President Dwight D. Eisenhower understood the value of roads. His conviction grew from experience after he participated in the U.S. Army's first transcontinental convoy of military vehicles. The journey from Washington to San Francisco took two months. During and after World War II, Eisenhower also made use of Germany's Reichautobahnen network of rural superhighways. He said, "The old convoy had started me thinking about good, two-lane highways, but Germany had made me see the wisdom of broader ribbons across the land." Eisenhower signed off on the Federal-Aid Highway Act of 1956 and by the end of his administration in 1961, 10,440 miles of the 41,000-mile Interstate System had been opened to traffic (including 2,264 miles of turnpikes at a price tag of more than $10 billion). Those years also mark the last time there was a major infrastructure project in America.
Today the United States no longer has the best infrastructure in the world. According to the World Economic Forum, United States overall infrastructure places 12th, with countries like Japan, Germany, the Netherlands and France outranking us.
And the underperformance is evident in many areas. The President’s target of $1 trillion in infrastructure investment will be funded through a combination of new Federal funding, incentivized non-Federal funding and newly prioritized and expedited projects.
Essentially, the bill doesn’t feature $1 trillion in new federal spending. It pledges $200 billion and proposes to generate $1.5 trillion in new infrastructure spending by leveraging $1.3 trillion in additional state, local, and private sector spending in the areas that the administration feels need the most attention. In short, it means leveraging a least $6.50 in additional infrastructure spending for every dollar spent by the federal government.
By 2025, infrastructure needs will total $4.6 trillion, leaving a $2 trillion gap. Of that amount, $1 trillion is transportation (roads, bridges). More than half the states in the U.S. have already begun collecting dollars through such means as raising state fuel taxes. To address that gap, it is likely the federal government will need to step up to provide more than $200 billion.
Key principles of the infrastructure bill include:
- Making targeted federal investments
- Encouraging self help on the part of non-federal entities
- Aligning infrastructure investment with entities best suited to provide sustained and efficient investment
- Leveraging the private sector
The 2018 budget includes $200 billion in outlays related to the infrastructure initiative, in addition to the following proposals:
- Air traffic control corporation
- Increase infrastructure flexibility at the Veteran’s Administration
- Divestiture of Power Marketing Administrations' transmission assets
- Reform the laws governing the Inland Waterways Trust Fund
Examples of funding proposals include:
- Expand the Transportation Infrastructure Finance and Innovation Act (TIFIA) program
- Lift the cap on private activity bonds and expand eligibility to other non-federal public infrastructure
- Incentivize innovative approaches to congestion mitigation
- Liberalize tolling policy and allow private investment in rest areas
- Fund the Water Infrastructure Finance and Innovation Act (WIFIA) program
- Encourage the use of Army Corps of Engineers (CORPS) contributed/advanced funding authorities
New federal tools include:
- Federal Capital Revolving Fund
- Partnership grants for federal assets
- Environmental review and permitting process enhancements
- Improving environmental performance
- One federal decision
- Judicial reform
A fact sheet on the infrastructure plan is available on the White House website.
What do you think of the President's Infrastructure Initiative?
