Rethinking the Way on Infrastructure

Bruce Katz and
Bruce Katz Founding Director of the Nowak Metro Finance Lab - Drexel University
Robert Puentes

November 20, 2009

Editor’s note: This publication originally appeared in the November 20, 2009 issue of The Hill newspaper under the title: Rethinking the Way on Infrastructure.

With the specter of a jobless recovery looming, Washington has been casting about for ways to put Americans back to work. In the process, the political class has re-discovered infrastructure.

Just this past week leaders in Congress and the president’s own Economic Recovery Advisory Board have called on the federal government to pump billions of dollars into new roads, bridges and rails.

Of course, we’ve seen this before. Since the time the Interstates were finished transportation has been more about job growth than the national economy. President George H. W. Bush was widely quoted in 1991 when he said the federal transportation law he signed “could be summed up in three words: jobs, jobs, jobs.”

But this approach ignores the real power of infrastructure to generate productive, sustainable and inclusive long-term growth, not short-term jobs.

This past summer, National Economic Council Director Larry Summers laid out a vision for the next American economy: one that is lower-carbon, innovation-fueled, export-oriented and opportunity-rich.

Yet current federal infrastructure policy directly undermines this ambitious vision.

A lower carbon future means our infrastructure investments must address global warming, caused, in large part, by burning coal and oil. Yet transportation alone accounts for 28 percent of U.S. emissions and is nearly all petroleum-fueled. Efforts to reduce that dependence are to date ephemeral.

To lead on innovation, infrastructure policy needs to make quantum leaps on everything from clean technology and renewable energy to high-speed rail and smart grid creation. While some progress is being made, infrastructure debates still revolve around the amount of spending, rather than its quality and impact.

A more export-oriented economy will require high-functioning global ports and transportation hubs that support, rather than impede, the movement of people and goods. So unlike competitors in Europe and China, which have national freight policies and invest heavily in their major ports and hubs, the U.S. government largely expects our gateways to modernize their facilities and keep pace with global commerce on their own.

And to ensure our investments are opportunity-rich they can no longer subsidize the excessive decentralization of people and jobs. Sprawl has a sticker shock. Household spending on transportation has risen across the board and is now the second largest expense for most American households, eating up 19 cents out of every dollar. Utilities such as electricity and natural gas consume 7 percent but are a disproportionately larger burden for low-income families.

So at the precise time that the nation desperately needs to prioritize its limited resources, the federal response has been mostly to keep throwing money at the problem, without any meaningful attempt to update our policies to the realities of today.

The American Recovery and Reinvestment Act, a.k.a. the stimulus, is illustrative in this regard. Infrastructure makes up a substantial share of the recovery package, about a quarter of the total excluding the tax cuts. Using the existing federal delivery system and focusing on shovel-ready projects thwarted any conversation about real reform. The one performance target, jobs created, has produced uneven and opaque results so far.

Nevertheless, the pressure for jobs in the near term is intense. At minimum we should focus any additional investments on repairing the nation’s existing crumbling infrastructure, helping transit agencies avoid drastic cutbacks in their workforce and their service, and holding the states and metropolitan entities responsible for their performance.

But to truly produce real prosperity, federal leadership, as with the interstates in the 1950s, is more necessary than ever and should advance an updated vision identifying strategic, transformative infrastructure investments of critical importance to national economic competitiveness. That vision should include robust plans for freight movement, the electric grid, and water infrastructure across state borders and between metropolitan areas.

We also need the federal government to empower our metropolitan areas to use infrastructure and mechanisms like congestion pricing and transit to improve mobility and choice and enhance sustainable patterns of development.

And we desperately need a new way of financing infrastructure. A merit-driven national infrastructure bank could be the vehicle for green-lighting those infrastructure projects (from road and rails to ports and pipes) that have the highest return on investment rather than the greatest political reward.

These are the strategies for an infrastructure agenda that truly positions the country for the stormy, competitive decades ahead.

The recovery, we now know, will be long, messy and uneven. Since what preceded the downturn was anything but normal, there will be no “return to normal.” The same should go for America’s infrastructure.