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Dammed if they do, damned if they don’t

The gleaming new 72nd Street subway station.

The gleaming new 72nd Street subway station.

Published in The Age on March 18, 2017

72nd Street station, on the newly-opened Second Avenue extension, is one of the nicest places to catch a train in New York. After passing through an airy mezzanine, enlivened by glass mosaic portraits by Brazilian artist Vik Muniz, passengers descend to a spacious, spotless platform with five metre high ceilings. There is mobile phone reception and wi-fi. Information screens display when the next Q train is scheduled – but not when it will actually arrive.

At US$4.5 billion for four stations and under three kilometres of new tunnels, the Second Avenue line is the most expensive urban rail project ever built. At the opening gala, New York’s Governor Andrew Cuomo said the development shows government “can still do big things and great things”. He might have added that its cost, $1.7 billion per kilometre, illustrates how difficult it is to get large infrastructure projects finished on budget and on time in the USA.

The new stations also highlight how outdated and in need of repair the rest of New York’s subway system is. Few lines have countdown clocks, and it is not unusual to wait fifteen minutes for a train on a packed platform, staring at filthy, damp-stained walls with missing tiles or rats scurrying along the tracks.

Things are no better above ground. Planes landing at La Guardia, an airport memorably described as “third world” by former Vice President Joe Biden, are guided in by a radar system that has needed an overhaul for forty years. More than one in four flights is delayed as a result. A NextGen GPS system is in the works, but may not be operational until 2030.

The problems are replicated across the country. A staggering 56,007 of the USA’s bridges were found to be structurally deficient in a widely-respected engineering report released last week. Inland waterways, the power grid, dams, levees, schools, roads and public transport were all graded barely above a fail, with an estimated $4.59 trillion required in the next eight years to bring the nation’s infrastructure up to scratch.

“If the United States continues on this trajectory and fails to invest, the nation will face serious economic consequences, including $3.9 trillion in losses to U.S. GDP and more than 2.5 million American jobs lost in 2025,” the American Society of Civil Engineers report warned. “The longer we wait, the more it will cost.”

It is hard to overstate how central Donald Trump’s campaign pledge to spend $1 trillion on infrastructure is to his pitch. In the Rust Belt, restoring American greatness means bringing back well-paid jobs in manufacturing, engineering and construction – jobs that the private sector cannot and will not provide by itself. Trump alluded to “rusted out factories scattered like tombstones across the landscape of our nation” in his inauguration speech, and every post-industrial town that voted for him expects him to do something about it.

Nostalgia for an era when “we used to win” was a huge part of his appeal to older white voters. To deliver on his promise to Make America Great Again, he will have to challenge modern Republican orthodoxy, and recall the time when politicians in both parties recognised the transformative economic potential of huge government-funded infrastructure projects such as the Interstate Highway System and the Hoover Dam (and when corporations and the wealthy paid significantly more tax).

The week before Trump assumed the presidency, I travelled to Ansonia, Connecticut, a former brass and copper manufacturing town that has swung Republican in recent years. One fifth of its six square miles is brownfield – abandoned factories too contaminated to be repurposed without a clean-up only the federal government can afford. The town’s rail link to New York is too slow and unreliable for it to rebrand itself as a commuter hub.

“When Trump talks about rebuilding infrastructure and bringing manufacturing back, that is exactly what this community needs,” Republican Alderman John Marini told me, adding that the mayor’s office is aggressively seeking federal and state grants to boost its economic prospects. When I pointed out that he sounded like a Democrat, he shrugged.

By this stage of his presidency, eight years ago, Barack Obama had shepherded the $787 billion American Recovery and Reinvestment Act through Congress. Not one Republican in the House of Representatives voted for it, and GOP threats to filibuster the bill in the Senate ensured that it was heavily weighted towards tax cuts, with only around $100 billion allocated to infrastructure improvements.

It bears repeating that Trump has sworn to invest ten times that. In his first address to Congress on February 28 the pledge was carefully worded, but unambiguous: “To launch our national rebuilding, I will be asking the Congress to approve legislation that produces a $1 trillion investment in infrastructure of the United States financed through both, public and private capital, creating millions of new jobs.”

Eight people died when an Amtrak train derailed near Philadelphia on May 12, 2015.

Eight people died when an Amtrak train derailed near Philadelphia on May 12, 2015.

How? Congressional Republicans will not write Trump a blank cheque. Senate Majority Leader Mitch McConnell warned against “a trillion-dollar stimulus,” and Congressman Raul Labrador told the Associated Press: “We are not going to vote for anything that increases the national debt.” The House Freedom Caucus, implacably opposed to almost all forms of government spending, will be a brake on Trump’s grand ambitions.

Commerce Secretary Wilbur Ross has proposed using tax credits to stimulate private investment (which would also increase the national debt by reducing revenues, something hardline Republicans are more prepared to accept). Trump’s Transportation Secretary Elaine Chao has talked up public-private partnerships. The hard truth is there is simply no way Trump can deliver on his promise without a major infusion of taxpayer dollars.

“Anything that could potentially be discussed as raising revenue has become problematic,” says Aaron Klein, Policy Director at the Center on Regulation and Markets. “There’s been an unfortunate shift in American politics from the days when Republicans like Ronald Reagan and Dwight Eisenhower could talk about the gas tax as a user fee, to areas when anything that brings money in is immediately dismissed as tax and spend.”

Conservatives argue this is a reasonable position when federal, state and local government has such a poor track record of bringing infrastructure projects in on budget. The Second Avenue extension cost six times as much per kilometre as comparable projects in Paris, Berlin and Copenhagen, an overspend that cannot easily be explained by New York’s unique geography, the depth of the tunnels, inflated union wages, over-regulation or the number of stakeholders with competing interests.

Clifford Winston, Searle Freedom Trust Senior Fellow at the Brookings Institution, says inefficiencies and “pervasive status quo bias” mean that in the USA’s decentralised model, the public sector is incapable of delivering transformative change: “You simply are not going to get it from the government, whether it’s this president or that president. We’ve had decades of this. It’s not new, and it just gets worse and worse.”

Take major roads. In 1956, the Highway Trust Fund was established to pay for the Interstate Highway System, funded by the federal gas tax. The tax rate, 18.4 cents per gallon (roughly six Australian cents per litre) is not linked to inflation and has not changed since 1993. As a result, petrol in the USA is the cheapest in the developed world, and its roads are congested and full of potholes.

In December 2015, Congress passed the Fixing America’s Surface Transportation Act (FAST), allocating $205 billion over five years to roads and $48 billion to public transport. To cover the shortfall in gas tax revenues, it raided the Strategic Petroleum Reserve and the Federal Reserve’s “rainy day fund” that is only supposed to be tapped in times of dire economic crisis.

This was touted as a bi-partisan legislative achievement. In the previous six years, the Senate had passed no fewer than thirty-six stopgap bills to maintain the USA’s roads, some of them allocating funding for just three weeks. If those extensions were sticking plasters, FAST was a bandage, at best. America’s chronically under-funded transportation network needs surgery.

By rail, it takes longer to travel from New York to Washington DC than it did in the 1960s because of ageing sections of track. China has built 20,000km of high speed rail track in the last decade, and is planning 15,000km more. During the campaign, Trump noted: “They have trains that go 300 miles per hour. We have trains that go chug… chug… chug.”

Yet During Obama’s two terms, Republican Governors in Florida, Ohio and Wisconsin turned down federal funding for high speed rail projects and New Jersey Governor Chris Christie vetoed a plan to build a new tunnel under the Hudson River, to relieve and eventually replace tunnels that are more than a century old.

In California, Democratic Governor Jerry Brown’s proposed high speed line from Los Angeles to San Francisco is plagued by delays and cost overruns. Republican legislators are dead set against it, enough to kill an upgrade to Silicon Valley’s Caltrain network purely because it will use the same track. Last month, at their request, the Trump administration pulled a $647 million federal grant that had been set aside for CalTrain. For the next few years at least, some Google engineers will continue to travel to work on trains built in the 1980s.

Voters are prepared to pay more for transportation infrastructure that works. The day Trump was elected president, voters in Los Angeles County approved a tax rise to pay for $120 billion in new road and rail spending. In Atlanta, a proposal to increase the sales tax to fund improved public transport passed with 72% support. In Seattle, a majority backed a $54 billion light rail expansion. Congress will not countenance raising the federal gas tax, but at state level, voters have shown that they will accept higher petrol prices in return for better, less congested roads.

“The American public has been demanding increased infrastructure investment for a very long time,” says Klein. “The failure of Congress to enact a bold infrastructure plan will eventually come home to roost, particularly under this president, who has made infrastructure a priority and is open to bold and unconventional action.”

Absent the political will to pay for new infrastructure, a large chunk of Trump’s promised $1 trillion will have to come from the private sector, meaning there is likely to be an emphasis on projects that generate revenue, such as the high occupancy toll lane operated by Australian company Transurban on the Capital Beltway around Washington D.C. A bullet train from Houston to Texas, optimistically marketed as a private project that will require no subsidies, was on the Trump transition team’s leaked list of infrastructure projects worth backing.

At least 188,000 people were forced to leave their homes following a spillway breach at Oroville Dam in February 2017.

At least 188,000 people were forced to leave their homes following a spillway breach at Oroville Dam in February 2017.

That might sit better with conservatives, but it limits the infrastructure failings that can be addressed. “It’s important to keep in mind the proportions here,” cautions Tracy Gordon, a Senior Fellow at the Urban Institute who served on the White House Council of Economic Advisers. “Historically, public-private partnerships have only constituted about 2% of highway funding. For things like school facilities, general public buildings, courthouses, it’s hard to imagine what the revenue stream would be.”

Last month’s spillway breach at the Oroville Dam in Northern California, which led to the evacuation of 180,000 people from their homes, was a reminder of the potential costs of decaying infrastructure. The ACSE estimates that there are 2,170 deficient high-hazard potential dams nationwide. The lead pipes that poisoned thousands of children in Flint, Michigan are infrastructure, too. When Detroit privatised parts of its water system, the result was higher bills and tens of thousands of homes cut off for non-payment.

In his address to Congress, Trump declared that the USA’s transportation network will soon come to symbolise restored American greatness rather than dysfunction and decline. “Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways, gleaming across our very very beautiful land,” he vowed, setting no deadline. His first budget proposal, released this week, increases military spending by $54 billion, protects Social Security and Medicare, and cuts spending almost everywhere else.

Greg DiLoreto, chairman of the Committee for America’s Infrastructure at ACSE, says it is up to voters to ensure that promises are kept: “The current president ran on a platform, talked about $1 trillion investment in infrastructure, and a number of other senators also ran on that platform, so we’re putting the question to them. ‘You said it was important: now is the time.'”