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Peter Morici: Biden’s infrastructure bill is hardly ‘monumental’


America was once capable of transformational projects—the Erie Canal, transcontinental railroads and Interstate Highway System. President Joe Biden says the $1.2 trillion Infrastructure Investment and Jobs Act is a “monumental step” that will create millions of jobs but that’s quite an exaggeration.

The American Society of Civil Engineers estimates the country’s investment deficit for improving roads, bridges, airports and the like at $2.7 trillion. Through congestion and other inefficiencies, that costs $500 billion in lost GDP.

Not only is the Infrastructure Act less than half of what’s needed but much of the money won’t go into roads, bridges, railroads, airports and utilities.

Green largess

For example, $21 billion is set aside for demonstration projects in clean hydrogen, advanced nuclear, carbon capture and other green largess. Another $40 billion is loan authority to finance energy deployment projects. However high sounding, those sound more like R&D or displacement for existing fossil-fuel capacity than fixing the Texas grid to bear another deep freeze or expanding electrical generation capacity to handle the expected increase in electric vehicles.

Of the $7.5 billion devoted to high-capacity EV charging stations, $5 billion is prioritized to place at least one station with four ports every 50 miles along the Interstate system. That’s hardly enough if half the vehicle fleet is electric.

Along with tougher mileage standards, more ubiquitous charging stations should still accelerate the transition from gas-powered vehicles, but public funds to replace private gas stations won’t refurbish or enhance what we traditionally think of as infrastructure or count toward the ASCE-estimated spending deficit.

Americans will switch quicker to EVs than the progress in more-efficient battery technology warrants. When subsidized, higher price tags for vehicles and personal transportation represent resources that could be devoted to other purposes and lost employment in those activities.

Only 75,000 jobs

EVs are jobs killers. Those have many fewer components and battery technology is more advanced in China and Korea. Sourcing and reliance on engineering abroad will substantially reduce the 873,000 employed making automobiles in the United States.

Overall, Moody’s Analytics estimates the infrastructure package will boost labor productivity by 0.03% and GDP by $39 billion by 2031 and permanently add only 75,000 new jobs.

Americans will see new subway stations and some improvements in the reliability of transit but not to the degree needed. Like roads, pipelines and the electrical grid, transit construction is more costly and often lags technological practices abroad.

It’s easy to blame unions—contract work rules, federal- and state-mandated Project Labor Agreements and Davis-Bacon Act prevailing-wage requirements add as much as 20% to the cost of projects. However, that’s not enough to explain why a new subway station in New York City costs three times what it does in Paris or London. Or why the $66 billion devoted to intercity rail transportation is well too short to adequately modernize Amtrak’s Northeast Corridor, provide high-speed rail that rivals services abroad, or solve other passenger rail issues around the country.

The infrastructure plan targets the most overburdened bridges that are choke points for the movement of goods—for example, the George Washington Bridge on I-95 and the Horace Wilkinson Bridge in Baton Rouge—but expanding these thoroughfares requires displacing commercial spaces and residents. And that puts much needed focus on the nation’s terribly abused permitting, zoning, environmental assessment, and community engagement systems.

One-stop approvals

Those have legitimate objectives but often taken in sequence, they stretch approval processes that should take months into years. But by running up litigation costs, those often limit the number of affordable improvements to few essential facilities.

Gone are the days when federal highway planners could bulldoze through neighborhoods—often imposing disproportionate costs on working-class and poor residents. However, safeguards tend to frivolously expand the scope of amenities—oversized platforms, redundant elevators, fancy landscaping, bike paths and the like. And because projects become so spaced out, many cities are unable to build permanent resident expertise in competent project management and design.

A suitable solution to addressing legitimate environmental and political concerns—and limit the tools available to outright obstructionists—would be to streamline the permitting processes.

Require that all above-mentioned processes be settled in a single forum and reviewed in a single court within one year. A federal agency and forum like the U.S. International Trade Commission, which has firm timetables to review, for example, intellectual property issues, could be established with the opportunity for a single appeal in a federal court.

We don’t need to run roughshod like autocratic China but at the same time we don’t need to run infrastructure projects like a Gilbert and Sullivan opera. The nation simply can’t compete otherwise.

Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.

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