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Infrastructure Spending, Economy, Are Intertwined

Port of Seattle, Washington
A new report calls on the United States to spend more on high-speed rail, mass transit, upgrades to the air traffic control system, and port improvements in order to stimulate the economy and to ensure that goods and travelers can continue to move swiftly as the economy rebuilds. Wikimedia Commons/Yummifruitbat

New report calls for a strategic transportation infrastructure investment policy in the United States as other developed nations pull away in planning and spending.

January 29, 2013—The expansive but crumbling transportation infrastructure network in the United States has fallen in the past seven years from first in the world to 14th as measured by the annual World Economic Forum’s competitiveness ranking. This can be attributed to inadequate spending and the absence of strategic planning, according to a new report—Building America’s Future: Falling Apart & Falling Behind—issued by the Building America’s Future Educational Fund (BAF Ed Fund).

BAF Ed Fund is a bipartisan coalition of elected officials working to encourage strategic planning and investment in infrastructure as a means to economic development and enhanced quality of life. The group is cochaired by Michael R. Bloomberg, the mayor of New York City; Edward G. Rendell, a former Pennsylvania governor; and Arnold Schwarzenegger, a former California governor.

The report notes that when measured as a percentage of the gross domestic product (GDP), the United States lags behind other developed nations, spending 1.7 percent compared to the 4 percent spent by Canada and the 9 percent spent by China. Transportation infrastructure spending in the United States—in real, inflation-adjusted dollars—is at the same level as it was in 1968, when the economy was much smaller, the report notes.

China, by comparison, is on a massive infrastructure spending spree, having funded $3.3 trillion in projects since 2000, and committing another $105 billion in 2010. The report notes that Australia, Brazil, India, France, Germany, and the United Kingdom have all unveiled strategic, intermodal transportation initiatives within the past five years.

“As Congress stands idly by, our competitors around the world are racing ahead—especially when it comes to building modern transportation networks,” said Bloomberg in a press release announcing the report’s release. “Washington needs to get into gear transforming our infrastructure or else our economy will be stalling out for decades to come."

This report takes issue with legislation and tax laws in the United States that target the bulk of available transportation funding for highway construction or repair. This focus on highway projects has left port, airport, and rail upgrades severely underfunded given their strong potential to spur economic activity, the BAF Ed Fund contends.

“The problem is that we cannot build enough roads to meet our growing transportation needs,” the report states. “We’ve built enough new roads between 1988 and 2008 ... to circle the globe more than five times. But despite all of the resources expended on new highways, we haven’t fixed the roads and bridges that are falling apart and we haven’t solved our congestion problems.”

As an alternative, the report advocates an intermodal approach for the United States as a means to transition from the priorities of the Eisenhower era to a 21st-century, high-tech plan that incorporates high-speed rail, mass transit, upgrades to the air traffic control system, and port improvements—all with a goal of boasting economic activity.

The report outlines a four-pronged approach for charting this new infrastructure investment course in the United States. First, develop a national strategy for the next decade that focuses on economics instead of politics. Second, pass a multiyear transportation bill updated for the 21st century global economy. Third, develop a national infrastructure bank and seek innovative, realistic options for funding, including an increased gasoline tax. Finally, promote accountability and innovation through competitive grants and project audits.

“The single most important challenge facing Washington today is making sure that America remains the economic powerhouse that it has been for generations, and to do that, Congress must lay out a bold infrastructure vision,” said Schwarzenegger in a press release announcing the report’s release.

The report makes many of the same points made in ASCE’s recently released report Failure to Act: The Impact of Current Infrastructure Investment on America’s Economic Future, which notes that a commitment to invest $157 billion per year until 2020 will protect:

$3.1 trillion in GDP, almost the equivalent of Germany’s entire GDP;

$1.1 trillion in U.S. trade value, equivalent to Mexico’s GDP;

3.5 million jobs, more than all of the jobs created in the United States over the previous 22 months;

$2.4 trillion in consumer spending, comparable to Brazil’s GDP; and

$3,100 in annual personal disposable income.



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