For years, America has ignored addressing its problem with an aging and decaying infrastructure. The American Society of Civil Engineers has estimated that $3.3 trillion needs to be spent on infrastructure investment in the next ten years. The ASCE has warned that if the needed monies are not spent, the cost to the economy will be in the neighborhood of $4 trillion.
US needs to spend at least $3.3 trillion over next ten years
Deteriorating infrastructure, long known to be a public safety issue, has a cascading impact on our nation’s economy, impacting business productivity, gross domestic product, employment, personal income and international competitiveness. — American Society of Civil Engineers
Last year the U.S. spent 3.4 percent of GDP or about 611 billion on public capital investments. As a percentage of GDP, this was the lowest amount in more than 60 years. Stories of falling bridges, train derailments, lead contamination in Michigan all highlight the price that the country is paying for neglecting its fundamental underpinnings.
Clinton and Trump both agree an investment is needed
In a rare sign of agreement, both Hillary Clinton and Donald Trump have called for the nation to make a significant investment to fix the country’s decaying infrastructure. Mrs. Clinton has pledged “the biggest investment in American infrastructure in decades,” if she is elected. Mr. Trump has vowed to be the “infrastructure president and promised to “build the roads, highways, bridges, tunnels, airports, and the railways of tomorrow.”
Clinton has proposed spending $275 billion on infrastructure over the next five years, while Trump has said that he would spend at least double that number.
President Obama has tried for seven years to get public works package
All that is well and good, but politicians have been making similar promises for years. For much of President Obama’s time in office, he has tried to persuade Congress to fund the kind of public works package that is needed to reverse the decades of neglect in the nation’s public transportation network. This would also create millions of jobs in the process.
The Republican-controlled Congress has refused to provide the funding needed to enact President Obama’s program. Mr. Trump might have more success at getting the money out of Congress, but that is far from a sure bet.
Raise the federal gas tax for the first time in 20 years
The options for funding the infrastructure fix are generally focused on raising the federal gas tax for the first time in two decades, or imposing a value added tax on barrels of oil. Another solution gaining support is to enact legislation that would force American companies to bring home the $2.10 trillion in profits which are kept offshore to avoid paying U.S. taxes. The amount of money this would generate would depend on the language of the legislation. It has the potential to create a substantial down payment on the repair of the country’s infrastructure, and would be more popular with the public than raising the gas tax.