Great Plains Laborers' District Council

Now is the time for infrastructure investment

Apr 03, 2020

Long before anyone gave much thought to a viral pandemic or contemplated 20% unemployment rates or seriously considered passing along a $600 boost to unemployment checks or bailing out the airline industry, experts were fretting about the state of U.S. public infrastructure — all those roads and bridges, pipes and wires, runways and transit systems that keep the economy moving.

Americans expect clean water and waste treatment when they turn on the tap or flush. Most assume their highway overpass is safe, that dams will hold back flood waters and the electric grid can handle growing demand. But the truth is, the country hasn’t kept itself in good repair.

As the American Society of Civil Engineers has pointed out, the U.S. deserves about a D+ for its infrastructure — or just a hair above outright failure. There isn’t really much serious dispute about this. President Donald Trump campaigned on upgrading infrastructure. Democrats in Congress have, too. But when it’s come down to coming up with the money to finance that investment? That’s where they’ve come up short.

How times have suddenly changed. This week, President Trump called for $2 trillion in U.S. infrastructure spending as yet another way to stimulate an economy badly flagging because of the extraordinary steps the government has taken to slow the spread of the coronavirus. House Speaker Nancy Pelosi and other Democratic leaders were already talking about exactly that approach. Indeed, it might prove a challenge to find a lot of folks on Capitol Hill right now who aren’t supporting the concept.

In addition to the need and opportunity, here’s another element that makes an infrastructure proposal especially inviting right now: Unlike other forms of stimulus spending, Congress could actually approach this in a fiscally prudent way. Instead of just printing money and adding to an already too-big federal deficit, Washington could incorporate a plan to pay for it. How? By agreeing to borrow money over a specified period of time with the expectation that it will be paid back as the economy returns to a more normal footing.

That’s not some pipe dream. That’s how government infrastructure spending works (or at least how it’s supposed to work). Think of it like a mortgage: Bonds are issued with a specified return to investors. The money goes into tangible assets. The borrower (that’s all of us) pay a little bit back each month over decades. That interest rates are currently rock bottom makes it all the more attractive.

One of the best ways to repay that debt can be found as close as your local filling station: The federal gas tax, the primary source of revenue for transportation infrastructure, has been frozen for 27 years at 18.4 cents for regular unleaded. Over that same time, inflation has risen more than 73%. There’s been a ridiculous disconnect between revenue and cost, especially when you factor in how greater fuel efficiency (as welcome as it’s been) has hurt tax revenues, too.

And here’s the really amazing point: America not only needs a higher gas tax, but there’s never been a better time to contemplate one. Right now, it’s not difficult to find a gallon of gas for less than $2. The national average as of this week, AAA reports, is $1.98, a wonderfully Orwellian coincidence.

The motoring public like the price, but it’s simply too cheap. It gives an incentive for people to act irresponsibly, to buy fuel-thirsty vehicles, to pump greenhouse gases into the atmosphere and worsen climate change — a circumstance that is destined to prove far more costly than any energy charge or, frankly, any single pandemic given its lasting implications.

We’re not advocating for an immediate increase in the gas tax or any other tax while the U.S. economy is in the tank, but any infrastructure proposal coming out of Congress should come with the expectation, like any responsible borrowing, of repayment. The average recession lasts 11 months. Raising the gas tax in the summer of 2021 by a little bit (perhaps a dime, maybe more) and then a bit more each year after until 1993 prices catch up with inflation that would not only be fiscally responsible, it would be forward-thinking in every sense of the term.

The Baltimore Sun