Infrastructure in political divide

Infrastructure in political divide Analysts say military rationale could lead public to support investment.

By Eric Kulisch

      Engineers, policy-makers, politicians and even ordinary citizens know that America's infrastructure ' its roads, bridges, water and sewer systems, health care delivery, electric grid and other societal foundations ' is falling apart.
      Parts of the transportation network that companies rely on to move goods and get their employees to work are also over capacity and congested.
      The systems that support the U.S. economy and way of life are slowly rotting from within. Repairing and replacing them doesn't seem to be a priority at any level of government. The reason is twofold: public apathy and an unwillingness to invest ' pay taxes ' in physical systems that people take for granted.
      Infrastructure spending in real dollars is about the same today as it was in 1968 when the economy was one-third smaller, according to economists.
      Many rail lines, subway systems and other infrastructure were built in the early or middle part of the 20th century. Subsequent generations benefited from those early investments, but now they are reaching the end of their life expectancy and the growth in population is straining their capacities to function properly.

Oberstar

      Americans aren't much used to discussing infrastructure investment because it rarely is a significant part of political discourse. Infrastructure barely gets mentioned during political campaigns, drowned out by war, jobs, abortion, gun control, social security and other more visceral topics. There are few leaders, besides Pennsylvania Gov. Ed Rendell and Rep. James Oberstar, who even make the effort to increase the public's consciousness about the need to invest in infrastructure.
      The American Society of Civil Engineers (ASCE) estimates that the United States needs to spend at least $2.2 trillion over five years just to maintain existing systems in good condition.
      The backlog of worthy projects is growing because states, which are responsible for about three-quarters of infrastructure spending, are dealing with huge budgetary shortfalls. The financial crisis also shrank the market of specialized insurers that guarantee repayment of municipal bonds, making it more difficult for governments to issue bonds to finance schools, water system upgrades and other construction projects.
      Since the Reagan administration in the 1980s, Americans have come to expect more government services and benefits while demanding tax cuts. Trying to raise taxes to pay for capital projects can be dangerous for politicians. The disinclination to make tough budgetary choices has been exacerbated by the political gridlock that has gripped Washington for the past 15 years, substituting the legislative process for constant campaign infighting.
      The situation is underscored now by the inability to make progress on a new multiyear surface transportation bill. The SAFETEA-LU spending authorization expired last September, but Congress and the administration continue to kick the can down the road. Federal highway and transit programs have been operating under a series of short-term extensions at reduced or flat funding levels. It took 12 extensions and two extra years to pass the $286 billion SAFETEU-LU in 2005.
      Transportation interests are pushing for a six-year spending plan that reforms aid programs to states and increases resources for highways, bridges, transit and rail. Oberstar, House Transportation and Infrastructure Committee chairman, last year proposed a $500 billion package, including $50 billion for high-speed passenger rail, but the effort is stalled while Congress deals with other issues. Meanwhile, the Highway Trust Fund is running short of money to meet current obligations because fuel tax collections are declining.
      The biggest challenge is finding a way to increase funding and create alternative financing mechanisms when Obama and many lawmakers have rejected the possibility of raising the gas tax ' which has remained unchanged since 1993.
The best description of governmental dysfunction is found in a book on governance by William Eggers and John O'Leary. In it they quote Michael Keeley, former deputy mayor of Los Angeles: 'Think of city government as a big bus. The bus is divided into different sections with different constituencies: labor, the city council, the mayor, interest groups, and contractors. Every seat is equipped with a brake, so lots of people can stop the bus anytime. The problem is that this makes the bus undrivable.'
      With so much political gamesmanship and special interest pressure, how can the richest country in the world reach consensus on making necessary infrastructure investments?
      James Fallows, the national correspondent for The Atlantic magazine and a respected policy thinker, and Stephen Flynn, the new president of the Center for National Policy (CNP), say the way to get the nation to open its pocketbook is to market infrastructure as a national security issue.
      President Dwight D. Eisenhower 50 years ago was able to create the interstate highway system and connect the nation by casting the need in terms of defense ' the ability to quickly mobilize the military and evacuate cities in case of a Soviet threat. The legislation giving the federal government the power to build roads across state lines was called the Interstate Highway in Defense Act.
      The highway program was 'fundamentally an economic imperative, but by highlighting the national security imperative it allowed us to take a national perspective of a system' that previously was a patchwork quilt of unconnected roads, Flynn said during an appearance on National Public Radio's 'Diane Rehm Show.' 'And so, when we basically speak to the national purpose, then we hopefully can garner the full capability outside our broken political process.'
      Fallows said during a mid-January roundtable discussion at the CNP that he isn't prone to hype military threats for political purposes, but sees a need to do so in the case of infrastructure.
      'If it is the case that the only instrument we have of national purpose is the military, you know, we can justify these things for military reasons. Maybe we should just recognize that as how we are, that there has to be some kind of defense justification,' he said.
      On the radio he also pointed out that it took the Soviet Union's launch of Sputnik in the late 1950s and fear that it would control space to spur the start of the U.S. space program.
      Aside from using national security as a marketing technique, there actually is a national security component to infrastructure, Flynn contends. It's part of what makes a country resilient to manmade and natural disasters.
      That's because a nation with brittle infrastructure is more susceptible to attacks by terrorists, who realize that the overreaction by a panicked populace and government will cause greater economic and societal disruption than the attack itself. The classic example is the way U.S. authorities shut down air space after 9/11 because they lacked intelligence about whether more attacks were on the way. Fallows also points to the post-9/11 measures that make it harder for foreign graduate students to enter the country. The government cut off the flow of talent that might be a key source of innovation or that can help represent American values in their own countries if they return, which helps improve U.S. relations around the world, he said.
      Terrorism, by contrast, becomes less attractive if a country has redundant capabilities and can't be easily paralyzed by a local disaster.
      'There's a deterrent value to investing in this,' Flynn said.
      The lack of refinery capacity on the West Coast is one of the strategic vulnerabilities Flynn recommends be addressed. The Port of Los Angeles is the gateway for half of the crude oil west of the Rocky Mountains, but the dearth of refineries means there is only about a seven-day supply of refined fuel in the entire Southern California economy, including the amount in people's gas tanks. Sinking a boat or otherwise damaging the oil pipeline in the harbor that connects to the trunk line to Phoenix would have an enormous economic impact.
      Flynn says the U.S. Navy doesn't devote any resources for minesweeping or other measures to protect the Los Angeles-Long Beach harbor complex, which also handles the most container traffic in the nation, because there are no warships berthed in the commercial port. The nearest salvage ship that can clean sunken or grounded vessels is in Pearl Harbor, Hawaii.
      'It's because the national security apparatus has largely said, 'it's the job of the property tax owners of Los Angeles County to take care of that problem.' Our job is to project power overseas and solve problems. It's a federalism issue we have to have a conversation about, ' he said.
      In a separate CNP event, Rendell discussed how the lack of upkeep on the nation's lock system jeopardizes the economic security of the steel industry, especially U.S. Steel. The company, which operates the largest coke producing plant in the country, depends on the river system in Clairton, Pa., to move its product to the Midwest and East Coast states.
      'It's so important that if a lock were to break, the repair time for that lock would be so long that (CEO) John Surma estimates that it's likely U.S. Steel would go out of business,' Rendell said.
      The $258 million the Army Corps of Engineers received in the 2009 stimulus act 'is literally like putting fingers in the dyke,' he added.

'Having hundreds of millions of dollars sit in an account untouched at the Department of Transportation does nothing to address our infrastructure needs or put people back to work.'

Sen. Russ Feingold D-Wis.

      The situation in Haiti following the devastating earthquake there in January, Flynn said, is a worst-case scenario of a country that can't even help itself when things go wrong because its infrastructure is already in poor shape. Similarly, the destruction of New Orleans from Hurricane Katrina is primarily attributed to the weak levee system that was never reinforced despite many warnings.
      'It's an illustration of how difficult it is to assist people when the core infrastructure fails,' Flynn said. 'And even with the best of motives and means, which I think the global community has demonstrated, if you can't move around in a society that's been hurt like this then the tragedy keeps growing each day.'
      The lack of investment isn't just because Americans are cheap, but because they have lost faith in government to set priorities and not waste money on frivolous projects, Flynn argues.
      In his 2007 book, The Edge of Disaster, Flynn called for the creation of an Infrastructure Resiliency Commission modeled on the former Base Closure and Realignment Commission, to depoliticize the funding process, prioritize projects in the national interest and present them to Congress for an up-or-down vote on the collective list.
      Flynn said at CNP that experts from prestigious groups such as the ASCE, the National Academy of Sciences and universities could identify the 100 most critical national infrastructure projects. Such a mechanism, he said, could renew the public's trust that government will wisely use their tax dollars.
      'While Congress will always control the purse strings, you can make it pretty embarrassing for them to be building bridges to nowhere when this top 100 list is not being addressed,' he said.
      Rendell repeated his similar call for an independent national infrastructure bank to supplement the formula funding the federal government provides states for highway and waste treatment systems. The institution would make decisions about electricity, rail, broadband, transportation and other systems of national or regional significance to fund based on cost benefit analysis and performance goals, such as carbon reduction, which Congress could help determine. The bank would use public funds as seed money and private sector investment to finance projects.
      'The European Investment Bank last year loaned out $81 billion through a combination of loans and grants. This year it's going to do about $112 billion. And for Europe that's significant. I mean, if you extrapolate, that to size and need for us, that $112 billion would be about $250 billion' ' or the equivalent to amount for a good capital budget plan, he said.
      Building America's Future, a broad coalition of pro-infrastructure elected officials co-chaired by Rendell, held a press conference on Capitol Hill to promote the idea of the infrastructure bank.
      (President Obama's fiscal year 2011 transportation budget request includes $4 billion to create a national Infrastructure Innovation and Finance Fund to invest in high-priority projects and attract private capital.)
      Rendell added that eliminating earmarks from congressional authorization and appropriation processes is critical because they undermine confidence in government and spread spending so wide there is not enough money to get projects done in a timely manner.
      The DOT estimated a couple of years ago that $10 billion in earmarks remains unspent from the SAFETEA-LU bill.
      A lawmaker's ability to secure several million dollars may be dwarfed by a project that costs tens or hundreds of millions of dollars. The federal government, which picks up 80 percent of the cost on eligible highway projects, may not fund the rest of the project, while the balance of the cost falls to the state, which may not have the money to proceed and often has other priorities. Minus a full appropriation, the money is parceled out in dribs and drabs over many years as lawmakers make special follow-on requests for more funding. Meanwhile, the overall price tag continues to go up as inflation increases construction costs.
      Sen. Russ Feingold, D-Wis., introduced an amendment in March that would rescind $626 million in transportation earmarks that are 10 or more years old and had unutilized balances of 90 percent or more. The measure was attached to a bill to reauthorize the nation's aviation laws being considered in the Senate. Feingold said that more than 60 percent of the earmarks had no money spent from them and were unwanted or low priority for the designated recipient. The legislation instructs the Office of Management and Budget to collect information from other agencies to see if there is a need to cancel dormant earmarks across the board, which could potentially save three or four times the original amount.
      'Having hundreds of millions of dollars sit in an account untouched at the Department of Transportation does nothing to address our infrastructure needs or put people back to work,' Feingold said on the floor of the Senate.
      Transportation Secretary Ray LaHood testified at a Senate hearing that the administration supported Feingold's proposal.
      Meanwhile, Feingold and Sen. Jim DeMint, R-S.C., co-sponsored an amendment to place a one-year moratorium on earmarks and House Republicans self-imposed a one-year ban on requesting money for pet projects.
      'Earmarks don't work even when they're well intended. Secondly, they're often not well intended. So we've got to get rid of earmarks,' Rendell said.
      The federal government's huge debt and the lack of a capital budget make it more difficult in the current environment to finance infrastructure, according to Rendell. The real need may be closer to $4 trillion if high-speed rail or freight system upgrades are added to the ASCE estimate, he said. Under existing accounting rules, an authorization for that amount would be counted against the deficit instead of about $285 billion per year in debt service if a 10-year construction program was financed over 30 years. Rendell argues that the federal government should separate operating and capital expenditures in the budget the way states, localities and businesses do.
      Rendell also called for a change in the law that prohibits states ' except in three trial cases ' from implementing tolls on federal-aid highways. He said people are more willing to pay tolls and user fees than taxes.
      The United States needs to start on some of these reforms even if it can't find the political will to bankroll a larger infrastructure program during the current economic and political environment, he said.
      Flynn, like many politicians and policy experts, notes the knock-on effect of infrastructure spending on jobs and the economy, but he also points to the potential for developing modern planning and construction techniques that can be sold in international markets.
      'We're the first developed country that really has to confront the problem of a legacy infrastructure at the end of its life ' If we get this right, we'll export this expertise to the rest of the developed world that has the same problem that will be coming up for them. This is something that could be part of not just our competitiveness here at home but something that, in fact, America could again do for the rest of the world,' he said.