the beginning of President Trump's term, infrastructure was pinned as one of his biggest priorities, along with health care, immigration, and tax reform. And it is the only one with some bipartisan consensus -. Senate Democrats actually proposed a $1 trillion infrastructure plan of their own in January. However, little has come in the way of negotiations between the two parties. Congressional Republicans have focused their attention on failed efforts to replace the Affordable Care Act, and ongoing work to lower taxes. The most visible Trump Administration effort aimed at infrastructure spending was with the annual budget proposal, which included just $200 billion in federal infrastructure spending, along with projections of future cuts.
The main disagreement that Democrats and Republicans have over infrastructure spending is how to fund it. Democrats want to use federal dollars to cover the whole cost, as their proposal in the Senate does. But Trump and other Republicans, mindful of fiscal conservatives in their party who would oppose any policy that significantly adds to the deficit, have at times suggested public-private partnerships. More recently, Trump has shot that path down as ineffective, and hinted at somehow forcing state and local governments to increase their own spending.
Given how a huge infrastructure bill was one of Trump's main campaign promises, there remains hope for Congressional action. But between the high degree of partisanship, the disagreements and doubts over funding, and the scattershot and contradictory priorities of the White House, Americans shouldn't expect an infrastructure bill anytime soon - even if we really need it.