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Infrastructure Challenge Tests Washington’s Ability to Function, Part 2

At a hearing of the U.S. Congress Joint Economic Committee, Ranking Democrat Carolyn B. Maloney (D-NY) called for improving long-term economic growth by investing in infrastructure. “Investing in broad-based economic growth was at the core of America’s success in the decades after World War II. We invested in our people through the GI Bill, and in our infrastructure, building the nation’s interstate highway system. It paid off. While publically held debt more than tripled between 1945 and 1981, it fell by about three-quarters as a share of the economy.

Business Insider notes that “There’s a $1 trillion crisis threatening the American way of life as we know it.” Despite the obstacles, infrastructure repair and upgrade is vital. John Grady, no fan of the current White House, wrote in Chicago Business  “…if you want to make America great again, start repairing the nation’s failing infrastructure… I am referring to the infrastructure that is the backbone of the U.S. economy, such as bridges, drinking water systems, dams, navigable waterways, rail, roads, transit and wastewater. Industries and companies of all sizes are risking everyone’s safety by relying on the current state of America’s failing bridges, drinking water plants, roads, tunnels and wastewater treatment plants.”

A 2016 Reuters review highlighted in Fortune Magazine noted that “Nearly half of registered U.S. voters think American infrastructure has deteriorated in the last five years… Forty-one percent of Democrats said infrastructure has gotten worse over the last five years, while 53% of Republicans took that view.”

But can common ground be found on how to do it? Can the problems of waste and corruption, so endemic to almost all areas of federal spending, be minimized to make the task affordable?
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An example of this roadblock to real progress can be seen in how a significant portion of 9/11 funds were misused. A New York Daily News study found that “9/11 recovery aid was used to finance a plethora of projects that taxpayers elsewhere could be forgiven for characterizing as old-fashioned pork-barrel spending. Hundreds of millions of dollars were spent on projects that seemingly had nothing to do with 9/11 and lower Manhattan… more millions went to help projects already in the works before 9/11 or on the drawing board with no prior funding source. Huge contracts were given to companies and organizations linked to the very officials tasked with deciding how to spend the money – creating, at a minimum, the potential for multiple conflicts of interest. Substantial sums were given to companies to stay in lower Manhattan even though they had no intention of leaving…”

Even apart from corruption and waste, federal rules render many necessary projects expensive and potentially unaffordable. The Davis-Bacon Act increases the labor portion of any project. According to the Department of Labor, “The Davis-Bacon and Related Acts, apply to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for …public works. Davis-Bacon Act and Related Act contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area…The Davis-Bacon Act prevailing wage provisions apply to the “Related Acts,” under which federal agencies assist construction projects through grants, loans, loan guarantees, and insurance.” Tim Worstall, writing for Forbes notes that “Union Wages Increase Construction Costs By 20%.”

It is appropriate to question why the $780 billion “stimulus” package spent by the Obama Administration failed to even attempt to address this, and why the former president alleged that he couldn’t find “shovel-ready” jobs.  Addressing the infrastructure issue will be a test of whether the U.S. political environment can rise up partisanship to achieve a vital goal.