In his State of the Union address last week, President Trump called for a “nation of builders” to repair the country’s crumbling infrastructure through $1.5 trillion in infrastructure “investments.”
This sort of rhetoric is hardly new, with calls to repair America’s roadways appearing in nearly every State of the Union going back decades. While President Trump’s quoted price tag didn’t come with many specifics, leaked administration plans offer a reasonable idea of what he has in mind.
The document suggests that the president will spearhead the creation of a Transformative Projects Program, which would finance “exploratory and ground-breaking ideas” in infrastructure. This may sound bold and daring, but the federal government has a long history of squandering taxpayer resources on ill-fated “cutting edge” ideas. A Transformative Projects Program, or something like it, would divert precious resources away from crumbling infrastructure at a time of trillion-dollar repair backlogs. Rather than create a Stimulus 2.0, the president should ensure that federal resources are targeted to truly urgent projects, with private and state actors taking the lead. Moreover, any money spent should include resources for oversight.
Recently leaked plans suggest that the administration seeks to reinvigorate infrastructure policy with the creation of a high-risk fund for new projects. The Transformative Projects Fund, slated to cost more than $100 billion, would subsidize speculative projects with high potential returns. Even though applicants would ultimately be in charge of operations, these arrangements place the Department of Commerce in the position of sorting out promising projects from boondoggles-in-the-making.
Congress doesn’t exactly have the best track record in picking meritorious transportation projects to fund, but that doesn’t mean that bureaucrats will do any better. Even officials at the Department of Transportation have a spotty record at best in championing the “right” projects. The Transportation Investment Generating Economic Recovery (TIGER) grant process, launched during the stimulus era and administered by the department, claims to have a rigorous “merit-based” evaluation process, but fails to live up to that promise. Vague quantitative metrics like “quality of life” and dubious job projections have led to billions of dollars directed toward wasteful projects (for example, streetcar routes) across the country.
Former President Barack Obama’s first Secretary of Transportation, Ray LaHood, stubbornly defended the inclusion of funding for California’s high-speed rail project in the Stimulus package, despite a series of cost overruns and scheduling delays. Originally slated to cost $6 billion, the portion of the “bullet train” running through the state’s Central Valley is now estimated to run nearly $11 billion, if it ever finishes. The slated completion year of 2018 has been set back to 2025, and the plan may need to be scuttled altogether pending the results of an audit.
Targeting emerging, rather than well-established transportation technologies would likely lead to even more waste. Anthony Foxx, who served as the Secretary of Transportation during Obama’s second term, expressed a great deal of interest in the Hyperloop concept and suggested that federal funds could get this and similar projects off the ground. But as pointed out by Brad Plumber, leading proposals vastly understate land acquisition and per-mile construction costs. Furthermore, tests of the technology under perfect conditions have “levitating pods” going 70 mph, a far cry from the 700 mph envisioned in proposals. Allowing agencies leeway in funding dubious technologies will lead to billions of dollars in wasted resources, with minimal improvement to infrastructure.
When engaging with the private sector, it’s easy for “public-private” partnerships to go awry with billions of dollars borne by taxpayers. But arrangements are possible that embolden private actors without increasing the size and clout of federal policymakers. A possible solution lies in the present-value-of-revenue contract, in which road companies compete for a contract by offering the lowest toll price. The resulting contract is flexible, and the company has ownership over the road for as long as it takes to recoup construction costs. This has seen successful implementation in England (ie. the Queen Elizabeth II Bridge) and Chile. Funding is raised via tolls, ensuring that businesses instead of taxpayers bear the brunt of poorly thought-out operations.
That’s how a “nation of builders” can indeed repair America’s infrastructure at minimal costs to citizens across the country.
Ross Marchand is the director of policy for the Taxpayers Protection Alliance.
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