The incoming Biden administration appears poised to move quickly on infrastructure funding, including dealing with the knotty aspects of financing—potentially stemming a growing nationwide deficit on spending for roads, bridges water, electricity and transit.
Speaking at a video press conference Jan. 12 announcing release of the American Society of Civil Engineers’ latest long-term economic study—which forecasts a $5.6-trillion investment gap in infrastructure by 2039—U.S. Rep. Earl Blumenauer (D-Ore.), a member of the House Ways and Means Committee, said conversations with Biden’s team indicate a willingness to work with Congress on charting a long-term course away from the federal fuel tax, and toward an alternative that would be “sustainable and fair over time.”
A fuel tax phase-out could begin with what Blumenauer called a “grand bargain” that combines a short-term increase with a discounted rate for certain rural areas. Taking advantage of current low interest rates for bonds would likewise allow legislators and the administration to use the “full range of tools,” such as bonding.
“We don’t need to raise revenues quickly,” Blumenauer added, “but we do need to have a ten-year plan that indicates where we need to go to provide this certainty.”
Blumenauer cited ASCE’s study, “Failure to Act: Economic Impacts of Status Quo Investment Across Infrastructure Systems,” as an ideal starting point for the financing discussion, as it details how unmet infrastructure needs could cost the U.S. economy trillions of dollars in economic growth and lost productivity over the next two decades.
Developed with the assistance of a broad-based economic research consultant team, the analysis provides a long-term comparison of current and projected infrastructure investment needs against existing funding trends in ten categories.
Absent any change in current spending levels, the study forecasts a $5.6-trillion investment gap by 2039, resulting in a $10-trillion hit to the nation’s gross domestic product. Business productivity would likewise suffer a cumulative $23-trillion decline, the study found, while delays and disruptions resulting from infrastructure deficiencies could eventually cost individual U.S. households as much as $3,300 a year.
“We are treading water,” said ASCE Executive Director Tom Smith during the press conference.
Smith noted that while recent federal- and state-level investment have partially narrowed funding gaps in some infrastructure categories, such as ports and inland waterways, others continue to grow. The combined surface transportation categories of highways, bridges, rail and transit comprise the largest imbalance, which has grown over the past decade by 9%, to $1.2 trillion.
While the effects of insufficient infrastructure funding are already evident, the ASCE analysis forecasts an exponential increase in detrimental effects, with more than three-quarters of total economic impacts occurring during 2030-39.
The coronavirus pandemic could alter that outlook as well, although the study admits that it’s too early to fully assess long-term economic impacts. Instead, the study assumes that “deterioration of the current state of infrastructure will cause economic harm, and a more aggressive and wisely considered investment program will improve future economic performance.”
Given that infrastructure is typically a unifying topic among legislators of all parties, Blumenauer said ASCE's report could serve to mend strained political relations on Capitol Hill, and “energize” the pandemic-depressed economy.
“This is a time when the economic impact is undeniable,” Blumenauer said. He also praised Biden’s choice of Pete Buttigeig as U.S. Secretary of Transportation, noting that the one-time presidential candidate had “one of the best platforms” of the 2020 campaign.