With GDP languishing and job-creation rates well below what’s needed to put the economy back on track, the key to recovery lies with American infrastructure, says a bipartisan group headed by Michael Bloomberg and Arnold Schwarzenegger.
U.S. infrastructure, far from being the best in the world, is due for an overhaul, says the Building America’s Future Educational Fund, a coalition that Bloomberg, the mayor of New York, and Schwarzenegger, the former governor of California, co-chair with former Pennsylvania governor Ed Rendell. If the country’s infrastructure isn’t modernized, they say, the U.S. will lose its competitive edge.
“If we are going to maintain our economic dominance, we have to get on the stick and get on it fast,” Rendell said earlier this week.
On Monday, the BAF Fund released a report calling upon policymakers to invest $200 billion a year in infrastructure for the next 10 years, a plan it says could create nearly 5 million jobs over the next decade.
The money would be generated in part by raising the U.S. gas tax, which the report points out is one of the lowest among major Western economies.
The report argues that the U.S. lags behind much of the rest of the developed world in the health and sophistication of its infrastructure. In 2005, the report says, the World Economic Forum ranked the United States #1 among countries in terms of economic competitiveness. Today, the U.S. is at #15.
Other troubling data included in the report: The U.S. spends only about 1.7 percent of its GDP on transportation infrastructure, compared with 4 percent in Canada and 9 percent in China. The Shanghai port moves more containers in a year than America’s largest seven ports combined. And American transportation is still largely based around a highway system developed in the mid-20th century, while countries from Korea to France to Brazil are moving ahead with ambitious high-speed rail projects.
In late July, the American Society of Civil Engineers released its own report on the state of American infrastructure. The ASCE claimed that if the U.S. doesn’t make an effort to improve its roads and bridges, the country will lose $3.1 trillion in GDP growth by 2020.
But unlike the ASCE, the BAF Fund would like the United States to move past its reliance on highways.
“Largely run on gasoline, our transportation system is environmentally, politically, and economically unsustainable,” the report says.
The BAF study also points out how inadequate public transportation hurts the checkbooks of average Americans. For example, it says, American households spend 17.6 percent of their income on transportation costs, more than what they spend on food. Among the nation’s poorest households, that figure rises to 40 percent.