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Get moving: Why Washington needs to tackle infrastructure investment

In January, the Gallup polling organization asked Americans what they considered to have been the incoming President Trump’s most important promise in the 2016 campaign. Overwhelmingly, they chose “federal investment in infrastructure,” with 69% of respondents saying it should be the top priority.

That wasn’t surprising, since infrastructure spending commands strong bipartisan appeal. President Trump appeared to recognize that reality when he renewed his pledge for “national rebuilding” in his address to Congress in February.

“To launch our national rebuilding,” he said, “I will be asking Congress to approve legislation that produces a $1 trillion investment in infrastructure of the United States— financed through both public and private capital—creating millions of new jobs.”

Yet eight months later, progress toward the president’s chief policy priority has been slow and marked by setbacks and missteps. While the administration has taken steps to address regulatory issues that slow infrastructure projects, a full plan is yet to come. Some even suggest an infrastructure package might not get through Congress before the 2018 midterm elections. If so, that would be terrible missed opportunity.

Perhaps policymakers in the nation’s capital should take a deep breath and remember why they came to Washington in the first place—to get results for the American people. It’s time to recommit to getting results, and addressing our infrastructure shortfall is a good place to start. Here’s what they need to consider.

Support spans political boundaries. First, infrastructure spending boasts strong bipartisan support. During the 2016 presidential primary, Gallup polled voters on their top policy preferences. One of the top answers, with support from Republicans, Democrats and Independents, was more investment in infrastructure—75% agreed we should spend more. Little wonder that the Trump, Hillary Clinton and Bernie Sanders campaigns all made infrastructure investment a key plank in their primary platforms. Members of Congress from both parties would do well to consider that reality.

It’s good for the economy. What explains the public’s enthusiasm for infrastructure spending in a polarized era? To quote an earlier campaign slogan: “It’s the economy, stupid.”

Numerous economic studies have shown that infrastructure investment can stimulate economic growth by boosting the nation’s productive capacity, if designed and implemented properly. Even many fiscal hawks are willing to invest in projects like roads, highways, bridges, railways, airports and waterways, because they understand that this spending has a multiplier effect that can create jobs, encourage broader economic activity and boost economic growth.

To take one example of the benefits: improving traffic flows through construction of new highways, roads and bridges (along with the repair and renovation of existing transportation assets) can reduce congestion and enhance labor mobility. That could be an underappreciated spur to greater efficiency and productivity in the larger economy, as J.P. Morgan Chase Economist Jim Glassman argues.

“With more people driving to work than ever before, the carrying capacity of the nation’s roads is increasingly coming under strain,” Glassman writes. “Faster commutes will increase the supply of available labor—the less time people spend stuck in traffic, the more hours they’ll have available to work. The total cost of US highway congestion is estimated to top $160 billion annually, which will rise further as the population grows. Considering that the combined state and federal highway budget totals only $280 billion, there appears to be substantial potential returns on aggressive infrastructure investment.”

It’s overdue. Moreover, Americans recognize the fact that our existing infrastructure is aging and in need of repair and replacement. The American Society of Civil Engineers gave America’s infrastructure a “D+” rating, estimating  we need $3.6 trillion in investment by 2020 to replace failing facilities and to support the demands of a growing economy and population.

Even President Trump’s ambitious $1 trillion infrastructure proposal (to be invested over 10 years) would only get us part of the way there—but it would at least be a start. (Democrats in Congress offered a competing proposal in January, so maybe there’s some common ground as a starting point for negotiation).

“In infrastructure, you get what you pay for and for decades we haven’t been paying nearly enough. It shows in the grades,” the ASCE says in the “Infrastructure Report Card.” “It’s time to change that, not in one-time, short-term patches and small-scale investment increases, but through bold leadership, thoughtful planning, and—most importantly—sustained strategic investment. Through such transformative action, our infrastructure will be improved and built for the future.”

It would improve public confidence in government. As we pointed out previously with regard to tax reform, a focus on getting things done on behalf of the American people would be welcome at a time when confidence in government and public institutions is perilously low.

Indeed, other leading nations seem to appreciate the benefits of infrastructure investment as a vital public responsibility. A 2016 study by the McKinsey Global Institute revealed that China’s spending on infrastructure is more than twice what Western Europe and North America invest combined.

Yet despite the strong arguments in favor of infrastructure investment, real progress at the federal level has been scarce.

That’s not for a complete lack of trying. One of the last major pushes to restore U.S. infrastructure was led by President Obama in the 2009 stimulus package, the American Reinvestment and Recovery Act (ARRA), which included substantial funding for capital projects.

The ARRA was a worthy start, but unfortunately only a relatively small fraction of the more than $830 billion in stimulus funding was devoted to capital improvements.

In addition, in 2015 President Obama signed the bipartisan Fixing America’s Surface Transportation (FAST) Act, which authorized $305 billion for highway, highway and motor vehicle safety, public transportation, motor carrier safety, hazardous material safety, rail, and research, technology, and statistics programs. The FAST Act according to the Department of Transportation, “largely maintains current program structures and funding shares between highways and transit. It is a down-payment for building a 21st century transportation system.”

Of course, part of the problem in getting infrastructure projects under way is an old one: how to pay for it? We know that it’s not something the government can afford on it’s own, and there will have to be a role for private investment. In a subsequent article, we’ll take a closer look at creative approaches to financing infrastructure projects through public-private partnerships, highlighting several of the priorities that SIFMA would like to see highlighted in any legislative package.

To be sure, there has been some progress on infrastructure investment at the state and local levels. In recent years, states and municipal governments have led the way on a wide range of local capital projects, thanks in large part to low interest rates and long-term debt financing through municipal bonds. But to really get the most bang for our buck, the federal government needs to step up.

That’s why the Trump administration’s early focus on infrastructure investment has been welcome—and why Washington needs to recommit its focus to progress on this vital goal.

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