The White House released President Trump’s infrastructure plan today, which calls for spending $200 billion federal dollars as seed money to stimulate a total of $1.5 trillion on “gleaming new infrastructure.” Almost lost in the dozens of pages of documents issued by the administration is that the reason why the federal government supposedly needs a new infrastructure program is that our infrastructure is crumbling, and the reason it is crumbling is that politicians would rather spend money on gleaming new projects than on maintaining the old ones.

The White House proposes several new funding programs. The administration could have dedicated one or more of these programs to maintenance and repair of worn-out infrastructure. Instead, all $200 billion can be spent on new projects, and knowing politicians, most of it will be. To make matters worse, funds for most of the programs would be distributed in the form of competitive grants, but experience has proven that competitive grants are highly politicized.

“In the past, the Federal Government politically allocated funds for projects, leading to waste, mismanagement, and misplaced priorities,” agrees White House economic advisor Gary Cohn. The administration’s solution, Cohn continues, is to “stimulate State, local, and private investment.” In other words, instead of most decisions being made by Washington politicians, they will be made by local politicians. But if local politicians were any better at maintaining infrastructure, then we wouldn’t have tens of thousands of local bridges classed as “structurally deficient” and the New York, Washington, Boston, and other subway systems wouldn’t be falling apart. Continue reading →

Remember America’s crumbling infrastructure that supposedly needs trillions of dollars for maintenance and rehabilitation? President Trump doesn’t. Instead, the seven sentences in his state of the union speech that focused on infrastructure talked about building “gleaming new” projects rather than fixing existing systems.

The only real news is that he is upping the ante from $1.0 trillion to “at least $1.5 trillion.” More disturbingly, other than mentioning an “infrastructure deficit” — which could just as easily be interpreted to mean a shortage of new infrastructure as a deficit in maintenance — Trump said nothing about fixing existing infrastructure. Instead, he wants to “build gleaming new roads, bridges, highways, railways, and waterways.”

Why? We have plenty of railways. Though the railroads have trimmed the nation’s rail mileage by 45 percent since 1916, they move more freight than ever and seem to be quite capable of adding capacity where they need it without government help. High-speed trains, meanwhile, are pointless when we have planes that can go twice as fast and don’t require hundreds of billions of dollars of supporting infrastructure. Continue reading →

Someone claims to have obtained a leaked document relating to the mythical Trump infrastructure plan. The document is sketchy and contains no hard dollar figures, but it gives an idea of what might be in a final plan.

The document proposes seven different initiatives or programs. The largest, called the Infrastructure Incentives program, would get half of any appropriations to pay for up to 20 percent of the cost of “core infrastructure projects” including transport, water, power, superfund, and flood control projects. The document doesn’t seem to distinguish between new projects and rehabilitation of existing ones, so the politicians who seek the funds would probably be biased in favor of new. Projects would be rated on a variety of criteria the most important of which would be the ability of the state or local government to sustain financing for the project.

Rural infrastructure is the second-largest program, getting 25 percent of funding for transport, water, power, and broadband. The funds would be distributed as block grants rather than matching funds, based on each state’s population and rural road miles. Continue reading →

A recent report from the RAND Corporation looks at America’s infrastructure and concludes that “not everything is broken.” In face, what is broken, more than the infrastructure itself, is “our approach to funding and financing public works.” This is largely because governments by-pass market signals and rely on “often complicated and multilayered governance arrangements and competing public goals and preferences” to make decisions about where to spend money.

For example, the report shows that government spending on infrastructure as a percentage of gross domestic product declined from a peak of 3 percent of GDP in 1960 to about 2.5 percent in 1980, and has hovered between 2.5 and 2.7 percent since then. But governments also made a clear trade-off in infrastructure spending: spending on roads declined from 1.6 percent of GPD in 1960 to around 1 percent in and since 1980, while government spending on mass transit grew from 0.1 percent in 1970 to 0.4 percent in and since 1980.

This would be fine if spending on mass transit had been as productive as spending on highways had been. But it wasn’t. Until the 2008 financial crisis, per capita driving continued to grow despite the lack of much capital spending on new roads, while per capita transit ridership was stagnant or declining. The report doesn’t have data after 2014, when per capita driving began to increase again while transit ridership began to collapse. Continue reading →