This is the twentieth in our series, “The ABCs of the AJP.”
As discussed in an earlier post, the American Jobs Plan adopts an expansive definition of “infrastructure” to address systemic inequities and benefit society as a whole. However, the AJP also addresses what is typically called “core infrastructure” by proposing substantial investments to repair and modernize our nation’s roads, highways, bridges, airports, ports, and railways. As with other aspects of the AJP, the President’s investments seek to address climate and sustainability concerns and the creation of American jobs by, among other things, using sustainable and innovative building materials that are made in America.
In total, the AJP proposes an additional $621 billion in investments in transportation infrastructure and resilience. These investments include:
- An increased $115 billion investment to modernize the bridges, highways, and roads that are in the most critical need of repair, and $20 billion to improve road safety and reduce crashes and fatalities.
- An $85 billion investment into public transit to repair, modernize, and expand public transit to service more communities and meet rider demand.
- An $80 billion investment to address Amtrak’s repair backlog, modernize the high traffic Northeast Corridor, improve existing corridors, connect new city pairs, and fund other programs to improve railway safety and modernization.
- A $25 billion investment in airports and an additional $17 billion investment in inland waterways, coastal ports, land ports of entries, and ferries in order to position the United States as a world leader in clean and efficient freight and aviation.
- A $20 billion provision for a new program that aims to reconnect neighborhoods that were divided by earlier infrastructure investments and projects, and to ensure that new projects provide for more equitable access and opportunities for disadvantaged communities.
Increased investments into repairing and modernizing our aging infrastructure are badly needed. The American Society of Civil Engineers’ (ASCE) annual grades for seventeen aspects of America’s infrastructure ranged from D- (transit) to a B (rail), with an overall infrastructure grade of C-. This means that, according to the ASCE, many aspects of America’s core infrastructure are in serious need of attention and are nearing the end of their usable life. Current spending levels are insufficient to address these deficiencies. Indeed, the United States only spends approximately 2.3% of its annual GDP on infrastructure, significantly lagging behind investments made by European countries and China. The ASCE estimates that the ten-year investment gap (the difference between current infrastructure spending and what is required to bring infrastructure up to a B grade) is $2.59 trillion.
Failing to address these investment shortfalls will have devastating consequences for our nation’s economy. The ASCE estimates that continued underinvestment in infrastructure could result in a loss of $10 trillion to GDP and a loss of 3 million jobs by 2039. The White House’s fact sheet for the AJP notes that the U.S. economy loses over $160 billion every year due to delays from traffic congestion, amounting to each motorist losing $1,000 in wasted time and fuel. Not surprisingly, traffic congestion is also responsible for billions of dollars of economic losses to the freight sector, and economic losses from traffic congestion are magnified in America’s largest cities. And not only is the deteriorating condition of America’s core infrastructure costly, it is dangerous. For example, the GAO found in 2014 that nearly 25% of the nation’s bridges are deficient, with 14% of all bridges being characterized as “functionally obsolete.” The ASCE notes that approximately 1 in 5 U.S. roads are in poor condition, and that roadway design features were a likely contributing factor in approximately one-third of the over 36,000 fatalities on U.S. roadways in 2019.
Investment in core infrastructure will not only prevent economic losses, it will result in economic gains. One study found that, in the long term, every dollar invested into infrastructure could result in nearly three dollars of economic growth through job creation, efficiencies, and increased aggregate demand. And better roads, bridges, highways, rails, airports, and rails will result in a more reliable and efficient supply chain with lower transportation costs, making America’s economy more competitive.
Recent polling indicates that a vast majority of Americans approve of Congress increasing investment in transportation infrastructure, including a staggering 87% of Americans indicating support for increased spending to repair roads and bridges. But as is evident by this blog series, the AJP is a sweeping proposal and improving America’s transportation infrastructure is just one, albeit a significant, piece of it.
But while support for the AJP has largely been split along party lines, the Senate Republicans’ initial counterproposal suggested that funding for a “core” infrastructure program (that is, a package to invest in transportation infrastructure) may be an opportunity for bipartisan legislation. While the Republicans’ initial proposed investment of $568 billion was only roughly one-quarter of the $2 trillion+ price tag of the AJP, nearly all of the Republicans’ proposed investment was dedicated to core infrastructure. As the Biden Administration negotiated with a group of six Senate Republicans—led by Senator Shelley Moore Capito (R-W.Va.)—both sides appeared to inch toward each other in terms of funding for core infrastructure improvements.
The give-and take suggests an appetite from both sides of the aisle to substantially invest in America’s core infrastructure, even though most Republicans object to many of the other spending proposals in the AJP as having no place in an infrastructure spending package.
Despite this, the Biden Administration’s negotiations with the group of Senate Republicans recently broke down over the scope of the infrastructure plan, the total investment and amount of “new spending” for the plan, and how the plan would be funded. The AJP proposes raising corporate taxes to raise revenue, which Republicans have called a nonstarter since the AJP was initially proposed, and the Administration has thus far not backed down from, at minimum, pledging to increase tax enforcement and ensuring that corporations pay a minimum of 15% tax. Conversely, Republicans have favored funding infrastructure investments through public-private partnerships and user fees, and preserving the 2017 tax cuts from the Tax Cuts and Jobs Act.
A bipartisan group of ten moderate Senators recently reached an agreement on a $1 trillion infrastructure spending package, which would not include any tax increases and would reportedly commit $579 billion in new spending—a significant increase above the new spending proposed by the Senator Capito-led group, but still significantly less than the $1 trillion in new spending sought in the Administration’s latest counterproposal. The Administration has not yet signaled whether it is on board with this latest proposal, which may very well be the last hope for a bipartisan compromise. The eventual scope, total investment, and method of raising revenue for core infrastructure investments, will be important issues to stay abreast of as negotiations continue—or break down.