Despite the urgency of passing an infrastructure bill, spending and infrastructure reform has been a thorn in the side of presidents and Congress. President Trump, who has been playing up the prospect of infrastructure reform, faces a critical choice over whether to find alternative funding sources for projects or continue down the same road of spend and spend more.
The latter, coupled with the proposed reintroduction of legislative earmarks, may mean an infrastructure bill filled to the brim with expensive pet projects.
Based on previously released plans, taxpayers already have a decent idea as to what the president’s proposal will contain. In particular, the administration hopes to expand existing “federal investments” and pave the way for the private sector to fund ambitious new projects. But earmarks by the administration and Congress can morph any infrastructure bill into a wasteful package of special interest giveaways.
Even without earmarks, large-scale infrastructure plans are too often prone to waste and abuse, with endemic cost overruns and crony contracts. Without proper market incentives in place and responsible budgeting, the administration’s bold new plan can easily turn into another failed “stimulus” package.
While reform has remained elusive, infrastructure funding boosts are certainly nothing new. From President Obama’s 2009 American Recovery and Reinvestment Act (aka Stimulus Bill) and proposed $300 billion road and bridge fund to President Bush’s thousands of “special projects,” infrastructure allotments are a dime a dozen. Previous packages sounded reasonable at the proposal stage, but quickly morphed into senseless spending bonanzas once in Congress.
By the time President Bush signed his road bill into law in 2005, few questioned the millions of dollars allocated to the National Packard and Henry Ford Museums. A large part of President Trump’s trillion dollar “investment” will consist of expansions to existing grant and loan programs, and is similarly open to waste by an earmark-friendly Congress.
The Transportation Infrastructure Finance and Innovation Act, which doles out subsidized loans to a diverse array of projects, would see eligibility and funding limits loosened in the administration plan. But ratcheting up TIFIA funding would hardly help the president fix the “crumbling roads and bridges” to which he has alluded.
Plenty of program funding goes to projects that shore up pedestrian areas in already-nice parts of large cities. Take, for example, the Chicago Riverwalk extension, which accommodated high-end restaurants, floating planters and glitzy water fountains. The Denver Union Station renovation similarly expanded a posh mall and corresponding pedestrian zone, while Denver roads continue to suffer a “quiet crisis.”
In addition to program expansions, the president’s plan will take infrastructure policy to uncharted territory. Proposals include delivering tunneling rights for high-speed rail endeavors across the country. While this is being touted as costing the federal government nothing and simply paving the way for private companies to build their own underground infrastructure, taxpayers have the right to be skeptical. High-speed rail constructions normally do involve federal support, after all, and are frequently subject to cost overruns and scheduling delays.
Typically, “consultants” hired by companies vying for a grant or loan present unrealistic numbers in a bid to get federal officials to bite. It is only when boondoggles fail to break even do appropriators realize that a mistake has been made. But even if we assume that companies involved don’t try to game the proposal and solicit funding, there’s still the issue of eminent domain compensation. Merely securing rights to an underground passage can be an expensive, multi-year ordeal as landowners rise in resistance to projects.
But in analyzing any proposal, it’s easy to magnify the negative without pointing out positives. The president’s proposed streamlining and permitting reductions will prove to be a boon to development, unshackling projects from unnecessary red tape. Extensive federal permitting regulation ensures that, before the process can get going, a battery of environmental impact analyses must be performed.
If, for example, a port expansion entails marsh clearing to remove invasive snail species, that would cost millions of dollars in damages. Also, special permissions would need to be obtained by the Environmental Protection Agency. In many cases, this type of obstacle can completely delay projects for years.
For the past few decades, infrastructure reform in the United States has been a third rail for a reason. Due to a confluence of powerful interest groups, new transportation projects cost more per mile than virtually any other developed nation. And sprawling territory makes many inter-city schemes developed by other countries unwise and unaffordable for America. Congress can make repairs and more constructions more affordable by nixing many of the onerous permitting rules that send costs through the roof.
At the same time, any proposal must resist the temptation to pump more money into failed “investment” programs and speculative boondoggles. Resisting the temptation to bring back earmarks, and subsidize unneeded construction in general, is key to responsible reform. By walking this fine line, the president and Congress can actually stimulate the economy and save taxpayers instead of creating a “Stimulus 2.0.”