Remember that wasteful stimulus spending that the Obamaniacs pushed through Congress in early 2009? It was a potpourri of short-term measures aimed at generating more economic activity. The total spending authorization was $789 billion, with more than a third ($288 billion) allocated to various tax cuts or tax suspensions; $144 billion distributed to states for fiscal relief; and the rest spread through a mélange of federal programs, like extended unemployment benefits, energy research—and some infrastructure spending. The pure infrastructure authorization was $105 billion (.pdf), or about 13 percent of the total, mostly going to highways, bridges, mass transit, and airports.
And guess what. The quadrennial “report card” on the status of the nation’s public infrastructure issued by the American Society of Civil Engineers (ASCE) shows visible improvement in precisely those areas. This is the fifth such report, and the first one not to record a decline in infrastructure quality. That’s not a lot to brag about, for the overall grade was just D+, up from a plain D in 2009. But we’ll take it. Highway paving is in better shape than in 2009, and the percentage of structurally deficient bridges has actually gone down—bridges won a C+ from the civil engineers, high praise compared to the dismal performances of recent years. Substantial progress, albeit against a background of overall decrepitude, was also recorded in commuter rail, Amtrak corridor trains, and airports. Freight rails, which are almost entirely privately financed, are in generally good shape, although they may find themselves capacity-constrained as the economy continues to expand.
The United States has long been a laboratory demonstration of the importance of infrastructure to growth. The Erie Canal created a unified trading market stretching from the Great Lakes to New York City and the Connecticut seaboard. Farmers quickly shifted to cash crops and began to adopt highly rational approaches to plowing, sowing, and soil maintenance. Areas like Troy, Utica, and Buffalo became centers of farm equipment and stove manufacturing. The same thing happened west of the Appalachians, when creative steamboat designers mastered the tricky Western rivers, and knit the states and territories of the “Old Northwest” into a single resource-based manufacturing powerhouse—in coal, iron and steel, and steam engines, along with flour, packed meats, soaps and other animal products. Once the Southern obstructionists left Congress, Lincoln’s Republicans quickly passed the Pacific Railroad Act. Today it is mostly remembered for its corruption (which was much exaggerated). In fact, despite marauding Rocky Mountain grizzlies and cougars, the railroad was completed pretty much on schedule and on budget; by the 1880s, Bloomingdale’s could ship catalog consumer goods anywhere in the country. Dwight Eisenhower’s postwar highway program enabled the over-the-road trucking industry, and allowed manufacturers to target smaller and smaller market niches.
All that history has somehow been swept away by the recent dogma that all government spending is waste. Under the very conservative Eisenhower administration, public infrastructure investment consumed just under 6 percent of GDP; now it is just under 3 percent, and it shows. One of the virtues of the ASCE report is that it highlights critical infrastructure components that are little appreciated. Some 43 percent of the population lives within an area protected by a levee. Data on levee age and construction quality is spotty at best, but it appears that a large number of quasi-urban levees were originally built to protect farm regions, and offer an inadequate level of protection against the enormous potential losses from urban flooding. Hurricane Katrina demonstrated the consequences of inadequate levees, while its cousin Sandy illustrated the risks assumed by flood-exposed regions without any flood protection at all.
Infrastructure investment can also lead to some interesting technology opportunities. Better signaling and sensing technology can allow trains to operate closer together, which raises rail capacity. The same thing is true in airports—the multiyear, multibillion federal “NextGen” replacement for the current air-traffic-control system will guide planes from ground-based equipment reading satellite GPS data, leading to shorter, straighter descents, while giving pilots full view of the area traffic. The program is proceeding surprisingly well. If it succeeds, it will create a new American technology export opportunity.
Infrastructure deficits are much more damaging to a country’s prospects than budget deficits. While it’s not likely that the current Congress could pass a meaningful infrastructure program, the 2014 elections may tip the balance. The results from the 2009 stimulus bill show that even a one-off program can do a lot of good. Now let’s think of following up a short spending spasm with a long-term, securely financed effort with transparent goal-setting and reporting.
