President Biden has called the $1.2 trillion Infrastructure Investment and Jobs Act a “monumental step” that will create millions of jobs. Like too much of what he says that claim is more than an exaggeration — it’s plainly false.
The country was once capable of epoch tasks — the transcontinental railroad, the Hoover Dam and the Eisenhower Interstate highway system, but now it seems more inclined to pad the welfare rolls than fix the roads.
Washington lacks a sense of proportion and purpose.
Last year, the American Society of Civil Engineers estimated the country’s investment deficit for improving roads, bridges, airports and the like at $2.7 trillion. The implied cost imposed by congestion, excessive travel time and other inefficiencies is $500 billion in lost GDP each year.
Although the Biden administration borrowed to spend $1.9 trillion in a single year for the American Rescue Plan — much of that simply monetary payments to families that have juiced inflation — the bipartisan package will only add $550 billion in new money for infrastructure investments.
Granted Mr. Biden wanted to spend more and faced Republican opposition. He could have used reconciliation to accomplish most of his original goals but chose to keep his powder dry for the stillborn Build Back Better program.
Moody’s Analytics estimates the infrastructure package will boost labor productivity by 0.03% and GDP by $39 billion by 2031 and permanently add 75,000 new jobs.
A good deal of the money will be spent on fixing yesterday’s problems and creating new ones.
$7.5 billion is devoted to building out a national network of charging stations for electric vehicles. Along with tougher mileage standards, that should artificially accelerate the transition from gas-powered vehicles.
By pushing EVs on the road sooner than cost-efficient battery technology is ready, Americans will pay thousands of dollars more for new cars and trucks. Whether subsidized with tax credits or financed by motorists, those higher price tags represent resources that could be devoted to other, more-productive investments and more inflation.
EVs have many fewer components and battery technology is more advanced in China and Korea. The shift in sourcing and reliance on engineering abroad will substantially reduce the 873,000 employed making automobiles in the United States.
Americans will see new subway stations and some improvements in the reliability of transit but not to the degree needed. Like roads, pipelines and the electrical grid, transit construction is often more costly and less technologically advanced here than abroad.
It’s easy to blame unions — contract work rules and Davis-Bacon Act prevailing wage requirements add an estimated 20% to the cost of projects. However, that’s not enough to explain why a new subway station in New York City costs three times what it does in Paris or London. Or why the $66 billion devoted to intercity rail transportation is well too short to adequately modernize Amtrak’s Northeast Corridor, provide high-speed rail that rivals services abroad or solve other passenger rail issues around the country.
The infrastructure plan targets the most overburdened bridges that are choke points for the movement of goods — for example, the George Washington Bridge on I-95 and the Horace Wilkinson Bridge in Batton Rouge — but expanding these thoroughfares requires displacing commercial spaces and residents. And that puts a magnifying glass on the nation’s terribly abused permitting, zoning, environmental assessment and community engagement systems.
These have legitimate objectives but are often taken in sequence, they stretch approval processes that should take months into years. But by running up costs, those often limit the number of affordable improvements to a few essential facilities.
Gone are the days when federal highway planners could bulldoze through neighborhoods — often imposing disproportionate costs on working-class and poorer residents. However, safeguards tend to frivolously expand the scope of amenities — oversized platforms, redundant elevators, fancy landscaping, bike paths and the like. And because projects become so spaced out, many cities are unable to build permanent resident expertise in competent project management and design.
A suitable solution to addressing legitimate environmental and political concerns — and limit the tools available to outright obstructionists — would be to streamline the permitting processes.
Require that all above-mentioned processes be settled in a single forum and reviewed in a single court within one year. A federal agency and forum similar to the U.S. International Trade Commission, which has firm timetables, for example, to review intellectual property issues, could be established with the opportunity for a single appeal in a federal court.
We don’t need to run roughshod like autocratic China, but at the same time, we don’t need to run infrastructure projects like a Gilbert and Sullivan opera or our farcical universities. Otherwise, the nation simply can’t compete.
• Peter Morici is an economist, emeritus business professor at the University of Maryland, and national columnist.