A conservative approach to infrastructure.
An NRO Symposium
With the next White House and Congress poised to push through an ambitious infrastructure-spending plan, what should conservatives be ready to do? What is a conservative infrastructure strategy and how realistic is it in Obama's Washington? National Review Online asked some experts.
Three core principles for conservative infrastructure investment:
Conservatives need infrastructure, too. The deteriorating quality of public infrastructure in cities and in crowded suburbs is making America less competitive relative to Europe and Asia. For evidence that big, creative thinking on infrastructure can make a huge difference in improving economic productivity and quality of life, look to Boston's Big Dig. Yes, the project took way too long and cost too much, and became a national joke. But the long-term joke is on the rest of the country, because downtown Boston now has the best highway infrastructure and the fastest airport trips in the northeast. Cities like New York should take the same audacious big-picture approach to new mass-transit projects.
Infrastructure is not a stimulus. One conservative argument against infrastructure investment as the focus of a federal stimulus package is that it's too slow to work in jump-starting the economy. In a long recession, this argument may be incorrect. But it's beside the point, anyway. The best way to ensure that the federal government allocates its infrastructure investment wisely is to remember that this money is for long-term investment, not short-term job creation. This focus, in turn, accomplishes two goals. First, it reminds us that the emphasis shouldn't be on "shovel-ready" speed, but on project quality. Second, it gives us a reasonable chance of making sure that the money isn't spent on above-market wages and benefits for workers or wasted on non-infrastructure considerations like gender. We should be getting this work done for the lowest responsible price possible.
The private sector has a role, but it's not a panacea. Public-private partnerships can bring much to an infrastructure project, including cost efficiencies and task proficiencies born of global experience. But the private sector doesn't bring with it a new pot of money. The money still comes from the public, whether through tolls or through government "capacity payments" that must be paid to the private "partner" every year, just like payments on a municipal bond. Nor will the private sector often take on certain financial responsibilities, like the risk that a newly built road won't attract enough traffic in its start-up years to cover costs, the technical risk that an unproven technology will cost more than expected, and the like. Most important, the public sector must remember that it continues to bear the ultimate responsibility when something goes wrong with a public-private partnership. So it has to bring with it a healthy skepticism. When something sounds too good to be true, it probably is.
Nicole Gelinas is a Chartered Financial Analyst and a contributing editor to City Journal.
Fifty years after Dwight Eisenhower started construction on the national interstate-highway systemjustified, at the time, largely for national-defense reasonsconservatives should argue for the ultimate road-infrastructure "change," and contrast it with the Obama administration's "more of the same."
They should argue for ending the federal highway "trust fund" and the federal gasoline tax that supports it, and for returning both the tax money and the infrastructure responsibility to the states. This could probably be accomplished for less than the hundreds of billions Obama is planning to spend and would have a myriad of benefits.
First, getting rid of the gasoline tax, as with cutting any tax, would have a stimulative effect on the economy. Cash would be freed up to be spent on consumer goods or invested in new jobs and new businesses.
Second, the highway trust fund, like the Social Security trust fund, is often diverted for other purposes, some of which have nothing to do with roads or even with transportation. So getting rid of the trust fund could mean that more money designated for infrastructure is actually spent on it.
Third, this would give states the ability to experiment with new, more efficient methods of transportation. They could fund the roads with user fees and/or congestion pricing, without drivers paying for roads "twice"at the gas pump and at the toll booth.
A conservative infrastructure plan would gain popularity by offering to put states in the driver's seat, rather than keeping them in their current position: buckled up in the back, shouting, "Are we there yet?!"
John Berlau is director of the Center for Entrepreneurship at the Competitive Enterprise Institute and author of Eco-Freaks.
Conservatives have already begun to ridicule projectsfrom tennis centers to dog parksthat cities and states are calling infrastructure just to get part of the trillion-dollar Obama-lode. We need to continue showing the waste among projects and the broad definition of infrastructure implied by them.
On top of that, we need to show the poor value even in real infrastructure projects such as roads and rails. North Carolina's road spending is supposed to encourage economic development. Small towns throughout eastern North Carolina have beautiful four-lane roads but still no growth, while the growing Charlotte, Greensboro, and Raleigh regions have increasing congestion. Those larger cities, and their brethren across the country, now look to trains as a way to control where people liveI mean, to promote growth.
Japan tried the same approach throughout the 1990s, paving riverbeds and actually building bridges to nowhere. Again to no effect.
The conservative approach to infrastructure should focus on self-sustaining projects. Many areas in the country already have private electric, gas, phone, and cable services. Most recent subdivisions have private roads. Private water and rail systems work in places around the world where there is demand. Let's try privatizing more infrastructure, just for kicks.
Joseph Coletti is fiscal-policy analyst for the John Locke Foundation.
Spending is not an end in itself. Otherwise, it would not matter whether we dug holes and then filled them up or spent the money on projects providing longer-term benefits. Regrettably, Washington's policy environment is skewed toward "hole digging." This is indicated by the current ideological (and romantic) bias toward transit spending. There is a false perception that spending more money on transit will get people out of cars. The recent increases in transit ridership have reinforced that fantasy. The reality is that the transit increases are directly related to only 3 percent of the decline in urban auto use. Things have gotten no better over the past decade. To the extent that the infrastructure package includes transportation, projects need to be prioritized based upon productivity, such as cost per hour of travel delay reduced. An administration and Congress serious about improving the economy must reject ideological hole-digging and the rewarding of interest groups. Instead, Washington should focus, however uncharacteristically, on the broad national interest. Rational policy is required.
Wendell Cox is a principal of Wendell Cox Consultancy in St. Louis.
VICTOR DAVIS HANSON
If a massive stimulus plan is going to happen in the next administrationgiven that the Senate, House, and presidency are in Democratic handsthen conservatives should try to do the following: (1) Tone down what will inevitably be a proposed megalomaniac project akin to Pericles' Acropolis project, replete with more redundant buildings, nowhere bridges, and cult-of-personality monuments dedicated to various senators, etc. (2) Appoint some small bipartisan commission that takes the spending out of the corrupt earmark process and targets projects that would lead to increased productivity, as in alleviating specific freeway congestion that is retarding commerce, or aiding key hub airports that habitually have long delays due to lack of another runway, or giving more docking space to overcrowded ports. Otherwise we will get either a bridge-to-nowhere monstrosity in every state where there is congressional seniority, or some of the silly post-9/11 "security" spending in which local out-of-the-way departments get flashy new cars, boats, helicopters, etc. or more Charles Rangel-like government centers. The money should be lean and targeted to areas where it will result in a proven economy that creates wealth. (3) Pay for it by cutting something superfluous rather than printing more money. I suggest, for a start, gutting the tens of billions earmarked in the current farm bill, which redistributes taxpayer dollars to those who are not hurting.
Victor Davis Hanson is the Martin and Illie Anderson Senior Fellow in Residence in Classics and Military History at the Hoover Institution.
Fiscal conservatives will have their hands full simply trying to keep infrastructure investments from veering off course and over a cliff as 2009 opens. Congress will convene for what is arguably the most important time for transportation policy in 50 years, taking up discussion on a five-year transportation reauthorization bill while federal policymakers are in the throes of a debate over an FDR-style economic-stimulus package approaching $1 trillion. While the nation's bridges, highways, and transit systems are in desperate need of upgrades, they will need to be the right facilities in the right place at the right time. Outside-the-box thinking will be a prerequisite for moving from our current, legislatively driven approach to infrastructure spending to one focused on consumer needs and economic value-added. This might be easier to accomplish under an Obama administration than many conservatives might think, but it will depend critically on who he appoints to his transportation-policy team. The fact that president-elect Obama left his transportation-policy team to bat last in the transition-appointment process does not bode well for meaningful reform. Nevertheless, experienced former Clinton administration appointees are more likely to favor the reforms necessary to promote meaningful changes in transportation policyexpanded use of public-private partnerships, creative approaches to road pricing, state-based prioritization of new investments, investments in key freight corridorsthan legislators comfortable with a Beltway-centered legislative process.
Samuel R. Staley is director of urban and land-use policy at the Reason Foundation.
In the 1980s, in answer to the "infrastructure crisis," Congress wisely commissioned the National Council on Public Works Improvement. It was composed of a small group of policy experts, who produced annual interim reports for three years.
Their work was insightfuland summarily ignored. They stated that public-works outlays should be viewed as "economic decisions" and accused public-works managers of living in a "capital-intensive fantasy world." They were pointing out the need for strategic wisdom.
That need persists today, on questions such as the following: Should an infrastructure program be a jobs program, or one that captures and creates economic efficiencies?
Traffic congestion is estimated to cost the U.S. economy about $63 billion a year. New information suggests a more complete accounting of costs would place the estimate closer to $120 billion. The cost of eliminating traffic congestion is in the area of $100 billion (a one-time payment)so the fact that this problem is not corrected in good economic times is an outrage. That it should not be addressed as part of an economic-recovery plan would be criminal. If we financed these infrastructure improvements with user fees, such as tolls, then the amount of money needed from taxpayersas opposed to userswould be nearly zero.
Similar economic efficiencies can be created by establishing truck-only lanes on the interstate highways. This, too, could be financed mostly by fees charged to those benefiting. The benefits of traffic-signal coordination projects are large and costs are small.
Dennis Polhill is a senior fellow at the Independence Institute.
ALAN D. VIARD
Ever since Adam Smith listed public works as a legitimate duty of the sovereign, free-market conservatives have supported a government role in infrastructure. In the weeks ahead, however, we will need to sound the alarm against excessive and misdirected infrastructure spending.
First and foremost, we must rebut unfounded claims about job creation and economic stimulus. Spending doesn't create jobs in the long runinfrastructure jobs are added only at the expense of other jobs. Although increased spending can boost the economy and provide jobs in the short run, the gains must be paid back when the Fed brings inflation back into line. Demand stimulus is useful only if the boost comes during hard times and the payback during better timesexactly the kind of delicate fine tuning that can't be done with slow-spending infrastructure projects.
Therefore, conservatives should call for scaling back the infrastructure program to include only projects that are good investments, not those that are adopted solely as "stimulus." We should oppose earmarks, Davis-Bacon rules requiring above-market wages, and protectionist buy-America provisions. We should insist that routine maintenance not be short-changed for high-profile new construction. In short, we should demand that American taxpayers get their money's worth.
Alan D. Viard is resident scholar at the American Enterprise Institute.
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