(No. 13 in Huffington Post's America Needs Jobs series.)
WASHINGTON -- Our existing infrastructure is crumbling.
In terms of the infrastructure of the future -- high speed rail, new airport terminals, and the like -- we have fallen way behind even some historically underdeveloped countries.
At the same time, our nation is suffering from massive underemployment and a nearly stagnant economy.
Building infrastructure creates jobs; having infrastructure increases productivity. Materials and labor are cheap. And we can borrow so inexpensively right now that in some cases people are actually paying for the honor of lending us money.
Only in the most colossally dysfunctional political climate would there be any hesitation to borrow large sums to jump-start an infrastructure renaissance and put the economy and the nation on a stronger and more productive economic course.
But of course dysfunctionality would be a step up for today's Washington -- not to mention tomorrow's. The leaders of the modern Republican Party blindly oppose any increases in government spending, while the Democrats are unable to govern as a majority. And the gridlock is only going to get worse.
In an October 19 interview with the National Journal, President Obama said infrastructure spending is a top priority for next year, regardless of who controls Congress.
That seems to preclude any kind of push in the lame-duck session, which might have been a better bet. If either or both chambers of Congress fall into Republican hands, he'll have a tough time getting anything passed, even things that don't have a huge price tag attached.
Obama's current proposal, which he first laid out on Labor Day, is to invest $50 billion up front to fund a National Infrastructure Bank, to jump-start the next six-year transportation authorization. The infrastructure bank would leverage some private capital, but also serve as a more reliable mechanism than Congress to ensure that the money is being spent on projects that are genuinely worthwhile.
Obama made the case again earlier this month: "For years, we have deferred tough decisions, and today, our aging system of highways and byways, air routes and rail lines hinder our economic growth," he said. " It should not take another collapsing bridge or failing levee to shock us into action."
He warned that America is losing its competitive advantage. "Everywhere else, they're thinking big. They're creating jobs today, but they're also playing to win tomorrow. So the bottom line is our shortsightedness has come due. We can no longer afford to sit still."
And he described his vision this way: "What we need is a smart system of infrastructure equal to the needs of the 21st century. A system that encourages sustainable communities with easier access to our jobs, to our schools, to our homes. A system that decreases travel time and increases mobility. A system that cuts congestion and ups productivity. A system that reduces harmful emissions over time and creates jobs right now."
Leaving its political viability aside, the biggest problem with Obama's plan is that it may be way too small.
Laura Tyson, a University of California, Berkeley, economist widely considered to be a possible replacement for White House economic adviser Larry Summers, argued in September for some bigger numbers. In addition to $25 billion for an infrastructure bank, she wrote, "[o]ver the next five years, the federal government should work with state and local governments and the private sector to finance $1 trillion of additional investment in infrastructure." She recommends expanding the federally-subsidized "Build America Bonds" program from the current stimulus package.
A February report from the American Association of State Highway and Transportation Officials includes on its list of "ready-to-go" state infrastructure projects some 9,857 highway, transit, rail, port and aviation projects valued at $79.41 billion.
The Miller Center of Public Affairs at the University of Virginia recently released a report from a group of policy experts led by two former transportation secretaries, with a grim assessment of our present circumstances:
Lacking a coherent vision for our transportation future and chronically short of resources, we defer new investments, fail to plan, and allow existing systems to fall into disrepair. This shortsightedness and underinvestment -- at the planning level and on our nation's roads, rails, airports and waterways -- costs the country dearly. It compromises our productivity and ability to compete internationally; transportation users pay for the system's inefficiencies in lost time, money and safety. Rural areas are cut off from economic opportunities and even urbanites suffer from inadequate public transportation options. Meanwhile, transportation-related pollution exacts a heavy toll on our environment and public health. Stakeholders in the transportation community have recognized these costs. It is time to rethink existing systems for the 21st century and create an agenda for enacting change.
The report's estimates of the "average annual gap between current sources of funding for transportation infrastructure and funding needs to maintain and improve the system" ranged from "$134 billion to $262 billion per year for roughly the next quarter century."
The Economic Policy Institute's American Jobs Plan includes a call for transportation infrastructure, declaring:
Our public transit systems are for the most part inadequate. For example, even some major cities lack subways, adequate bus service and light rail, and inter-city passenger rail service is almost non-existent. The massive long-term investments to bring these systems into the 21st century would create hundreds of thousands of good jobs in a wide array of industries, including manufacturing, engineering, and construction. At the same time, our highway system has fallen into dangerous disrepair, with a staggering inventory of unsafe bridges and neglected repairs of road and highway surfaces. The Recovery Act provided about $50 billion worth of transportation infrastructure funding, which -- while badly needed -- only addressed about 6% of the five-year transportation deficit. We should immediately begin to address this public investment deficit in order to increase productivity, expand economic opportunities, and generate jobs.
And infrastructure spending doesn't just generate jobs, it generates particularly good jobs. The White House stresses the "disproportionate" advantages of infrastructure spending for the middle class. In an economic analysis of Obama's infrastructure investments, his advisers write:
Investing in transportation infrastructure creates middle class jobs. Our analysis suggests that 61 percent of the jobs directly created by investing in infrastructure would be in the construction sector, 12 percent would be in the manufacturing sector, and 7 percent would be in retail trade, for a total of 80 percent in these three sectors. Nearly 90 percent of the jobs in the three sectors most affected by infrastructure spending would be middle class jobs, defined as those paying between the 25th and 75th percentile of the national distribution of wages.
There are a variety of ways the government could quickly boost infrastructure spending, explains Ethan Pollack, a policy analyst at the Economic Policy Institute. There could be a one-year hike in appropriations. There could be an even bigger hike, achieved by front-loading a five-year appropriation. Or there could be some sort of infrastructure bank (either on or off the annual budget.)
However you do it, Pollack tells HuffPost the rule of thumb is this: "Spending $200 billion on the current mix would create about 2.7 million jobs. If you do a mix that focuses more on transit and maintenance/repair (rather than new highways), you get another 100,000, for a total of 2.8 million jobs."
And that's just the direct and indirect jobs in the construction and supplier industries; it doesn't include the jobs created when those folks spend their incomes. So the total job impact would be even higher. "In other words, a sustained $200 billion could support an additional up to 4 million jobs relative to the current baseline funding levels."
That would actually put a decent dent in the 11.5 million jobs we need to get back to a pre-recession unemployment rate.
In his National Journal interview, Obama insisted he is still optimistic. "[H]istorically you've had a strong bipartisan consensus around roads, bridges, runways, railways," he said.
His message to Republicans, he said, would be this: "Even in a context of fiscal restraint we can't let our core infrastructure deteriorate. What's the best way to do it? Are there ways that we can redesign how we fund infrastructure so that taxpayers are getting better bang for the buck? Are there ways that we can leverage private capital to come in on top of public dollars for investments not only in traditional infrastructure but also new infrastructure like a state-of-the-art air traffic control system, for example, that would cut down delays and increase productivity for people across the country?"
But if congressional Republicans find themselves in the catbird seat, it's hard to see how Obama will get the hundreds of billions more that his plan requires -- unless, that is, he's willing to cut the requisite dollars straight out of the budget for food stamps or the EPA and spend the money only in red states. And even then it might be an uphill battle.
COMING NEXT IN THE AMERICA NEEDS JOBS SERIES: A Tax Credit For Job Creation
Have you missed any of the previous installments of HuffPost's America Needs Jobs series? Read the introduction, Idea No. 1: A Payroll Tax Holiday, No. 2: Rescue The States, No. 3: The Joys Of Retrofitting, No. 4: Put Young People To Work, No. 5: Gearing Up For Climate Change, No. 6: Sharing The Pain Of Layoffs, No. 7: Drawing A Line With China, No. 8: Time For A New WPA, No. 9: Encourage Banks To Lend -- Or Else, No. 10: A Lower Dollar Would Level The Playing Field, No. 11: Buy American -- If You Can, and No. 12: Let The Old Folks Retire Early And Make Way For Young Workers.
Got an idea you think we may be overlooking? Email email@example.com.
Dan Froomkin is senior Washington correspondent for the Huffington Post. You can send him an e-mail, bookmark his page; subscribe to RSS feed, follow him on Twitter, friend him on Facebook, and/or become a fan and get e-mail alerts when he writes.
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