How well do we prioritize what to build or fix? Not well at all, says a new report.
The last time President Donald Trump spoke to the nation about his administration’s plan for infrastructure spending, he ended up defending the honor of violent white supremacists in Charlottesville, Virginia. Since then, the proposed $1 trillion bill appears to have slipped on his list of priorities: Trump hasn’t tweeted about infrastructure since August.
But if and when the topic of America’s crumbling bridges, leaky pipes, and outdated electrical grid comes up again, the need will outstrip whatever resources in whatever bill Congress gets around to passing—even if it’s a trillie. Prioritizing infrastructure projects to be funded turns out to be more art than science. The government could be much better at making these decision, whether it’s at the local, state, or federal level.
That’s the conclusion of a new report from the Economic Policy Institute that explores ways for policymakers to tighten up the process. The report’s author, Josh Bivens, who is the organization’s director of research, sees three ways that government is falling down on the job—and one big-picture solution for making infrastructure projects work better for everyone.
The first issue is one of jurisdiction. There’s a lack of efficient coordination between local, state, and federal governments, Bivens writes, and it affects the assessment of infrastructure projects. The map that shows which government body has ownership over a given asset gets blurry quickly. Jurisdiction varies from state to state, making side-by-side comparisons difficult.
Moreover, blurry jurisdiction makes it harder for a government to weigh an infrastructure investment. An assessment of the benefit of an asset to a locality might not appropriately account for its benefit to the region, state, or nation. “Coordination is essential because a bigger-picture view is essential to ensuring that the benefits of regional and national spillover effects are taken into account when selecting and prioritizing projects,” Bivens writes.
Problem number two, he explains, is straightforward: The country does not price carbon when it assesses the value of infrastructure investments. There is no standardized mechanism for appropriately estimating the cost of negative externalities associated with climate change in making decisions about infrastructure. The risk of literally undervaluing investments in clean energy is high.
Under the Obama administration, the government took a stab at costing out carbon: Since 2008, the U.S. Environmental Protection Agency and other federal agencies employed a social cost of carbon estimate to factor in the costs of climate change. The metric survived a court challenge brought forward by various business interests in August 2016. But it did not survive Donald Trump: The president scrapped SC-CO2 in a March 2017 executive order, and the EPA guidance page has been scrubbed from the agency’s website. The Obama-era figure was widely criticized as being too low—but it was at least not $0.
Finally, some places simply need the investment more than others. Flint, Michigan, needs safe drinking water more than Kansas City needs a streetcar expansion, but communities in one state don’t necessarily weigh the needs of another community when they’re assessing their own infrastructure needs. Flint needs the jobs more than Kansas City does, too. Bivens makes the point that infrastructure projects that have a deeper impact in more distressed communities—especially in terms of the jobs they create—should probably take priority. At the very least, the relative welfare effect should be a factor. “The explicit goal should be to use the public investment to make sure that jobs created disproportionately benefit the places and communities that are experiencing the most labor market distress,” he writes. (The oversimplified comparison between Kansas City and Flint is mine, not his.)
Bivens recommends solutions for each problem he poses. He suggests that policymakers earmark certain purses to make sure that they go first to regions marked by chronic job distress (a shift in priority). He argues that the nation should once again cost out carbon (a shift in policy). Both are commonsense fixes that are never gonna happen. My colleague Laura Bliss has explained how Trump’s focus is on spending that makes the most sense to private investors, not to distressed communities. And Trump himself has told experts where they can shove their cost-of-carbon equations.
One last solution recommended by the paper is the most sweeping: a cabinet-level agency to oversee infrastructure selection. The U.S. Department of Infrastructure has a nice ring to it. Such a department could potentially manage a national infrastructure bank. (As the Economic Policy Institute has shown elsewhere, an infrastructure bank’s main benefits are stripping politics from decision-making and collecting data on best practices—not in financing projects.) With public–private partnerships on the rise, there is need for a federal agency with a mandate to make sure municipal and state governments aren’t giving away the farm in privatization schemes. (See: Flint, Michigan.)
Short of an entire department devoted to infrastructure, Bivens recommends an inter-agency panel modeled after the Financial Stability Oversight Council, an interdepartmental group tasked with responding to threats against U.S. financial security. The 10-member panel possesses unique statutory tools that give it regulatory authority over a variety of activities that concern Treasury, the Federal Reserve, and other council agencies. “Given the vast interconnecting issues and interest involved in getting national infrastructure project selection right, a body with FSOC-type authority and scope to guide decisions for infrastructure projects could well be needed,” Bivens writes.
The cabinet moonshot is still worth a try. The U.S. has experienced serious czar inflation in recent years: President Bill Clinton appointed 11 officials with the (informal) title of “czar,” while President George W. Bush handed out 49 czar-ships and President Barack Obama had 50. The nation’s infrastructure needs are too deep for a single task force to address. It’s not just about fixing bridges: More and more, this work means assessing the private sector’s interest in and capacity for fixing bridges.
An infrastructure czar or a Federal Infrastructure Oversight Council could be the first step toward a U.S. Department of Infrastructure. But when the president hasn’t even raised one of his signature campaign promises in more than two months, even these modest steps seem out of reach.