The Infrastructure Bill: What It Means for Business
In recent years American infrastructure has deteriorated rapidly.
Historical US Infrastructure Rank
2008 7
2009 8
2010 15
2011 16
2012 14
2013 15
2014 12
2015 11
The ASCE’s report card is bleak.
A = Exceptional
B = Good
C = Mediocre
D = Poor
F = Failing
Energy D+
Parks and Rec C-
Roads D
Ports C
Bridges C+
Wastewater D
Levees D-
Drinking Water D
Schools D
Transit D
Rail C+
Inland Waterways D-
Aviation D
Solid Waste B-
Hazardous Waste D
Dams D
Cumulative GPA D+
Largely a measure of no long term reauthorizations of transportation spending.
Why?
The Highway Trust Fund Deficit
1957-2007 $0
2008 $8.8B
2009 $7.1B
2010 $9.7B
2015 $15B
December 2015: Congress passes a $305 billion bill to fund roads, bridges, and rail lines.
(Senate Vote: 83-16)
$61 billion a year for the next five years.
While it’s the longest reauthorization of transportation spending in a decade, is it enough?
In 2014 the Economic Policy Institute issued a report outlining the effects of three tiers of transportation bills.
Largely affecting our future, including:
overall economic activity
productivity
number and types of jobs
sustainability
Scenarios range from $18-$250 billion annually.
Scenario 1:
$30 billion annually over the next ten years
Cancellation of automatic across-the-board cuts from the sequester
Traditional infrastructure investments
–Largest portions of funding:
Construction (9 out of 18 billion)
Scenario 2:
$92 billion annually over the next ten years
Centered on energy efficiency in residential and commercial buildings
Creation of national “smart grid”
–Largest portions of funding:
Construction (52/92 billion)
Smart Grid (40/92 billion)
Scenario 3:
$250 billion annually until 2020
Centered on traditional infrastructure (water treatment, distribution, and sewage systems)
Would nearly close the US “infrastructure deficit”
–Largest portions of funding
Construction (83/250 billion)
Water and sewage systems (50/250)
Transit and ground passenger transport (35/250)
All Three Options Would Yield Immediate Economic Boosts
Option 1:
cost: $18 billion
Yield: $29 billion increase in GDP and 216,000 new jobs by year one
Option 2:
cost: $92 billion
Yield: $147 billion in GDP and 1.1 million new jobs by year one
Option 3:
cost: $250 billion
Yield: $400 billion and 3 million net new jobs by year one
Employment:
All three options create jobs that are disproportionately male, Latino, high-earning, and skewed away from young workers.
Male/Female
Option 1: 77/23
Option 2:80.4/19.6
Option 3: 74.1/25.9
Economy average: 50.2/49.8
Latino/non-Latino
Option 1: 15.4/84.6
Option 2: 16.2/83.8
Option 3: 14.3/85.7
Economy average: 13.2/86.8
Under 25 Adults/Over
Option 1: 9.3/80.7
Option 2: 9.5/80.5
Option 3: 7.8/82.2
Economy average: 13.2/86.8
Jobs in bottom wage quintile/Above
Option 1: 9.5/90.5
Option 2: 9.4/90.6
Option 3: 11.2/88.8
Economy average: 18.9/82.1
Economy:
Option 3–the most aggressive policy–would increase productivity growth by .3% annually
That’s equal to half of productivity acceleration in the US Economy between 199-2005
One of the most prosperous periods in American history.
Focus on water/sewage and passenger transport sectors would help many of the largest offenders
Cost to economy per year from lagging infrastructure
[type, cost]
Roads: $130 billion
Transit: $90 billion
Bridges: $76 billion
Rail: $24 billion
As well as help save American infrastructure, life blood of the American economy from WWII to the 1990’s.
ROADS
World Rank: 16
32% Poor or Mediocre Condition [pie chart]
Per Year:
Cost to Economy $130B
Needed Investment $179B
Actual Investment $91B
Shortfall $88B
Unfunded Gap
2010 48%
2048 54%
BRIDGES
Per Year:
Cost to Economy $76B
Needed Investment $20.5B
Actual Investment $12.8B
Shortfall $7.7
25% of US bridges are structurally deficient or functionally obsolete.
TRANSIT
Per Year:
Cost to Economy $90B
Needed Investment $62.5B
Actual Investment $37.5B
Shortfall $25B [same format]
Unfunded Gap
2010 40%
2040 55%
$1 trillion economic cost by 2040.
Accessibility Gap
Households With No Transit 45%
Rural Households With No Transit 86%
RAIL
World Rank: 15
Freight (Private)
Investment 1980-2015: $600B
40 cents / $1 Revenue
Congestion Cost to Economy:
2013 $200B
2040 $288B
Passenger (Public)
Ridership
2000 16 million
2014 31 million
50% up
Northeast Corridor Ridership
2014 11.66 million
2040 43.5 million
75% up
Next 15 Years
Needed Investment $15B
Actual Investment (+)$8B
Shortfall $7B
AIRPORT
World Rank: 5
Cost to Economy
2007 $22B
2012 $24B
2020 $34B
2040 $63B
Per Year:
Needed Investment $7.85B
Actual Investment $3.35B
Shortfall $4.3B [same subtraction format]
Increased infrastructure spending is a key component to making America great again.
Citations
- http://www.theatlantic.com/politics/archive/2015/12/a-major-infrastructure-bill-clears-congress/418827/
- http://www.epi.org/publication/impact-of-infrastructure-investments/
- https://www.fhwa.dot.gov/bridge/nbi/no10/defbr14.cfm
- http://www.infrastructurereportcard.org/a/#p/roads/investment-and-funding
- http://www.fhwa.dot.gov/asset/plans/financial/hif15018.pdf
- http://reports.weforum.org/global-competitiveness-report-2015-2016/competitiveness-rankings/
- http://www.nytimes.com/2012/05/08/us/chicago-train-congestion-slows-whole-country.html?_r=1
- https://www.aar.org/BackgroundPapers/Freight%20Railroad%20Capacity%20and%20Investment.pdf
- http://www.amtrak.com/ccurl/238/481/Amtrak-FY2014-Ridership-and-Revenue-ATK-14-096%20.pdf
- https://www.cbo.gov/sites/default/files/cbofiles/attachments/43884-2015-01-HighwayTrustFund.pdf
- http://www.brentspencebridgecorridor.com/project-overview/