How to Fix America's Infrastructure
What if Republicans agreed to pay for major projects in exchange for Democrats agreeing to cut red tape?
Fixing America’s decrepit infrastructure shouldn’t be controversial—it enhances competitiveness, creates jobs, and helps the environment. And of course, it protects the public. Repairing unsafe conditions is a critical priority: More than half of fatal vehicle accidents in the United States are due in part to poor road conditions.
After years of dithering, Washington is finally showing a little life for the task. Congress recently passed a $305 billion highway bill to fund basic maintenance for five years. But the highway bill is pretty anemic—it barely covers road-repair costs and does nothing to modernize other infrastructure. The total investment needed through the end of this decade is actually $1.7 trillion, according to the American Society of Civil Engineers. Further, the highway bill does nothing to remove the bureaucratic jungle that makes these projects so slow and costly.
But these two failures—meager funding and endless process—may actually point the way to a potential grand bargain that could transform the U.S. economy: In exchange for Democrats getting rid of nearly endless red tape, Republicans would agree to raise taxes to modernize America’s infrastructure.
Stalled funding. The refusal to modernize infrastructure is motivated by politics, not rational economics. By improving transportation and power efficiencies, new infrastructure will lower costs and enhance U.S. competitiveness—returning $1.44 for every dollar invested, according to Moody’s. That’s one reason why business leaders, led by the U.S. Chamber of Commerce and the National Association of Manufacturers—normally on the same page as congressional Republicans—have been pleading for robust public funding. As an added benefit, 2 million new jobs would be created by an infrastructure-modernization initiative, jump-starting the economy. That’s why labor leaders and economists have joined with the business community to advocate for it.
But these benefits largely accrue to society at large—not to the public entities funding the infrastructure. Because tolls and other user charges, where applied, rarely cover all the capital costs, the federal government often must subsidize public works if the United States wants modern interstate transportation, water, and power systems. As a matter of party ideology, however, Republicans have steadfastly refused to raise the gas tax and other taxes needed to fund infrastructure. This line in the sand was drawn in the 1990s because of the Republican conviction, widely shared by the public, that government is wasteful.
So when the highway trust fund expired this year, Congress found itself in an ideological struggle over how to fix potholes. Unfortunately, Washington’s answer is an inadequate funding plan that is also basically dishonest, resorting to gimmicks like selling oil from the nation’s strategic petroleum reserve at more than $90 per barrel (when the market price is closer to $40).
Red-tape waste. The Republican frustration about government waste is illustrated by the inefficiencies of infrastructure procurement and process. The arduous procedures by which public infrastructure gets approved and built shows that total costs could be cut in half by dramatically simplifying the environmental review and permitting processes—which can often consume a decade or longer. The water-desalination plant in San Diego, for example, which is vital for water-parched California, began its permitting in 2003. It finally opened in December 2015, after 12 years and four legal challenges.
Even projects with little or no environmental impact can take years. The plan to raise the Bayonne Bridge roadway, which spans a strait that connects New Jersey to Staten Island—in order to allow a new generation of post-Panamax ships into Newark Harbor—had virtually no environmental impacts because it used the same foundations and right of way as the existing bridge. Yet the project still required five years and a 20,000-page environmental assessment. Among the requirements was a study of historic buildings within a two-mile radius of the Bayonne—even though the bridge touched no buildings. Once approved, the project was then challenged in the courts based on—you guessed it—inadequate environmental review.
All of this process is expensive. The nonpartisan group Common Good (which I chair) recently published a report on bureaucratic delays, Two Years, Not Ten Years, which found that decade-long review and permitting procedures more than double the effective cost of new infrastructure projects. Delay increases hard costs by at least 5 percent per year. Delay prolongs bottlenecks and inefficiencies, which totals 10 to 15 percent of project costs per year (depending on the infrastructure category). A six-year delay, typical in large projects, increases total costs by more than 100 percent.
Careful process, the theory goes, makes projects better. But the U.S. approval process mainly produces paralysis not prudence. America’s global competitors don’t weigh themselves down with these unnecessary costs. Take Germany: It is a far greener country than the United States, yet it does environmental review in a year not a decade. Germany is able to accomplish both review and permitting in less than two years by creating clear lines of authority: A designated official decides when there has been enough review and resolves disputes among different agencies and concerned groups. The statute of limitations on lawsuits is only one month, compared with two years in the United States—and that two years is only because it was shortened under the new highway bill. Following Germany’s lead, Canada recently changed its permitting process to complete all reviews and other infrastructure decisions within two years, with clear grants of authority to officials to meet deadlines.
Like most laws, America’s infrastructure process has its supporters. Any determined opponent of a project can “game” the procedures to kill or delay projects it doesn’t like. And, just as most Republicans are adamant about not raising taxes, many Democrats are adamant about not relinquishing the effective veto power environmentalists currently wield. After all, who knows when a new Robert Moses might appear to flatten urban neighborhoods?
The tragic flaw in this position, however, is that lengthy environmental review is dramatically harmful to the environment. Prolonging traffic and rail bottlenecks, the Common Good report found, means that billions of tons of carbon are unnecessarily released as officials, environmentalists, and neighbors bicker over project details. America’s archaic power grid—not replaced in part because of permitting uncertainties—wastes electricity equivalent to the output of 200 coal-burning power plants. At this point, the decrepit state of America’s infrastructure means that almost any modernization, on balance, will be good for the environment. Water pipes from 100 years ago leak an estimated 2.1 trillion gallons of water per year. Faulty wastewater systems release 850 billion gallons of waste into surface waters every year. Overall, America’s infrastructure receives a D+ rating from the American Society of Civil Engineers. For every project that is environmentally controversial, such as the Keystone pipeline, there are scores of projects that would easily provide a net benefit to the environment.
In some vital projects, adhering to rigid legal processes could even lead to catastrophe. For example, the proposed new rail tunnel under the Hudson River must be completed before the adjoining tunnel is shut down to repair damage caused by Hurricane Sandy. Any delay in approvals would cut rail capacity to Manhattan from New Jersey in half, with unthinkably bad consequences on traffic, carbon emissions, and the economy.
Environmental review is important, but the tough choices required can usually be understood and aired in a matter of months not years. The trade-offs for the most part are well known: A desalination plant will produce one gallon of briny byproduct for every gallon of clean water; the new rail tunnel under the Hudson River will require dislocating homes and businesses at either end; a new power line will emit electromagnetic energy and mar scenic vistas. But California’s fresh water must come from somewhere, New York needs to eliminate rail bottlenecks, and new power lines will carry clean electricity to cities from distant wind farms. In each case, the relevant questions are whether the new project is worth the costs and, sometimes, whether there’s a practical way to mitigate the effects. Spending years arguing about if the project is worthwhile rarely improves the decision—it only makes projects more expensive while prolonging pollution.
A new bargain. There’s a way to break the logjam caused by a lack of needed funding and an overabundance of process. Conservatives concerned about wasteful government should agree to raise taxes to fund infrastructure if liberals agree to abandon the bureaucratic tangle that causes the waste. This deal will cut critical infrastructure costs in half, enhance America’s environmental footprint, and boost the economy.
Adequate funding will get America moving with safe and efficient infrastructure. And abandoning years of process need not undermine environmental goals or public transparency. The key, as in Germany and Canada, is to allocate authority to make needed decisions within a set time frame. Public input is vital, but it can be accomplished in months. Plus, input is more effective at the beginning of the process, as adjustments can be made before any plan is set in the legal concrete of multi-thousand-page environmental-review statements.
Politically, of course, getting Republicans and Democrats to strike a bargain—more funding for less bureaucracy—won’t be easy. Special interests on both sides have their claws deep into the status quo. It is notoriously difficult to raise taxes, and curbing review timelines can sound like cutting corners. But America can’t move forward on infrastructure built two generations ago. Eliminating traffic jams, electricity outages, airplane delays, and unnecessary tragic accidents will be more than worth the small increase in taxes and a shorter review period.
Congress knows there’s a problem. The new 1,300-page highway bill tiptoes toward streamlining decisions. Unfortunately, these good intentions may actually make matters worse. The bill creates a new 16-agency committee to review projects and defines elaborate procedures on how to set a permitting timetable. But the timetable can be waived, and the new procedures assiduously avoid the one indispensable element for enforcing deadlines: a final decision maker. Indeed, the reluctance to grant anyone the ability to resolve disagreements is almost comical. The director of the Office of Management and Budget is supposedly in charge, but the director’s ultimate grant of authority amounts to no authority all: “If a dispute remains unresolved … the Director … shall … direct the agencies party to the dispute to resolve the dispute.”
But a new bipartisan bargain doesn’t require complicated drafting. It only takes a few words for Congress to approve a gas tax or other taxes to fund infrastructure-modernization programs. And the radical change needed to reduce permitting from ten years to two years will not be made in substantive law—underlying environmental requirements, for example, would remain the same—but rather in authorizing specific officials to make and review decisions. Creating clear lines of authority is much simpler than defining the intricacies of a procedural labyrinth. The law can give the chair of the Council on Environmental Quality responsibility over deciding when there has been enough environmental review, and it can give the OMB director responsibility over resolving disputes among squabbling agencies. They will both be accountable to the president and, if necessary, to the courts. Common Good, at the request of relevant committees in Congress and with the help of two former Environmental Protection Agency general counsels, has already drafted proposed amendments that establish these lines of authority as well as oversight standards for the president and the courts.
The good news is that the political winds are shifting. Hillary Clinton recently proposed a $500 billion infrastructure initiative that included a call to radically streamline permitting and review processes. And Jeb Bush recently called for permits to be granted “within two years instead of ten.” With strong leadership, the nation can get there: If the Democrats cut waste and the Republicans provide funding, Americans will have better rules and better roads.