Getting infrastructure right

  • 25 January 2018
  • NormanL
Fix first, then build new

Official Washington is (slightly) abuzz about a leaked draft of the President's infrastructure plan.  Recall that the President promised a massive infrastructure program that would repair roads, bridges, ports, airports, and much more. What does the current draft say? Transportation policy expert Randal O'Toole gives us the rundown:

The largest, called the Infrastructure Incentives program, would get half of any appropriations to pay for up to 20 percent of the cost of “core infrastructure projects” including transport, water, power, superfund, and flood control projects. The document doesn’t seem to distinguish between new projects and rehabilitation of existing ones, so the politicians who seek the funds would probably be biased in favor of new. Projects would be rated on a variety of criteria the most important of which would be the ability of the state or local government to sustain financing for the project.

Rural infrastructure is the second-largest program, getting 25 percent of funding for transport, water, power, and broadband. The funds would be distributed as block grants rather than matching funds, based on each state’s population and rural road miles.

The third-largest program, getting 10 percent of federal funds, is called the transformative projects program. These are supposed to be projects that have a possibility of a big payoff but are too risky for the private sector to invest in. (Has Trump heard of venture capitalists?) Federal funds would pay for up to 30 percent of demonstration projects, 50 percent of planning, and 80 percent of capital costs of transport, water, energy, commercial space, and telecommunications projects.

The fourth-largest program, getting 7.05 percent (is that supposed to be 7.50 percent) of federal funds, is an expansion of existing lending programs such as TIFIA (for transportation), RRIF (for railroads), and WIFIA (for water) funds. More money would be available for lending under these funds.

A federal capital financing fund would get 5 percent of total appropriations to lend money to state and local government to buy federal property. The agencies would be required to repay the fund in fifteen equal annual payments.

This adds up to 97.05 (or 97.50?) percent of whatever federal monies are spent. Two other programs are mentioned without listing what share of funding they would get. These are a public lands infrastructure program that would get money from federal mineral and energy revenues and an expansion of tax-exempt private activity bonds to more kinds of infrastructure including ports and airports.

That's a lot to digest. The bottom line is that the plan will be very expensive -- several hundred billion dollars. But O'Toole cautions that the way the draft is structured, it gives politicians every incentive to build new stuff, rather than fix what already exists:

The biggest weakness in this proposal is that it will end up spending most, and possibly all, new infrastructure money on new projects and little or none on maintenance and rehabilitation of existing infrastructure. Yet the supposed need for increased federal infrastructure spending is the claim that America’s infrastructure is in poor shape. This supports the idea that this claim is merely a cloak for politicians who want to hand out funds for highly visible new projects and contractors who want to get those funds.

That would be an enormous mistake, in part because it would add to future maintenance bills. But it makes absolute political sense. Press releases about fixing a crumbling, existing bridge aren't nearly as sexy as press releases about an entirely new bridge (plus a ribbon cutting ceremony - that makes excellent TV, and even better campaign ads).

Do the nation's roads need fixing? Yes. Does the draft infrastructure plan do that? It seems not. But it is a draft, and we can hope that more sensible proposals to fix what's already broken before adding new miles to the maintenance list will prevail.