No politician wants to face the fact that Americans are under-taxed. If we are to build the infrastructure of the 21st century, the money must come from someplace, or to be more precise, someone. That someone will be all of us. No politician wants to argue that the absence of debt means that we are not investing in the future. The recent collapse of a bridge in "good repair" on Interstate 5 in Washington reminds us of our inability to make choices and take care of basic needs. Federal gasoline taxes have not risen since 1993; and while repair needs increase, politicians would much rather cut ribbons on new roads than repair old ones. According to the advocacy group, Transportation for America:
"In recent years, most transportation agencies have delayed needed repairs and maintenance while focusing their energy on new construction. In 2008, all states combined spent more than $18 billion, or 30 percent of the federal transportation funds they received, to build new roads or add capacity to existing roads. In that same year, states spent $8.1 billion of federal funds on repair and rehabilitation of bridges, or about 13 percent of total funds. States currently have the ability to "flex" or transfer out up to 50 percent of their bridge repair money into other projects or programs."
Unfortunately, infrastructure is not the only public good starved for resources. We are equally shortsighted when it comes to rebuilding communities hit by natural disasters. After the tragic death and destruction caused by tornadoes in Oklahoma, we were treated to the awkward political dance of Oklahoma Senators, James Inhofe and Tom Coburn, begging their colleagues for tornado relief despite their opposition to Superstorm Sandy relief. Both voted against the post-Sandy recovery package. Inhofe called it a slush fund and Coburn would not vote for it without spending cuts elsewhere. These absurd debates miss the point. Of course we need to pay for emergency response and restoration. But we also need to make sure that we rebuild stronger to reduce damage next time.
It is time to acknowledge that the nature of FEMA's mission has changed. The cause of this change has been the intensity of storms due to climate change in combination with population growth. Moreover, the complexity of our transportation, water, sewage and energy infrastructure means that the cost of storm restoration has increased. Population density, mass transit and the complexity of infrastructure may mean that storm repair is more expensive in New York than in Oklahoma, but Americans in both places have lost their homes due to forces beyond their control. A primary function of government is protection and security, and restoring a community after a tornado or a hurricane must be a non-optional function of government.
The steady and silly Tea Party mantra of cutting government spending and offsetting emergency spending with cuts elsewhere is not based in the reality of the modern, complex and interconnected global economy. Where will these cuts come from: The bridge and highway funds? Aid to older Americans? Homeland security? Aid to homeless families? Basic science? Aid for education? I'm sure there's waste in the federal budget, but frankly after thirty years of conservatives defining "government as the problem", most of the federal budget is in health care, social security, and the military, and not much "discretionary" spending remains. Meanwhile, fundamental needs and building for the future are stymied by the ideology of disinvestment.
Conservative political ideology has found its way to economic policy, with the debate over the use of deficit spending to stimulate the private economy. If you have an anti-government ideology, you want to reduce both government spending and taxation. However, all deficits are not created equal. Even beyond the arguments over Keynesian economics, federal budgeting faces another problem that is seldom discussed: the absence of a capital budget. All state and local governments have a capital budget to fund long-term projects with debt. The federal government does not have a separate capital budget. It is difficult to determine which part of the federal deficit is funding long-term expenses that state and local governments fund through debt and amortize over the lifetime of a project, and what part is funding current expenses. Both forms of spending stimulate the economy, but capital investments generate benefits over the long term. When we restore a local courthouse or school, we fund it over the 20 or 30 years we plan to use the facility and set aside some of the annual budget for debt service. In other words, while I am convinced of the counter-cyclical advantages of government deficit spending to stimulate the economy, one need not rely on that argument to be concerned about a federal government that does not borrow money for capital investment.
I am not arguing that emergency response programs should be funded by borrowed money. I am arguing the opposite. They should be funded by new taxes. I come to that conclusion because cutting spending is unrealistic and because new revenues should be generated to fund these new needs. I also think that when an "emergency" happens every 100 days, it is no longer an emergency. It is a routine event. Over the past year we have seen hurricanes in the Northeast, tornadoes in Oklahoma, floods in the Midwest, and forest fires in the West. As we spread out and live in places we never lived before, we are more frequently in the path of a storm's destruction. We need to find a way to pay for a real insurance program that has a reliable revenue stream, is national in scope and does not depend on action by our dysfunctional Congress every time a community is damaged. These funds must also be used to pay for stronger and more resilient infrastructure. Climate change is causing more frequent and more intense storms. By creating a national insurance fund, we minimize the costs for any single local community and build a stronger national community.
Our capital needs include reconstruction after weather events, repair and construction of bridges, roads, mass transit, airports and ports. We also need to somehow generate private and public funds for technologies such as smart grids and renewable energy. There are a variety of new taxes and tax policies that could be developed to help fund these needs. Since corporations such as Apple and many wealthy individuals have discovered creative ways to avoid taxes on income, a value added tax or a carbon tax, collected at the point of consumption might be a simpler and surer approach. A carbon tax has the added benefit of speeding the transition to renewable energy. This tax could be indexed to inflation and include low income tax credits to reduce its regressive impact.
Any casual observer of politics in our nation's capital knows that in anti-tax advocate Grover Norquist's American Congress, the prospect of enacting higher taxes is quite low. Before change can take place, more bridges will need to fall, and more devastated communities will need to suffer due to inadequate or delayed funding. Loss of life is one result of deteriorating infrastructure. Delays in reconstruction cause needless suffering and a decline in the quality of life. These impacts are immediate and highly visible. However the most devastating long-term impact will be the decline in America's competitiveness in the global economy. Many businesses and many people are highly mobile. Cities and nations compete for their attention and money. A nation with slow internet, poor transportation, and a government incapable of partnering with business, will lose people and businesses to nations and cities that create a positive business environment and a high quality of life. A nation that does not learn how to effectively adapt to climate change will be literally and financially under water. In order to compete in the world economy, America's government and private sector must learn how to work with each other.