COVER STORY

The Real Infrastructure Crisis

The nation's roads and bridges are in pretty good shape. It's the national will that is suspect.

by Burt Solomon

Sat. Jul 5, 2008


It's a frighteningly familiar catastrophe to imagine. An earthquake in Northern California ruptures 30 levees along the converging Sacramento and San Joaquin rivers, and 300 billion gallons of saltwater rush inland from San Francisco Bay, flooding 16 islands and ruining the supply of fresh water across two-thirds of the nation's most populous state. Or picture this: In southern Kentucky, the 55-year-old Wolf Creek Dam (where water has seeped through the foundations for years) gives way. The breach lets loose the largest man-made reservoir east of the Mississippi River, flooding the communities along the Cumberland River and shorting out the electric guitars in Nashville.

These were the top two horror stories--"5 Disasters Coming Soon If We Don't Rebuild U.S. Infrastructure"--that Popular Mechanics conjured up for its readers last fall, after the collapse of a bridge in Minnesota killed 13 innocents on their way home from work. The stunning sight of an interstate highway plunging into the Mississippi River, just two weeks after a steam pipe exploded beneath Lexington Avenue in Midtown Manhattan--and less than two years after Hurricane Katrina brought New Orleans to its knees--dramatically brought the nation's fallible infrastructure to the public's attention. So, too, did the overwhelmed levees along the Midwestern rivers during the recent rains. And so did the garden-variety failures, such as the water main break on June 16 in Montgomery County, Md., bordering Washington that forced some of the capital's bigwigs to boil water before brushing their teeth.

In the mammoth but aging networks of roads, bridges, railroads, air traffic, sewers, pipelines, supplies of fresh water, and electricity grids that helped turn the United States into the world's economic superpower, other dangers lurk. All over the country, clean-water and wastewater facilities are wearing out. The combined sewers that 40 million people in 772 cities use could disgorge their raw contents into waterways when the next storm passes through. Every summer brings the possibility of blackouts.

Traffic gridlock has become a fact of life, jamming the highways and airways and creating bottlenecks of goods through the ports, especially around Los Angeles and New York City. The American Society of Civil Engineers has classified 3,500 of the nation's 79,000 dams as unsafe; in a 2005 report card on the nation's infrastructure, the society assigned grades that ranged from C+ (for the proper disposal of solid waste) down to D- (for the supply of drinking water and the treatment of wastewater).

Talk of the "crisis" in the nation's physical infrastructure has leapt beyond think-tank forums and earnest editorials. It has quickened legislators' interest, generated heartfelt lobbying on Capitol Hill--expected to climax next year when Congress must reauthorize the pork-laden highway program--and nosed its way into the presidential campaign.

Experts, however, consider "crisis" an overblown description of the perils that America's infrastructure poses. Federal investigators have tentatively concluded that the ill-fated Interstate-35W in Minnesota collapsed not because it was structurally deficient--although it was--but because of a design defect: The gusset plates connecting the steel beams were half as thick as they should have been. Nationwide, bridges are in better structural condition than they were 20 years ago, and the most critical of the nation's 4 million miles of roadways are in pretty good shape. In the transportation system, "the physical condition has not noticeably deteriorated ... in the past two decades," said Katherine A. Siggerud, the managing director of physical infrastructure issues at the determinedly nonpolitical Government Accountability Office. "The condition of the most-traveled roads and bridges in the United States, the interstates and the national highways, [has] improved in quality."

The more serious problem is the lack of roads and the traffic congestion that this shortage creates, especially around major cities. In the nation's airways, too, congestion has become chronic, especially at airports in the Northeast. But Gerald Dillingham, the GAO's director of civil aviation issues, doesn't see a crisis in the near- or midterm, and he is hopeful that better technology and new ways of structuring the airways can stave off disaster for at least the next 15 years. The Transportation Department has calculated the overall economic cost of congestion at $200 billion a year, surely a drag on the nation's commerce, not to mention a vexation to anyone stuck in traffic. Still, in a $14 trillion economy, that amounts to 1.4 percent--a pittance.

Fixing the nation's infrastructure is "a matter of fine-tuning the economic production system," said Kenneth A. Small, an economist who specializes in transportation at the University of California (Irvine), "not a matter of moral outrage." Rudolph G. Penner, a senior fellow at the Urban Institute, said, "I'd call it a problem, not a crisis." Even the lobbyists who urge more spending on the nation's infrastructure acknowledge that the assertions of impending doom are an exaggeration. Janet F. Kavinoky, the director of transportation infrastructure at the U.S. Chamber of Commerce, is the executive director of Americans for Transportation Mobility, an alliance of construction companies and labor unions. "If you don't say it's a crisis," she explained, "nobody shows up at your press conference."

Nor is the country ignoring the issue. The nation's spending on infrastructure continues to rise; New Orleans is rebuilding the levees that Katrina breached. "The things that need to get done are getting done, by and large," said Timothy P. Lynch, the American Trucking Associations' senior vice president for federal relations and strategic planning.

This isn't to say, of course, that all is hunky-dory. The future of U.S. infrastructure could be grim indeed if too little is done. At the core, it's a question of cost. Bridges and roads are expensive--to build or to fix--and so are mass transit, airport runways, and almost everything else. The civil engineers issued a widely invoked price tag of $1.6 trillion over five years to do what needs to be done, but even champions of a strong infrastructure find such a number inflated--"a compilation of a wish list," the ATA's Lynch said.

Moreover, investment bankers say that plenty of capital is available for work that is critical to the nation's well-being. What may be missing, however, is the political will to spend this capital. Increasingly, legislators and local governments are trying to arrange infrastructure financing in ways that conceal the true costs from taxpayers, who are reluctant to foot the bill, and that may transfer the financial burdens to future generations. If the measure of a society's responsibility is its willingness to invest for the long run, then the crisis in infrastructure is this: Do Americans possess the national will to pay for what their children and their children's children are going to need?

Ancient Rome Meets Reagan

Only occasionally has a civilization made its infrastructure an emblem of its ambition or greatness. Consider, notably, the marvels of ancient Rome--its roads, its aqueducts, its public baths and lavatories, its Colosseum and other sites of public entertainment. Conceived as a military necessity to assure the movement of troops through a far-flung empire, Rome's extravagant and enduring infrastructure took on other functions, too. As a public benefaction, it gave the state a way to justify its own existence, according to Garrett G. Fagan, a historian at Pennsylvania State University, and the many amenities that wealthy families financed served as "a kind of social compact between the upper classes and the poorer classes." The boldness and breadth of Roman infrastructure, Fagan said, "go a long way to explain why the empire lasted so long."

The United States has often shown a similar ambition. In 1808, after Thomas Jefferson's Louisiana Purchase added a vast wilderness that stretched as far as the future Montana, Treasury Secretary Albert Gallatin proposed a national transportation network of roads, rivers, and ports.

In the following decades, Henry Clay of Kentucky lent his legislative weight in the House, and then in the Senate, to the "internal improvements" of canals and railroads. Abraham Lincoln, even as he struggled to win the Civil War, pursued plans for a transcontinental railroad. Theodore Roosevelt, so fond of proclaiming the needs of "future generations," convened a conference of governors that resulted in water projects that irrigated the West and generated electricity cheaply; his list of ventures-still-undone gave TR's fifth cousin, Franklin D. Roosevelt, a starting point when he tried to spend the nation out of the Great Depression. Then, in the postwar boom of the 1950s, President Eisenhower pressed for a system of interstate highways that knitted the nation together and bolstered its economy. As late as the 1970s, after the Cuyahoga River in Cleveland caught fire in 1969, the federal government invested tens of billions of dollars in sewer systems and wastewater treatment plants.

Taxpayers' generosity toward the nation's infrastructure, however, took a dive during the 1980s. President Reagan's aversion to using taxes for domestic spending, exacerbated by Wall Street's obsession with quarterly earnings, encouraged a shortsightedness in assessing the public good. According to Sherle R. Schwenninger, the director of the New America Foundation's economic growth program, the money that government at all levels has devoted to infrastructure, as a proportion of the nation's total economic output, slipped from 3 percent during the 1950s and 1960s to only 2 percent in recent years.

"We've just not reinvested," former Council of Economic Advisers Chairman Martin N. Baily complained at a Brookings Institution forum last fall, "because nobody wanted to raise the taxes to do that." Even in Katrina-devastated Louisiana, when the Army Corps of Engineers announced in 2006 that its estimate for fixing the levees had ballooned from $3.5 billion to $9.5 billion, the state's politicians and editorial writers wailed.

Not to Worry

It wouldn't take many years, or so it is said, before the weeds poked up through a neglected interstate highway. Not to worry. Even as the nation's enthusiasm for long-term investments has flagged, the total amount of money spent on its infrastructure has continued to grow. As the federal share has shrunk (from 32 percent in 1982 to less than 24 percent in 2004, according to the Congressional Budget Office), state and local governments have picked up the slack. Counting all levels of government, public entities spent $312 billion on the nation's transportation and water infrastructure in 2004, three times as much--after taking inflation into account--as in 1956, when Eisenhower's heyday began. (See chart.)

Has the U.S. underfunded its infrastructure, on which its economy rests? "Compared to what we really need, I think so," said Penner, a former CBO director, "but relatively slightly."

Consider, for example, the state of the nation's bridges. Last summer's tragedy in Minnesota cast a spotlight on the Federal Highway Administration's alarming conclusion that, as of last December, 12 percent of the nation's bridges were structurally deficient. But less attention was paid to the fact that this proportion had shrunk from 13 percent in 2004 and nearly 19 percent in 1994. Nor was it widely noticed that the label of "structurally deficient" covered a range of poor conditions, from serious to far less so. Fewer than a tenth of the tens of thousands of bridges deemed deficient are anywhere close to falling down. (A Federal Highway Administration spokeswomen said the agency does not have summary information about the location and size of the worst bridges.)

The surge of bridge inspections that followed the disaster in Minnesota turned up a second bridge with bowed gusset plates across the Mississippi in Minneapolis-St. Paul--it was immediately closed and slated for repairs--and another one in Duluth. The Minnesota Legislature found numerous shortcomings in the state inspectors' work on the I-35 bridge that had been tagged as structurally deficient for some cracking and fatigue. According to the National Transportation Safety Board's investigators, however, the inspectors were not the problem. Indeed, the investigators cited the effort to repair the bridge, which entailed piling construction supplies and equipment on its overburdened deck, and the thin gusset plates as the likely leading causes of the I-35 collapse. The more that they have learned about the disaster, the less it has served as a morality tale.

As for a fear of falling bridges, "I don't really think we're in a crisis," said economist Small. He also mentioned the "pretty strong" system of bridge inspections and placed the 13 deaths in Minnesota into the context of all U.S. traffic fatalities, which average 120 a day. "If you plot the statistics," he noted, "you might not notice the bump."

On the roads, too, drunk drivers or malfunctioning vehicles cause many more deaths than potholes or crumbling concrete. The roads are OK, but there aren't enough of them to hold the traffic, and building more will only increase demand. The gridlock is worst of all around Los Angeles, the San Francisco Bay area, Chicago, New York City, Atlanta, and Washington, but it has also spread into unlikelier venues. A third lane is being built along certain truck-clogged stretches of Interstate 80 in Iowa and Nebraska. The GAO's Siggerud pointed to "bottlenecks in every mode of transportation," which stand to get worse. The Federal Aviation Administration has predicted that air traffic may triple during the next two decades, and the American Road & Transportation Builders Association has forecast that the volume of cargo on U.S. roads will double. In Los Angeles, the freight volume is expected to triple as the population grows by 60 percent, producing strains that the U.S. chamber's Kavinoky warned "will paralyze the city."

Ian Grossman, the FHWA's associate administrator for public affairs, lamented the Little League games unattended and the volunteerism in decline because of congestion. "It shouldn't be a fact of life," he said.

The economic impact of the bottlenecks has been "woefully understudied," according to Robert Puentes, an expert in infrastructure at the Brookings Institution, who regards transportation policy as "a fact-free zone." But Clifford Winston, an economist at Brookings, has tried. His calculation of the annual economic cost of congestion is just a third of DOT's--$15 billion in air traffic and nearly $50 billion on the roads, counting the shipping delays, the higher inventories required, the wasted fuel, the value of gridlocked motorists' time, and other not-quite-tangible factors. The impediments are numerous, Winston said, but "none of them are big. That's why they persist."

The problem of congestion is, to a degree, self-limiting. It could injure the economy of a gridlocked metropolis, but by no more than 5 to 10 percent, according to Small, by driving business to the suburbs, exurbs, and smaller cities that stand to benefit from the big cities' pain.

Nor has congestion in the air been neglected. The air traffic system, in which 25 percent of last year's flights arrived late, has added runways in recent years in Atlanta, Boston, Cincinnati, Minneapolis, and St. Louis; starting this November it will add another runway at Chicago's O'Hare. The $13 billion that the FAA spends annually on infrastructure development for civil aviation falls a mere $1 billion short--pocket change, really--of what GAO analyst Dillingham believes it should spend. The next generation of air traffic control, based on a global positioning system instead of on radar, has been delayed--not because of the immense cost or the technology, Dillingham said, but because of the difficulty of integrating it into the existing system.

Scarier, perhaps, for the nation's economic future is the possibility that congestion or other strains on an elderly infrastructure will damage America's already shaky competitive position in global markets. The American business executives who leave South Korea's luxurious Incheon International Airport or Shanghai's modern, half-empty airport to arrive at New York's seedy JFK are bound to feel repulsed. Today, that is nothing more than inconvenience, but eventually, economists say, it could count.

"In a globalized economy," the New America Foundation's Schwenninger said, "there are only a few ways you can compete." Asian countries can claim lower wage rates and taxes, and Europe boasts governmental subsidies and an educated workforce. This leaves infrastructure, Schwenninger ventured, as American businesses' best hope for a competitive edge--more so than 20 to 30 years ago, and more important than education. Silicon Valley, he reported, has lost some of its silicon-wafer manufacturing to Texas and countries overseas because producers fear brownouts in California.

Yet the threat to U.S. competitiveness shouldn't be exaggerated, for other countries face similar problems with congestion. Gaining permission to build a new road or runway is even harder in cramped, environmentally conscious Europe. China and India are spending 9 percent and 5 percent, respectively, of their gross domestic product on infrastructure. The U.S., however, has an overwhelming advantage: Its elaborate infrastructure--4 million miles of roads, 600,000 bridges, 26,000 miles of commercially navigable waterways, 11,000 miles of transit lines, 500 train stations, 300 ports, 19,000 airports, 55,000 community drinking water systems, and 30,000 wastewater plants--is already built.

Ducking the Costs

Still, on matters of infrastructure, the United States is losing ground. "It would be an overstatement to say our system is in crisis," Brookings's Winston said. "At the same time, the annual costs of the inefficiencies [because of congestion] are large, growing, and unlikely to be addressed by the public sector."

No longer is American infrastructure on the cutting edge. "I think we are falling behind the rest of the world," Rep. Earl Blumenauer, an earnest veteran Democrat from Portland, Ore., said in an interview. He is pushing legislation to create a blue-ribbon commission that would frame a coherent national vision for dealing with the country's disparately owned and operated infrastructure, variously the responsibility of federal, state, or local governments or--for a majority of dams and many recent water systems--private owners. Besides the existing bottlenecks in the movement of goods, Blumenauer foresees "real problems with the backlog of projects"--for sewers, roads, water, bridges, etc.--within five to 10 years. And deferring maintenance, he noted, increases the costs, which is one reason he thinks that the astronomical price tags "tend to be understated, not overstated."

The GAO, among others, is more skeptical, not only of the civil engineers' $1.6 trillion, $300-billion-plus-a-year cost projection but also of a congressionally created panel's recommendations. The National Surface Transportation Policy and Revenue Study Commission announced in January that the nation must spend $225 billion annually--$140 billion more than at present--on its roads, waterways, and railroads. "Most of the needs assessments," the Urban Institute's Penner explained, "are very much influenced by special interests," using unrealistic assumptions and self-serving estimates.

How much the nation must spend, however, is certain to rise. For fresh water and wastewater alone, by the GAO's calculations, the infrastructure costs over the next 20 years will range between $400 billion and nearly $1.2 trillion to correct past underinvestment. The existing facilities, if not repaired or replaced, would probably take 10 to 20 years to deteriorate, an offical said, not two or three.

Given the presumed reluctance of American taxpayers to pay up front, such projections have quickened the search for politically palatable alternatives to financing infrastructure projects--artful ways of ducking the costs. Hence the rising popularity of public-private partnerships, "or as we called them, business deals," Everett M. Ehrlich, an expert on infrastructure financing, told the House Transportation and Infrastructure Committee in June. On May 19, Pennsylvania Gov. Ed Rendell had announced the winning $12.8 billion bid (submitted by a Spanish toll-road company and a division of Citigroup) for a 75-year lease of the Pennsylvania Turnpike. The idea wasn't original. The city of Chicago signed a $1.8 billion lease for the Chicago Skyway in 2005 and has received a half-dozen bids for privatizing Midway Airport. The Indiana Toll Road was leased in 2006 for $3.8 billion. A private company built and runs the Dulles Toll Road in Northern Virginia, and the Texas Legislature has imposed a two-year moratorium on a planned network of private toll roads out of concern that the deals were too lucrative for the operators.

A private operator, the thinking goes, can raise tolls with an abandon that would give politicians the willies, and investment banks are salivating at the prospect of jumping in. But the criticism has mounted. "Deferred maintenance will become a big part of creating profits for shareholders," Allen Zimmerman, a resident of South Whitehall Township, Pa., warned about leasing the turnpike, in a letter to The Morning Call of Allentown, Pa. Economists worry that a private operator might milk the drivers along the popular routes while ignoring the boondocks.

By the GAO's lights, the value of any given deal depends on the particulars, such as the quality of the management, the assurances of proper maintenance, and the uses to which a state will put the newfound revenues. Indiana is spending its bump in revenue on a 10-year transportation plan; Chicago, on the other hand, has pointedly refrained from any allocation. Pennsylvania officials have vowed to spend their windfall on transportation but have been "evasive," the ATA's Lynch said, about specifics.

At least so far, the greatest hindrance to an influx of private capital for the nation's infrastructure, according to Penner of the Urban Institute, is the paucity of investment opportunities. He also lacks faith in the other ideas being pitched on Capitol Hill that seek to lure capital while dodging the costs--notably, proposals to establish an infrastructure "bank" to leverage private investments and to institute a separate capital budget for the federal government. Nor does the direct approach--the possibility of federal appropriations--give him reason to hope. He fears that the entitlement programs (Social Security, Medicare, and Medicaid) will squeeze the budget, shrinking the discretionary spending on infrastructure projects.

Where, then, will the money come from? At Brookings, infrastructure expert Puentes thinks that relatively small, targeted investments can relieve the worst bottlenecks--those of national importance, such as the congestion at the port of Long Beach, Calif. In any event, simply relying on the construction of new highways and airport terminals won't suffice, in Small's view: "It's just too expensive."

Many economists favor another solution--congestion pricing. London, Stockholm, and Singapore now charge vehicles that drive into the central cities at busy times of the day. Michael Bloomberg, New York City's businessman-turned-mayor, pursued the idea until the state Legislature shot it down. Pure congestion pricing, a high-tech means of raising or lowering the toll depending on the traffic, is being tested on a highway north of San Diego, where the price of driving changes every few minutes. Such pricing would be one way for Americans to pay their way.

The Political Marketplace

On the night that Sen. Barack Obama of Illinois claimed the Democratic nomination for the presidency, he spoke to the nation about, among a litany of intentions, "investing in our crumbling infrastructure." Of course, he happened to be in Minnesota, less than 10 miles from where the I-35 bridge had collapsed. But then he spoke of the problem again two days later while campaigning in Virginia and, later, at a roundtable with 16 Democratic governors. In trying to bolster his appeal to working-class voters in Flint, Mich., on June 16, Obama promised to use the money he would save from ending the war in Iraq on a National Infrastructure Reinvestment Bank that would spend $60 billion over 10 years. Stressing the issue helps Obama look sober and serious about the nation's long-term needs, which is useful for a candidate who is criticized for being inexperienced.

Sen. Hillary Rodham Clinton of New York, whom Obama bested for the nomination, demonstrated the versatility of infrastructure as a political issue. A week after the bridge fell in Minnesota, she delivered a speech in New Hampshire on infrastructure as "a silent crisis." She showed a thorough understanding of the issue ("Today nearly half the locks on our waterways are obsolete.") and offered a detailed plan of attack, including a $10 billion emergency repair fund, $1.5 billion for public transit, $1 billion for intercity passenger railways, and sundry other millions for additional projects. Nine months later, however, facing political death as Indiana Democrats readied to vote, she climbed onto the back of a pickup truck and appealed to voters beleaguered by the soaring price of fuel. Her idea? Suspend the federal gasoline tax, which pays for the upkeep on the nation's pivotal highways. Economists gagged at the thought, but Indiana Democrats rewarded her with a narrow victory.

The presumed Republican nominee, Sen. John McCain of Arizona, who agreed with Clinton on the gasoline tax, has also used infrastructure as a political football. It's a word he reveres. In campaign speeches, he has applied "infrastructure" to public health, alternative fuels, "the infrastructure of civil society," and "the Republican infrastructure." But in the conventional sense, he has linked it to one of his trademark issues. "The problem with roads and infrastructure and bridges and tunnels in America can be laid right at the doorstep of Congress," he said in May, four months after federal investigators blamed the Minnesota bridge collapse on a design flaw, "because the pork-barrel, earmark spending, such as the 'Bridge to Nowhere' in Alaska, has diverted people's hard-earned tax dollars that they pay at the gas pump." This charge drew a public rebuke from Tim Pawlenty, Minnesota's Republican governor, who is a national co-chairman of McCain's campaign and is often mentioned as a possible running mate. "I don't know what he's basing that on," Pawlenty said, "other than the general premise that projects got misprioritized throughout time."

One legislator's pork, of course, is another's infrastructure. Such criticism of "pork," as a result, has not dampened Congress's enthusiasm for spending money on highways and such. The 2005 highway legislation (known, improbably, as SAFETEA-LU) authorized $286 billion over six years, $32 billion more than the Bush administration wanted. But this amount was miserly compared with the House-approved $380 billion. Members of Congress earmarked just one-tenth of the money for particular projects back home, and not all of those were considered boondoggles. An earmark, for instance, funded the newly built Woodrow Wilson Bridge along the Capital Beltway between Virginia and Maryland.

The lobbyists for the labor unions and the contractors that stand to benefit from road construction are already gearing up for next year's effort to reauthorize the highway bill. The pot will surely grow bigger--reportedly to $500 billion over six years--especially if a Democratic president works with a Democratic Congress. Spending on infrastructure has recently been touted by Rockefeller Foundation President Judith Rodin, among others, as a Keynesian response to an impending recession. And even if earmark-happy highway bills inevitably waste money, they may be worthy of praise for paying up front for whichever roads and bridges--to nowhere or to somewhere--the democratic system has deemed worthy. "In the end, there's no substitute for making systematic investment," Rep. Blumenauer said.

As a political issue, infrastructure is the kind that democracies have a hard time with--a chronic, usually invisible problem that only occasionally becomes acute. For better or worse, however, politics has become inseparable from the battles over infrastructure, sometimes to the point of amusement. When members of the House Transportation and Infrastructure Committee discussed the fateful gusset plates in Minnesota, the Republicans stressed the arbitrary nature of such a failure, which money would never have averted, while the Democrats kept mentioning the bridge's wear and tear, for which more money would have mattered. Partisan positions on gusset plates--who knew?

Still, the politics of infrastructure are far from straightforward. Earmarks and pork find enthusiasts and critics within both political parties. Congestion pricing has produced odd bedfellows. Both Bush administration conservatives and environmental activists approve of such a market mechanism that would save fuel and improve economic efficiency, while some Democrats worry about the effect of "Lexus lanes" on the poor.

The true political divide may lie between Americans who'll be willing and able to pay up front for the nation's needs--whether through taxes or tolls--and those who would rather skimp or burden their children. This sort of decision, between a world-class infrastructure and muddling through, will be made in the political marketplace. If Americans get disgusted enough, they'll do what it takes. Otherwise, they won't.

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