Robert Kahn

Macro and Markets

Robert Kahn analyzes economic policies for an integrated world.

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Guest Post: Fixing America’s Infrastructure—More Than Just a Solo Act

by Heidi Crebo-Rediker
January 29, 2014


Today we are please to have the following guest post written by Heidi Crebo-Rediker, a CFR Senior Fellow. Prior to joining CFR, Heidi served as the State Department’s first chief economist. 

Infrastructure got a brief mention in last night’s State of the Union—enough to remind us that the president still cares about renewing America’s infrastructure, and that he can make a dent without legislation or new funding. But he’ll need Congress on this one. President Obama highlighted that first-class jobs gravitate to first-class infrastructure and said he’s acting on his own to slash bureaucracy and streamline the permitting process for essential projects.

He will need the help of the legislative branch to finish important transportation and waterways bills this summer though, and he called on Congress to act. He did not push the National Infrastructure Bank this time around—even though he found new champions of the bank late last year in Senators Mark Warner and Roy Blunt, who introduced the BRIDGE Act of 2013, an updated 2.0 version of the BUILD Act introduced by Senators John Kerry and Kay Bailey Hutchison in 2011.

The president is right to continue to keep public attention on infrastructure and the need for both investment and strategic attention. According to the American Society of Civil Engineers (ASCE), one out of nine bridges in the United States is structurally deficient, and approximately 210 million trips are taken each day across these deficient bridges in more than one hundred of the nation’s largest metropolitan areas. This problem is very close to home—we drive across these bridges everyday. ASCE’s very user-friendly report card gave America’s overall infrastructure a “D+” in 2013, noting that levees and waterways are particularly bad, and estimating that the price tag has now reached $3.6 trillion by 2020 just to bring what we have up to an acceptable state.

But public attitudes of what is an acceptable state of infrastructure usually leads observers of the American predicament to quote the boiling frog analogy—that we don’t realize the situation keeps getting worse and worse until we’re cooked—or in our infrastructure’s case, a bridge collapses or train crashes. We get used to the traffic and delays.

Keeping American public attention on the importance of investing in infrastructure to drive competitiveness needs all the help it can get—a recent PEW survey shows investment in roads, bridges and public transit nears the bottom of the list of what Americans care about in 2014—although the survey noted this ranking is up from the year before.

Americans who travel around the world get a glimpse of life outside of the boiling pot—they take smooth rides on high-speed trains, connect seamlessly through high-tech airports, or take quick airport connections into cities that boast great public transport or roads with no potholes. They come home dismayed. But for most Americans, a reminder from the president of how important infrastructure is to our daily lives and our economic competitiveness is extremely helpful.

Infrastructure investment is win-win for the country. An investment in an asset that can help businesses be more productive and efficient, provide jobs, ensure safer transit of goods and people around the country and provide greater resilience against storms should be a no-brainer.

Ways to get there include overcoming permitting and red tape hurdles, providing innovative financing that can plug gaps in project capital structures across a wide range of infrastructure projects—most efficiently and effectively delivered through a well-designed National Infrastructure Bank, such as described in the BUILD Act of 2011 or BRIDGE Act of 2013—and tackling the knowledge gap that we have in the United States when it comes to engaging the private sector in infrastructure investment through Public Private Partnerships. In some of these areas the president can act alone. But in most, he will still need to rely on congressional support to move the infrastructure agenda forward.



Post a Comment 2 Comments

  • Posted by Tobycat

    The detail, as usual is in the financing. Infrastructure should take precedent to an extent that money is shifted into funding projects. But why not set up a dedicated fund, paid for via a payroll tax dedicated to infrastructure. Make that payroll tax nearly revenue neutral with a corresponding reduction in the lowest marginal income tax rate.

    In this scenario all working Americans would pay into the fund (progressivity could be built into the program insofar as to how much income is subject to the tax) yet for the most part they would see no net tax increase.

    Then we need to determine just how important funding infrastructure is since the reduction in the general income tax revenues should result (LOL) in a subsequent and corresponding reduction in other spending

  • Posted by ROBERT G

    Are you kidding? Tax workers for infrastructure necessary to corporate profits?
    Better suggestion: increase corporate tax rates to Clinton-era rates, and levy a special tax on Billionaires for saving national assets. Don’t like that? Then close corporate welfare loop-holes in tax code, and levy “earned profits tax” on offshore tax avoidance of US corps registered in DE and NV…

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