If We Can’t Agree on Infrastructure, What Can We Agree On?

Candidate after candidate and election year after election year, both sides of the political spectrum promote infrastructure plans. Who, after all, could be against fixing potholes and failing bridges? And yet, while our infrastructure continues to deteriorate, we fail to reach agreement. If we can’t do this, what can we do?  Let’s try to be fact-based and rational.

Both 2016 presidential candidates Clinton and Trump supported infrastructure investment, with specific proposals of $275 and $500 billion respectively. Each of the 2020 candidates has an infrastructure proposal, and an entire presidential forum (Moving America Forward) will be dedicated to the topic. And yet, despite a celebrated meeting recently between the president and congressional leaders, no progress has been made. 

This is particularly perplexing given that when measured in economic terms, infrastructure investment yields a compelling return. Not to mention the fact that potholes, congested highways, power outages, and cyberattacks are not exactly being lobbied for. 

Despite this apparent consensus, as we describe in our Infrastructure Research, investment in terms of GDP has decreased from 2.5% in the 1960s to 1.3% today. Furthermore, recent infrastructure investment has shifted to repair and maintenance, while spending on capital improvement projects has decreased by 16%. Even the motivation of the 2008 financial crisis was insufficient to reverse course. President Obama’s American Recovery and Reinvestment Act (ARRA) of 2009 included only $105 billion in infrastructure investment, with $8-11 billion in railway grants in an effort to fulfill his goal of giving 80% of Americans access to high-speed rail. ARRA resulted in—according to some—“few, if any” lasting results, and by some measurements, we still do not have a single true high-speed railway.  

So, if we agree, why can’t we reach agreement?

A primary reason appears to be that while the content of most proposals is similar, we can’t agree on how to pay for them, and the lack of compromise on this issue prevents progress. Trump’s $2 trillion plan, for example, provided only $200 billion of federal funding, essentially as “seed” capital to stimulate local, state, and private investment that would make up the other $1.3 trillion. Democratic leadership, by contrast, proposed that federal funds make up the larger proportion of the investment. Their Blueprint to Rebuild America’s Infrastructure proposed $1 trillion in federal funds, paid for by “closing tax loopholes” for corporations and the ultra-wealthy. 

A traditional source of public funds for infrastructure is the federal gas tax, which has remained at 18.4 cents per gallon since 1993, thereby undergoing a 40% decline in purchasing power. Yet President Trump’s recent consideration of a 25-cent increase was met with objection within his own party. 

Although funding is perhaps the most contentious part of the issue, most of the Democratic candidates rely on general references to corporate tax increases to fund their proposals. Senator Klobuchar has made infrastructure her “top budget priority.” She would allocate over $650 billion in federal funding for infrastructure, paid for by an increase in corporate taxes, “closing loopholes,” and increased “tax enforcement.” Senator Sanders includes infrastructure spending as part of the Green New Deal. He assumes reductions in defense spending along with higher taxes on the wealthy, corporations, and oil companies will be sufficient to start the process. Ultimately, he argues that the benefits of the new jobs created and related reductions in safety net spending will sustain the program. Pete Buttigieg has a plan to invest $1 trillion of federal spending alongside states, cities, and local governments. His website, however, is silent on the issue of financing the program. Bloomberg’s plans are similar to the other candidates’, but he leads with the view that “money isn’t the issue” and what is needed is a “truly visionary national plan that will tie investment to clear goals.” 

Fortunately, while the federal government fails to deliver on infrastructure promises, states have tried to do their part. Thirty-one states have raised or reformed their gasoline taxes in their efforts to increase or maintain their infrastructure investment. These include conservative, “red” states like Alabama, which raised the gas tax by 10 cents in the fall of 2019. 

Sadly, on the list of problems, infrastructure is one of the easiest to solve. Perhaps we need a good power outage on Capitol Hill or a backup in the sewer lines to get the attention of our leadership in Washington.