The Pothole in the U.S Infrastructure’s Wallet

By: Liam Siegal 5/20/15

The United States is considered one of the worlds super powers through its global politics and military forces. As interesting as this is, that's not what I’m discussing today, but it raises a good question. If we are such a developed country why is our infrastructure so bad compared to other developed places like Europe. When I was on a trip in Europe I don’t recall seeing many potholes in any road which begs the question: Why is the U.S roads in such terrible conditions to begin with? According to the 2013 Report card for America's Infrastructure, the U.S got a D+ rating. Even worse, we rank in 19th place with infrastructure development among developed countries. Well that isn’t terrible, but not great either for our developed country. And to fix this problem, will make the hole in our pocket grow by $2.3 trillion within the next 5 years if we want to have a chance to moving back up the ranks.

The United States was a country that played a major role in WW1 and WW2. Between these two wars and a few other factors, the U.S got into a lot of debt. Congress is now in a budget war, over issues around increasing our debt or improving our infrastructure paralyzing policymakers. On top of this, we have around around 15% of our population in poverty. So two problems can be solved with one stone. Since the last recession we have seen the GDP growing so we should see some improvement in our infrastructure, but we don’t. As we know, the government provides funding for large scale projects, but public construction is at its lowest between 1.5% to 2.4% of our GDP within the last few years.

The first answer to this question is that States and local governments are responsible for building most of the school buildings, highways, and waste disposal facilities. On average, they spend about $241.886 million dollars while the federal government just pitches in with a $22.284 million dollars from the U.S Census Bureau. This spending isn’t going to help because this just goes towards maintaining the current state as best we can. States are also prioritizing costs mainly to attempt to pay down debt first before they fund a big project for the improvement of the infrastructure, which shows how our debt is holding back our society.

Secondly, the Highway Trust fund plays a major role along with the federal budget for each state. On average, they collectively pay for 30% of all states costs in transportation. This is nice, however the Highway Trust fund is almost bankrupt. The Democrats and Republicans can’t seem to agree on where the funding should come from. Recently, the Republicans have disagreed with using funding from the treasury to fund this program causing part of this issue. The next part is that the Federal Government as a whole is prevents states from taxing certain private areas or accessing other tools to compensate for the loss in funding and repair the infrastructure. Overall, the main reason why this program has fallen short with funding was due to the decrease in tax income on fuel. This program was based on the tax which hasn't changed with inflation since 1993 since the government is afraid to raise the taxes on fuel. Because of this, we have this funding issues that could be the reason why we can't move forward as a country to improve our current infrastructure.

With all the debt and the collapse in the infrastructure funding, states are becoming crippled. Florida, which needs about $2 billion a year from the Federal gov. may not receive the full amount due the shortage of funding. This will result in bridges, tunnels, and roads not getting the needed maintenance to keep them in their current state. To try and compensate with all the shortages and the inability to tap into private wealth, states have been reducing spending in areas like pensions hurting many people’s income. At this point 43 states have already started to reduced the funding for the pension program. They also have reduced the Amtrak funding by around $260 million even though a lot of their rails need upgrading which will cost almost $20 billion dollars, which includes a new tunnel under the Hudson River. This did however benefit some states like Florida since they ended up being able to pay down $3.6 billion dollars worth of debt. But anyway, speaking about Amtrak, over the years we have seen less train accidents and fatalities over the years till 2015 when multiple of trains have already derailed. On one train derailment on May 12, 2015, eight people were killed and over 200 people were injured, being the deadliest year since 1999. On top of that, many of Amtrak’s railroads are 30 years old and need to be repaired. So the decrease in their budget may not be such a good idea especially with this years report card that already has 3 trains being derailed in 5 months. On top of the 3 trains being derailed, we have more people injured from train derailments compared to Europe according to The Washington Post by a lot.

As we have seen, many states have been reducing major spendings to compensate for the lack in funding that they’re receiving from funding, taxes, and the debt. If our infrastructure is going to have any chance in improving, we need to find possible solutions to counteract the lack of funding. Firstly if the federal government allows states to start taxing private sectors and utilities sheltered from tax and add more tolls to roads can significantly improve the funding for our country's infrastructure. Next, if we can tap into these financial resources (if the federal government will lift its laws preventing states from accessing these financial areas), our states will be less worried with funding issues and this may result in more public projects being started. This will help to employ more people, which can reduce our wealth gap by providing jobs for people who need it (possibly by hiring unemployed workers) and improve our roads at the same time tackling two issues with one stone. This can possibly mean that state and federal workers will stop losing their pensions that they earned from 30+ years of work taking care of another issue. Thirdly, our Federal Government should encourage states to use PPPs to fund new public works projects since with our current economy, interests rates are lower than in the past (for the states through certain deals with some banks) making this prime time to invest the needed amount into our infrastructure. And finally we need to get these projects started as soon as possible to prevent the loss of more lives and to reduce the number of people injured in incidents.

Sources:

1. "United States Census Bureau." Construction Spending. N.p., n.d. Web. 20 May 2015. <https://www.census.gov/construction/c30/c30index.html>.

2. Berman, Russell. "Why Congress Can't Solve America's Infrastructure Crisis." The Atlantic. Atlantic Media Company, 20 May 2015. Web. 20 May 2015. <http://www.theatlantic.com/politics/archive/2015/05/highway-trust-fund-congress-infrastrcture/393653/>.
3. Flowers, Andrew. "Why Congress Can't Solve America's Infrastructure Crisis." Our Changing Economy. N.p., 3 June 2014. Web. 20 May 2015.
4. Ross, Janell. "New York State Workers' Pensions Cut By Governor Andrew Cuomo, Following National Trend." The Huffington Post. TheHuffingtonPost.com, 22 Mar. 2012. Web. 20 May 2015. <http://www.huffingtonpost.com/2012/03/21/public-worker-pensions-government_n_1365716.html>.
5. Thomasson, Scott. "Encouraging U.S. Infrastructure Investment." Council on Foreign Relations. Council on Foreign Relations, Apr. 2012. Web. 20 May 2015. <http://www.cfr.org/infrastructure/encouraging-us-infrastructure-investment/p27771>.
6. "Crossing Collisions & Casualties by Year." Crossing Collisions & Casualties by Year. N.p., 12 Mar. 2015. Web. 21 May 2015. <http://oli.org/about-us/news/collisions-casulties>.

Ingraham, Christopher. "What We Know about Amtrak’s History of Accidents, Injuries and Deaths." Washington Post. The Washington Post, 13 May 2015. Web. 21 May 2015. <http://www.washingtonpost.com/blogs/wonkblog/wp/2015/05/13/what-we-know-about-amtraks-history-of-accidents-injuries-and-deaths/>.