The Trump administration hopes to make America's infrastructure great again. But as it does, it should focus on fixing what we have, not building from scratch.
The Trump administration is hoping for its first bipartisan legislative victory with its proposed plan to make America's infrastructure great again with shorter project-approval periods and an infusion of $1 trillion in spending, much of it coming from public-private partnerships.
But more important than simply agreeing to spend more on infrastructure is passing the right program. The guiding light of any plan should be the "fix it first" principle. With the country's aging roads, highways, bridges, ports, airports, electric grid, and water and sewer systems in such disrepair, the last thing taxpayers need is ribbon-cutting ceremonies for fancy new projects or wasteful "bridges to nowhere."
How bad is existing infrastructure? The American Society of Civil Engineers estimates that if America's failure to invest in its ailing infrastructure is not addressed by 2025, the U.S. economy can be expected to "lose almost $4 trillion in GDP, resulting in a loss of 2.5 million jobs in 2025." The total cost of repair? At least $3.6 trillion.
If there is a silver lining, it is that unlike Brazil, India or China, the U.S. doesn't need a vast new infrastructure footprint. We need to repair, rebuild and modernize what we already have.
Moreover, given America's more advanced state of development, new infrastructure no longer offers the spectacular returns of yesterday. The Erie Canal, for example, completed in 1825, reduced transportation costs by 90% vs. overland hauling. But after two centuries of infrastructure development, those kinds of returns are gone.
If we... want to help our struggling communities, helping them overcome the legacy cost of deferred infrastructure maintenance is one good way to do it.
Take America's still impressive highway system, built largely after President Eisenhower signed the 1956 Federal-Highway Act into law. As my Manhattan Institute colleague, Ed Glaeser, wrote in City Journal in 2016, by the 1990s the rate of return on new U.S. highways had fallen to less than 5%. By contrast, highway maintenance produces returns of 30%-40%.
Sadly, politicians on both sides of the aisle often prefer cutting ribbons on new projects over maintaining what we already have. But earmarking the majority of a new infrastructure spending for maintenance instead of expansion would do a lot to drive better decision making and save taxpayers money in the long run.
A maintenance-focused program would also be more equitable. Many Rust Belt cities are working to upgrade aging water and sewer systems, for example, a far more pressing need than new construction. Costs can run into the billions simply to comply with legally mandated updates, such as the St. Louis region's $4.7 billion sewer remediation project.
If we as a nation want to help our struggling communities, helping them overcome the legacy cost of deferred infrastructure maintenance is one good way to do it. We can't wave a magic wand and restore the economy of Flint, Mich., not even with new highways. But we can rebuild its water system and ensure clean, safe drinking water for its citizens.
Even in growing urban areas, maintenance is critical and has been neglected in favor of less urgent expansion projects. New York City, for example, plans to build new train tunnels under the Hudson River. It also recently built two new subway extensions and is in the process of building a new $11 billion commuter rail connection between Long Island and Grand Central Terminal. Yet the existing subway system has been losing riders despite a jobs boom, as breakdowns and delays soar due to antiquated signals dating to the 1930s and other deferred maintenance items.
States and localities also need flexibility to match spending to needs. Many states might focus on highway rehabilitation, whereas Boston and New York might instead upgrade transit infrastructure. Some states might instead want to invest in water and sewer needs. So, while the plan should be maintenance-focused, much decision-making should be decentralized.
As Japan learned to its chagrin in the 1990s, pouring billions into new infrastructure to try to revive a sagging economy only ended up drowning the country in debt. The U.S. should choose a more economically rational, and equitable, path by focusing its infrastructure investment on critical maintenance needs.
This piece originally appeared on Investor's Business Daily