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American Shipper

Flynn proposes $250 billion infrastructure trust fund

Flynn proposes $250 billion infrastructure trust fund

The United States will continue to lose ground as an advanced society to other parts of the world if it doesn’t seriously address the challenge of aging and inadequate infrastructure, a panel of experts said Tuesday.

      The Interstate 35 bridge collapse in Minnesota and the bursting of a steam pipe in Manhattan that killed one person earlier this month are just the latest examples of overtaxed, older infrastructure failing in this country. They follow the 9/11 terrorist attacks, levee breaches in New Orleans during Hurricane Katrina that caused the city to be flooded, and the massive power outage that occurred in the Northeast and parts of the Midwestern United States and Ontario.

   The United States needs to invest about $250 billion per year during the next decade to maintain and upgrade critical physical infrastructure, said Stephen Flynn, a senior fellow at the Council on Foreign Relations and authority on homeland and transportation security. The cost is only 1.9 percent of the nation’s Gross Domestic Product and just one-fifth of what China is spending on infrastructure to grow its economy. In 2005, China spent $200 billion on infrastructure projects, equivalent to 9 percent of GDP and twice what the United States invested for an economy that is six times as large.

   “Americans should be appalled at the images sent around the world essentially showing that this is a superpower rotting from within,” Flynn said during a forum at the National Press Club in Washington presented by the Center for American Progress, a liberal think tank.

   He said the United States is falling behind global competitors because “elsewhere people recognize infrastructure as an investment, whereas here we seem to think of it as a cost.”

   Panel members said transportation infrastructure is crumbling because of age and because traffic volumes are exceeding original designs. There are more than 248 million registered vehicles nationally compared to 74 million in 1960 and heavy truck traffic has exploded with economic growth and international trade. Shippers and freight carriers have spent the past few years advocating more investment to increase capacity of all transport modes.

      The root of the problem is a political process that allocates resources based on parochial constituent services rather than addressing national needs, the former Coast Guard captain and National Security Council advisor said.

   Flynn offered a three-part prescription for infrastructure renewal, starting with voter insistence that mayors and governors issue report cards on the state of infrastructure in their jurisdictions and assign price tags to the cost of maintenance and upgrades. Reiterating proposals in his recent book, The Edge of Disaster, Flynn called on the president to convene an Infrastructure Resiliency Commission modeled on the former Base Closure and Realignment Commission to prioritize needed projects and make funding recommendations to Congress, which would have the responsibility of finding and allocating the money for improvements.

   Flynn, who helped shape many of the government’s port and cargo security policies after 9/11, urged lawmakers to pay for the investment by diverting the inheritance tax, recovering the Bush administration’s 2001 tax cuts, raising the gas and diesel tax, and putting the money in a dedicated infrastructure trust fund.

   Additional funding can come from private capital, which could help out by writing certain conditions for technology, materials and safeguards into bonds it issues states for projects.

   “The private sector can leverage best practices” by using its capital to generate top standards, he said.

   The inheritance, or estate tax, was temporarily abolished by Congress until 2010 during President Bush’s first term. Flynn said targeting the inheritance tax is based on the sense that people accumulated their wealth by benefiting from the foundations put in place by prior generations and they should help pass that legacy on to future generations.

   As a society “we seem to be like a generation that has inherited a mansion and we decide we’re not going to do any of the upkeep,” Flynn said. The prevailing mentality is “like a very well-to-do person complaining the he has to fix his roof as a hurricane barrels down on him. Yes, it’s gonna cost something. But what’s the cost of losing the whole house?”

   Local officials will need to have better information about infrastructure conditions in order to issue meaningful report cards, Flynn noted. One-quarter of the nation’s bridges, for example, have been classified as structurally deficient or functionally obsolete, including the I-35 bridge that fell into the Mississippi River. He said engineers need to up come up with language “that actually communicates to us whether we have a problem or not. Let’s get out of this Orwellian language where structural deficiency isn’t really structural deficiency” and allows politicians to defer maintenance indefinitely.

   The concept of an independent infrastructure investment commission comprising professional staff that would serve as neutral arbiters to prioritize investment is similar to a proposal made by the Center for Strategic and International Studies and business leaders in 2005.

   The recent bridge collapse has raised awareness about the poor state of highways, bridges, tunnels, pipes, power plants, dams and water treatment facilities, and led to a public discussion about paying for infrastructure repairs. Minnesota Democrat Jim Oberstar, the powerful chairman of the House Transportation and Infrastructure Committee, has suggested a temporary 5-cent per gallon increase in the federal gas tax to help pay for his national bridge reconstruction plan. Sen. Christopher Dodd, chairman of the Banking Committee, and Sen. Chuck Hegel, R-Neb., three weeks ago introduced a bill to create a National Infrastructure Bank that would identify, evaluate and help finance infrastructure projects with regional or national significance.

   But few lawmakers have run to embrace the idea of raising the 18.4-cent-per-gallon fuel tax, which has stayed the same since 1993 and resulted in the Highway Trust Fund losing 30 percent of its purchasing power due to inflation. And President Bush also opposed the idea, saying Congress should readjust its spending priorities first.

   Presidential leadership is required to get Congress to give up some of its power and convince the American people to part with some of their money for the greater good, Flynn said.

   “You have to embarrass Congress into essentially doing infrastructure investment” this way, he said. Americans aren’t willing to share more of their income with the government given the current state of pork-barrel politics unless the process is changed and they can trust that the money will be used for high-priority projects, he added.

   “It’s more popular to build a bridge to nowhere than it is to fix an old bridge to somewhere,” said P.J. Crowley, a senior fellow and director of homeland security policy at the Center for American Progress.

   Scott Lilly, another center fellow, blamed underinvestment in infrastructure and research and development on the emergence of a well-funded libertarian movement that is opposed to big government and tries to create political deadlock. That means responsibility for fixing the deficit is placed on the 15 percent of the budget that is goes for non-military, discretionary spending.

   He estimated it will take $20 billion per year just to maintain the highway system as is.

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