Donald Trump wants to polish America’s infrastructure, and as a regular commuter whose transportation options include the impassably congested D.C. Beltway and the international embarrassment that is the Washington Metro subway, I couldn’t be more pleased. No doubt many of my fellow city slickers will agree; perhaps some rural readers will as well. America’s roads, bridges, rails, and airports need to be made great again.
But to make that happen, we need to understand the scope of the problem and the impediments to success.
To start with, American infrastructure isn’t “third-world,” as many like to claim, or on the brink of utter ruination, as the perpetually apocalyptic American Society of Civil Engineers likes to diagnose in its annual report cards. Anyone who’s ever been abroad to Italy or France, to say nothing of actual third-world nations, will appreciate the United States’ relatively maintained transportation network. According to the OECD, we have roughly the right amount of infrastructure proportionate to our needs. Let’s make sure we don’t inflate the problem here.
Let’s also guard against ascribing magical properties to infrastructure investment, as some have done by suggesting Trump’s pledge to rebuild our roads and bridges could spur an economic boom. For a cautionary lesson, look at Japan, whose 1990s infrastructure spending surge coincided with a doldrums economy that became known as the “lost decade,” while also racking up unprecedented debt. So massive was Tokyo’s infrastructure investment that businessmen there like to quip that every river in the country now has a concrete bed. This sort of stimulus didn’t work in Japan and it didn’t work when President Obama’s $100 billion investment in new infrastructure projects yielded the slowest economic recovery since the Great Depression.
If we’re going to fund more transportation projects, we should do it because we want better transportation, not because we’re chasing neo-Keynesian ghosts.
Fortunately, President-elect Trump seems to understand this, at least partially. Rather than haphazardly dumping billions of taxpayer dollars into construction projects, Trump proposes a $137 billion tax credit for companies that want to tackle infrastructure initiatives, from which he hopes to unlock $1 trillion in new private-sector spending. It’s a quixotic idea (that’s one crazy rate of return) if an intriguing one, but there’s a catch. Transportation projects tend to attract private dollars only when investors can make ongoing profits — think of those stupid highway EZ-Pass lanes, built through private-public partnerships, that require drivers to pay up for the privilege of driving a few miles — which means Trump’s plan is going to require tolls, and a lot of them.
That reality will likely reroute many of Trump’s projects through the federal government’s more traditional appropriations system. This is where the real improvements need to occur. Several years ago, following a deadly subway train crash, Washington’s execrable Metro system secured a deep pot of $5 billion in funding, only for the delays to get worse and the safety culture to deteriorate further. Trump should take this as a lesson: more government spending doesn’t equate with better infrastructure.
Our current problem isn’t that we don’t shovel enough taxpayer dollars into the Department of Transportation maw; it’s that the federal government is wildly inefficient and wastes money.
There’s the Davis-Bacon Act, a protectionist relic from 1931 that requires the government to pay its workers 22 percent more on average than the market rate and mandates so much paperwork as to effectively exclude smaller companies from contracts. The Congressional Budget Office says repealing Davis-Bacon could save billions, and Trump should listen.
Mandated environmental impact reviews allow anti-development forces to stall, stall, stall, often chewing up more than a decade between the end of planning and the beginning of construction. Trump should modify existing law to shorten the process.
The government’s spending mechanism requires transportation dollars to alley-oop up through federal agencies and then back down to states and localities, wasting even more money on administrative costs. Trump should devolve powers downwards and sideline the cumbersome Department of Transportation.
The real culprit behind America’s groaning roads and bridges is our bureaucratic, unwieldy, primitive, construct-by-committee government. If Trump can streamline this process, if he can clear out the bureaucratic obstacles, he may find that improving America’s infrastructure is easier and cheaper than even he suspects.