Are We Ignoring America’s Infrastructure Deficit?

Last week I turned on the news to learn that a major bridge over the Skagit River on Washingon State’s I-5 had fallen down. The bridge is not far from where I live. I have driven over it more times than I like to think. Why did it fall?

The proximate cause is clear: A large truck, carrying an oversize load, hit a crucial girder and the whole thing collapsed. The economic cause is also clear: Our political leaders are so obsessed with one isolated part of the national balance sheet — the balance of the federal government’s financial assets and liabilities — that they have not noticed other, even larger threats to our national balance sheet. Like infrastructure deficit.

There are a lot of things we do not yet know about today’s event, but one thing is clear: The bridge that fell down was “functionally obsolete.” Washington State authorities insist that the bridge was well maintained, and certainly, in my many trips across it, I have seen no rusty girders nor felt any ominous vibrations.

The National Transportation Safety Board’s Deborah Hersman explained to CNN’s Wolf Bltizer what functionally obsolete meant for this particular bridge, which was designed in 1954 and built in 1955 when traffic on the I-5 corridor between Seattle and Vancouver was a fraction of what it is today. A new bridge would have shoulders; this one did not. A new bridge would have had more overhead clearance. On the face of it, either of these features would seem sufficient to have prevented the accident.

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So why are we sending 21st century highway traffic across Elvis Presley era Interstate bridges? The answer is simple: We are not spending enough to stay even with our infrastructure deficit. Our bridges, roads, dams, electric grid, sewers, and water treatment plants are wearing out faster than we are replacing them. And that is happening, in large part, because of our misguided obsession with the federal fiscal deficit.

A good starting point to understand what is going on is to ask why we are concerned with the budget deficit in the first place. The cliché is that we do not want to be the first generation to leave our children a national balance sheet with a thinner margin between assets and liabilities than we inherited from our parents.

The trouble is, the federal budget deficit is not the only thing that shapes the national balance sheet. Infrastructure is also a part of the equation. The infrastructure deficit is the difference between what the country invests each year in new bridges, sewers, and power lines and the rate at which the old ones fall apart. If investment in infrastructure exceeds depreciation, the country is that much richer at the end of the year. If depreciation exceeds investment, it is poorer, as surely as if the Treasury sells bonds and uses the proceeds for the most shortsighted spending programs you can think of.

If you have any doubt that the infrastructure deficit is real, try taking a look at the Report Card for America’s Infrastructure published every four years by the American Society of Civil Engineers. The Report Card assigns grades of “A” through “F” to various infrastructure categories. The 2013 report begins on an optimistic note: the cumulative GPA for our infrastructure is up. Good news! It is up! Up to D+! We are UP to totally pathetic!

Unbelievably, bridges are one of the bright spots in the report. They rate a C+. Wow! C+! In the language of the report card, “only” one in nine of the nation’s bridges is rated as structurally deficient. (Structurally deficient means not only functionally obsolete, but inadequately maintained. It is an even worse rating than the bridge that fell down today.) The average age of the nation’s 607,380 bridges is currently “only” 42 years, 16 years younger than the fallen Skagit span. The Federal Highway Administration estimates that to eliminate the nation’s bridge deficiency backlog by 2028, we would need to invest $20.5 billion annually.

Unfortunately, though, we are currently spending only $12.8 billion. The challenge for federal, state, and local governments is to increase bridge investments by $8 billion annually to address the identified $76 billion in needs for deficient bridges across the United States. If we don’t do it, we are not going to hold on to that exalted C+ for long.

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Only rail ranks as high as bridges. No, not our passenger rail, which is the laughing stock of the high-speed world, but our pretty credible freight rail system. Ports and aviation rate a D without the plus. Inland waterways and levees are a D-. But who cares about levees? We have federal flood insurance to take care of any random leaks in the dike, don’t we?

A rational person would look at the report card and conclude that we should be very careful when cutting infrastructure spending. Cuts to essential repairs and upgrades will decrease the federal budget deficit only at the cost of increasing the infrastructure deficit. The trade-off is especially unfavorable when deferred maintenance leads to costly catastrophic failures. And realistically, just eliminating the infrastructure deficit isn’t enough. Future economic growth will require an infrastructure surplus, so that wireless communication networks and renewable energy grids can be built at the same time needed repairs are made to aging sewers and bridges.

Still, although cut, cut, cut is not the right approach to infrastructure, spend, spend, spend isn’t the answer, either. The problem is, not all infrastructure projects are created equal. Spending on roads, sewers, and parks has a reputation for pork-barreling and corruption that is all too often deserved. If your community is anything like mine, you probably can’t drive to the store without “benefiting” from some infrastructure project that has no visible purpose other than generating revenue for some politically connected contractor. Is there any way to separate the wheat from the chaff?

A few years ago another useful infrastructure report, this one from the Bipartisan Policy Center, tried to address that question. Although it focused specifically on transportation infrastructure, it made some common sense recommendations that are more widely applicable.

  • Beware of putting new, borrowed money into existing distribution channels. Those channels tend to share out funds on political grounds rather than zeroing in on the most productive projects. It would be better not to spend at all than to spend without rational prioritization.
  • Focus not just on projects that are “shovel-ready” but on those that are both ready and consistent with long-term productivity standards. We will never catch up with the infrastructure deficit if we fund too many short-term make-work projects.
  • Be skeptical of the “jobs multiplier” rationale for infrastructure projects. Focus on the outputs from infrastructure spending, not the inputs.

Unfortunately, these principles are easier to state than they are to implement. At present, the government’s budget process seems to be moving away from them, not toward them. In this era of permanent budget crisis, any infrastructure money that is appropriated comes on an ad-hoc basis, with specific projects thrown in as “sweeteners” to get past a fiscal cliff or a hike in the debt ceiling. Congress seems completely to have abandoned the kind of orderly budgeting-authorization-appropriation process that is supposed to allow considered evaluation of individual spending proposals. Instead, we get omnibus spending bills and across-the-board sequesters that spend and cut without any sense of priorities.

The bottom line: Yes, our political leaders are right to worry about the kind of national balance sheet we will leave to future generations. But the difference between federal financial assets and liabilities is not the only thing on that balance sheet. Highways, railroads, the electric grid, and those invisible but crucial sewers and water mains are on the balance sheet too. The last time I blogged about the infrastructure deficit, the fiscal deficit was still getting worse. Now the economy is slowly recovering and the fiscal deficit is looking a little better. So isn’t it about time to look at the larger picture, and do something about those ready-to-fall bridges and ready-to-bust levees?

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Ed Dolan is Wall St. Cheat Sheet’s in-house economics professor. He is the author of an acclaimed series of textbooks Introduction to Economics and Ed Dolan’s Econ Blog.

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