Pivot to Infrastructure
Guest Post by Judi Greenwald, Principal, Greenwald Consulting
Lawmakers of both parties may not agree on much, but there is broad agreement on the need to rebuild and modernize America’s infrastructure. President Trump has made much of a pledge to spend $1 trillion on infrastructure projects, touting it again during an “Infrastructure Week” this week, and congressional Democrats have called for increased investment and attention on the issue as well.
This is because both sides agree that we have fallen behind: while smart and resilient infrastructure all over the world is a platform for new technologies, the American Society of Civil Engineers gives U.S. infrastructure a grade of D+. The investment gap between what we need and what we expect to spend over the next decade is $1.4 trillion and growing. Infrastructure has enormous direct benefits but also massive indirect benefits, fueling economic growth and innovation, and creating jobs. This is a particularly good moment to finance infrastructure because interest rates are quite low by historical standards. We should invest massively in infrastructure, we should do it now, and we should tap every potential source of funding, including the private sector.
However, the president’s proposed budget decreases direct federal investment in infrastructure. For example, it cuts the Department of Transportation’s budget by 13 percent, reducing investment in long-distance trains, mass transit, and highways. It proposes eliminating the Appalachian Regional Commission, which plays an important role in rural infrastructure by fixing broken sewer systems, revitalizing community centers, and investing in economic development. It proposes drastic cuts to the Department of Energy, threatening DOE’s electric grid modernization efforts. The president said this week that it is time for states and cities to take a larger role in infrastructure funding and for the federal government to take a step back. But states and cities cannot shoulder this massive burden alone.
The private sector has always played an important role in infrastructure investment, and billions of dollars in private capital are ready and waiting to be put to use on critical projects. But the federal government as well as states need to take some actions, as recommended by the Bipartisan Policy Center’s Executive Council on Infrastructure, to bring that money off the sidelines.
Public-private partnerships are not a new or strictly foreign concept. In fact, much of our energy infrastructure, such as pipelines, are privately owned and operated with government oversight. But we also need public investment, especially for transportation, because infrastructure is a public good with public benefits. We in the United States build some infrastructure through public-private partnerships, but we are behind other nations in the effective use of this mechanism. President Trump’s proposed tax credit for private sector infrastructure investment is a useful contribution to the debate that would do much to create new funding streams for these projects.
Rather than cutting federal infrastructure investment, the budget should increase it, challenging federal agencies to re-orient their programs to drive innovation and leverage private investment. We particularly need infrastructure that is smarter, using information technology to improve overall system efficiency, for example through intelligent transportation systems, connected and automated vehicles, and “smart” electric power grids. We also need infrastructure that is more resilient to increasing threats like cyber-security and extreme weather. And we need infrastructure that improves environmental performance, like transmission lines bringing wind power from west to east Texas. Smart, resilient, and clean infrastructure will provide a platform for high-tech innovation and job creation throughout the economy.
We can do this. The interstate highway system we now take for granted cost $114 billion at the time, or over $500 billion in today’s dollars. President Dwight D. Eisenhower made the project a priority because as a young man he traveled across the country with a military convoy testing how difficult it would be to move an entire army across the North American continent. He found our road system to be woefully inadequate, and when he became president, he was determined to do something about it. He led a cooperative federal-state undertaking funded by raising the federal gasoline tax. We have not raised our 18 cents per gallon gasoline tax since 1993, and inflation has drastically reduced its value.
The White House’s focus on infrastructure this week is certainly welcome. But one week of attention is not nearly enough. We need sustained and focused attention on what is fast becoming a national crisis that threatens America’s economic security and every American’s way of life. We need to invest — now.
Judi Greenwald is the Principal of Greenwald Consulting and a former deputy director for climate, environment, and energy efficiency in the Department of Energy’s Office of Energy Policy and Systems Analysis.