Fixing our Infrastructure Without Breaking the Bank

COMMENTARY Budget and Spending

Fixing our Infrastructure Without Breaking the Bank

May 16th, 2017 2 min read
COMMENTARY BY
Michael Sargent

Policy Analyst, Transportation and Infrastructure

Michael Sargent is a Policy Analyst in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
History shows that big-spending federal construction programs typically produce lackluster results for both infrastructure quality and job creation. iStock

Key Takeaways

The government has long exceeded its proper and optimal role in funding and managing certain aspects of the nation’s infrastructure.

Washington should realign federal investment to match national priorities and leave other investments to the private sector and states.

If President Trump wants to fix our infrastructure without breaking the bank, embracing these free market proposals is the way to do it.

Crumbling roads, decrepit bridges, obsolete airports. Politicians often paint a hyperbolic picture of America in disrepair. It helps drum up support for a politically appealing twofer offer: to fix the nation’s aging infrastructure and put Americans back to work.

It sounds good. But history shows that big-spending federal construction programs typically produce lackluster results for both infrastructure quality and job creation.

That didn’t stop candidate Donald Trump from pledging to embark on a massive “program of national rebuilding,” one that would sink $1 trillion into repairing and expanding the nation’s infrastructure. But details about the plan have been slow in coming. About all we know is that most of the $1 trillion would come from private investment; direct federal spending would total about $200 billion.

The focus on private infrastructure investment is indeed laudable, but the plan would be even better if it provided for the full $1 trillion investment without any additional federal spending. It can be done. And with the nation nearly $20 trillion in debt, it can’t afford an infrastructure approach that fails to prioritize both fiscal responsibility and the most effective investments.

Analysts at The Heritage Foundation have mapped out a policy approach that could steer over $1 trillion to U.S. infrastructure over the next 10 years without adding a penny to the debt. Though the agenda provides over a dozen specific recommendations, the administration and Congress can follow this blueprint for responsible investment by sticking to three overarching principles.

First, make the most of the infrastructure funds provided by the federal government. Federal mandates such as Davis-Bacon requirements for union-scale wages and project labor agreements drive up the cost of labor for federally funded infrastructure projects — by an average of 20 percent in the case of the former.

By removing these special interest labor requirements, as well as Buy America rules that drive up the cost of construction materials, policymakers can stretch current spending levels by more than $100 billion over the next decade.

Second, there are simply too many regulations that hamper both public and private infrastructure investment. Overly burdensome permitting and environmental review processes stifle projects for years — sometimes even decades.

Expediting these processes has bipartisan support and would free up the equivalent of hundreds of billions of dollars in infrastructure investment. Similarly, rolling back regulations that impede private companies from investing in energy infrastructure could create thousands of long-term jobs while producing abundant, safe energy.

By embarking on a strategic deregulatory process — including the repeal of industry-specific rules, like those that decrease broadband investment or increase the cost of dredging the nation’s ports — the administration and Congress can add more than $550 billion in direct infrastructure investment.

Finally, the federal government has long exceeded its proper and optimal role in funding and managing certain aspects of the nation’s infrastructure, to the detriment of many important assets. Instead of continuing this trend, Washington should realign federal investment to match truly national priorities and leave other investments to the private sector and states.

This would mean refocusing highway spending — which currently hemorrhages nearly 30 percent of funding to local concerns like streetcars and bike-sharing programs — on repairing the interstate system.

Important aviation assets such as airports and the air traffic control system have underperformed under restrictive federal micromanagement, and should be handled by the more efficacious private sector, as is done in many other countries.

Making good on federal promises on nuclear infrastructure, such as constructing Yucca Mountain, should likewise be prioritized. Refocusing the federal government’s mission on projects of true importance would steer hundreds of billions in investment where it’s needed most — and would allow for better management of vital infrastructure.

Although many of these proposals are not necessarily conventional in the way many politicians think about infrastructure investment, they are far superior to the failed tax-and-spend method. If President Trump wants to fix our infrastructure without breaking the bank, embracing these free market proposals is the way to do it.

This piece originally appeared in The Washington Times