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Finding a Path Forward on U.S. Infrastructure

Q&A With Robert Puentes of Brookings

Robert Puentes | Brookings Institution

Given the polarization in Washington, it’s hard to get agreement on whether infrastructure is even in crisis — let alone how to fund it. Robert Puentes sheds some light on what’s needed to maintain the roads and support the country’s future growth.

Few issues illustrate Washington gridlock so literally as infrastructure spending. The Highway Trust Fund, the source for about a quarter of highway and transit spending by all levels of government spending, is facing a huge scaleback again at the end of May.

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Clearly we are a growing country, and infrastructure needs to grow with it.

Yet not only do lawmakers — and experts — differ on how to fund critical maintenance of America’s roads, bridges and dams, they even disagree about whether the nation’s infrastructure is in a state of crisis or not.

Part of the problem, as John Oliver so entertainingly demonstrated, is that infrastructure upkeep isn’t very sexy. Perhaps a bigger issue is the highly fragmented and complex way that infrastructure spending works — with roads funded and financed differently than rails, and with states given tremendous leeway in how they allocate federal funding.

“The problem we have on the federal level is that it’s a big black box,” says Robert Puentes, senior fellow with the Brookings Institution’s Metropolitan Policy Program. “Since the money can be spent on almost any conceivable transportation purpose, there’s just very little connection between the taxes being paid and the results that people see on the ground.”

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At Brookings, we have defined seven different sectors of infrastructure that include not just transportation but also energy, water and social infrastructure.

There’s no doubt that a hike in the federal gasoline tax to revive the highway fund is long overdue, he says, but policymakers also must articulate a more effective spending plan to convince Americans of the need to not just maintain the country’s infrastructure, but ensure stronger future growth.

“Clearly we are a growing country, and infrastructure needs to grow with it,” says Puentes in an interview, in which he explains why infrastructure can be such as complex issue and what’s needed to solve the problem:

There’s some debate about whether the country’s infrastructure is actually in a state of crisis or not. Some believe that certain segments — such as rail transit — are woefully underfunded or underdeveloped, while state highways are actually in good condition. Do you view the current state of infrastructure as a holistic crisis?

Part of the problem is that we don’t really define what we mean by “infrastructure.” We usually default to a conversation about transportation and that usually narrows into just roads and transit, and we kind of leave it there, for the most part.

At Brookings, we have defined seven different sectors of infrastructure that include not just transportation but also energy, water and social infrastructure. It’s important to do that — not from an academic exercise, but because each of these sectors are designed and governed and financed and delivered very differently.

Some infrastructure is completely — or very much — public sector-owned and operated and financed and delivered. In things like public transit, for example, there is a funding crisis right now. There’s a lot of needed investment, because public funding has been waning as of late.

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The gas tax absolutely needs to be raised because it hasn’t been raised since 1993, even to keep pace with inflation.

On the other end of the spectrum, you have something like the freight rail system, which is completely privately owned and operated. You have telecommunications systems that are, for the large part, privately owned and operated. A lot of energy utilities are privately owned and operated, as well.

Raising the gas tax is the potential fix that is talked about most, but would that truly target the problem?

The federal gasoline tax is limited to just a subset of infrastructure. It’s only focused on roads and bridges and public transit. Yet most of the money is so flexible that it can be spent on almost any conceivable transportation purpose.

If a state decides that the money needs to go to certain roadways — whether or not they are owned by the localities or the state — it can get it done. The metropolitan areas also get direct money from the federal government to spend for their own purposes, including local government.

So I don’t think that’s the strongest argument against the federal gasoline tax. The best argument is that the federal role is rather limited, and we overemphasize what the federal government is supposed to do to solve our infrastructure problems.

For certain sectors, federal spending is relatively high, such as transportation and water, for which federal spending averaged $92.15 billion each year from 2000 to 2007. But even for those sectors, the federal share of total spending was never higher than 27 percent during that time.

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To convince the public that the federal tax needs to be raised, states have to articulate a better use of the system.

For other sectors, such as freight rail, telecommunications and clean energy, the federal role in funding and finance is actually quite limited — though they may be affected by federal regulations.

The gas tax absolutely needs to be raised because it hasn’t been raised since 1993, even to keep pace with inflation. We do know that we have these needs for both new capital and investing in existing capital, but it’s not the only thing that we need to do.

Every state has its own gasoline tax — conservative states like Wyoming are raising their tax, and other states like Maryland are raising theirs. So the need is out there, and the federal gas tax is just one small piece of it.

To convince the public that the federal tax needs to be raised, they’ve got to articulate a better use of the system. It needs to be reflective of this post-interstate era and of the dramatic changes that are happening demographically, economically and environmentally. They haven’t really done that, so it will be very difficult to get the public to agree to it.

What type of investments are needed to make the U.S. more competitive?

In a lot of ways, the infrastructure that’s on the ground today is just reaching the end of its useful life. You could say that the roads don’t have potholes, or the sidewalks are not crumbling, but the fact of the matter is that the stuff has a lifespan. It has to be maintained, it has to be rehabilitated, it has to be modernized.

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If so much of the economic growth is happening in Southeast Asia and Latin America, we are going to have to invest in the freight network and ports.

The interstate highway system is a great example — it’s more than 50 years old right now. It just needs to be fixed, because it has reached the end of its useful life.

Then, we need to think about what investments this country needs to compete economically going forward. If so much of the economic growth is happening in Southeast Asia and Latin America, and we are going to try to tap into these markets, we are going to have to invest in the freight network and ports. Those are some of the future type of investments. Canada does this all the time, so it’s not like it’s just a Chinese kind of approach — other federalist countries do it, as well.

So you have to just fix the things that are on the ground right now, at the same time we need to think strategically about the kind of investments we need for the future. Nobody can say that we don’t need to build anything else. Clearly we are a growing country, and infrastructure needs to grow with it. goldbrown2

This article first appeared on GE Reports/Ideas and was republished with permission.

 

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Robert Puentes is a Senior Fellow with the Brookings Institution’s Metropolitan Policy Program where he also directs the program’s Metropolitan Infrastructure Initiative.

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