Infrastructure

9 Reasons Government-Funded Infrastructure Is a Bad Idea

Let private investors take the lead.

|

The new Congress hasn't even been elected yet, but it's already under pressure to add billions of dollars in new government spending to pay for "infrastructure."

Politico Magazine lists "rebuild our infrastructure" as one of 11 "bipartisan ideas that might actually pass" in President Obama's final two years in office. A Bloomberg View editorial opines: "Once Republicans control Congress, there's reason to hope that—just maybe—they'll be looking for a tangible accomplishment. Why not start with a new program of investment in public works?"

At The New York Times, columnist David Brooks declares it "completely obvious" that "the federal government should borrow money at current interest rates to build infrastructure," and he adds that "The fact that the federal government has not passed major infrastructure legislation is mind-boggling, considering how much support there is from both parties."

Brooks' Times editorial page colleague Paul Krugman, meanwhile, also uses the word "obvious" to describe the need for more federal spending, writing, "We have huge infrastructure needs, especially in water and transportation, and the federal government can borrow incredibly cheaply—in fact, interest rates on inflation-protected bonds have been negative much of the time (they're currently just 0.4 percent). So borrowing to build roads, repair sewers and more seems like a no-brainer."

A front-page news article in Sunday's Times declares that Obama's top aides "have met for weeks to plot…possible compromises with Republicans to…build roads and bridges."

Here are nine reasons why a burst of federal borrowing or taxing to pay for roads, bridges, sewers, or airport terminals would be a bad idea.

1.  It would be a betrayal by Republicans of the voters who elected them. No Republican politician I am aware of won election by saying, "Vote for me, I will borrow and spend more than the Democrats." In fact, when a Democratic Congress borrowed and spent for a "stimulus" bill that included infrastructure spending, voters responded by throwing them out and electing a Tea Party Republican House.

2. Plenty of borrowing, spending, and building is already happening at the state level. The Times has reported recently on the under-construction $3.9 billion new Tappan Zee bridge over the Hudson River, as well as the construction, for $3.6 billion, of a new main terminal at La Guardia Airport. In 2003 a new $1.9 billion AirTrain opened linking the subway and JFK Airport.

3. The federal government spends a lot on infrastructure already. The federal Department of Transportation had outlays of $76 billion in 2013. That is a vast sum.

4. Federal infrastructure spending is often on wasteful projects. Remember the $223 million Congress appropriated to fund the "bridge to nowhere" in Alaska? Federal infrastructure spending can be influenced by the seniority of a Senator on an appropriations subcommittee, rather than by whether a project is a genuinely worthwhile investment.

5. Federally funded projects are excessively costly because of excessive regulations. The government spent more than half a billion dollars on repainting the Brooklyn Bridge. Even after adjusting for inflation that is more than it cost to build the bridge from scratch back in 1883, when environmental regulations and prevailing wage laws were more lax or nonexistent.

6. Infrastructure projects are quickly overtaken by new and unanticipated technological improvements. The federal government spent a lot of money building and maintaining coastal lighthouses—until GPS technology made them obsolete. Cities spent lots of money acquiring land for reservoirs and building aqueducts—but advances in desalinization and wastewater treatment technology today can make some of those earlier investments look shortsighted.

7. Infrastructure projects can have unintended consequences. Building interstate highways through the middle of cities destroyed functioning neighborhoods, hastening suburban sprawl (and enabling both white flight and school re-segregation). If you believe that car exhaust fumes contribute to global warming, then the interstate highway system is a contributing factor in that, too.

8. Big infrastructure projects enrich the powerful at the expense of the powerless. Big, politically connected construction contractors do well, while the little guy with the misfortune to live in the path of "infrastructure" gets told to get lost.

9. The mere fact of low interest rates is not sufficient reason to borrow. If the government uses its borrowing capacity up now on infrastructure, it may have a harder time borrowing in the future for some more urgent need.

Sure, some "infrastructure" projects might be worthwhile. In those cases, private investors might decide to invest on their own, finding the potential rewards to outweigh the potential risks. But the idea that a new Republican Congress should come in and immediately borrow vast sums to fund big government construction projects is not as "completely obvious" as advocates claim.

Advertisement

NEXT: Keep an Eye on Phoenix's Pension Reform Initiative

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. “3. The federal government spends a lot on infrastructure already. The federal Department of Transportation had outlays of $76 billion in 2013. That is a vast sum.”

    What kind of crap is that? A “vast sum”? Explain how or why it is “vast” and why it should be lower or stay the same.

    Simply put, infrastructure investment IS lagging in the US and needs to be done. Now whether or not it is done by the states or by the Feds is a good question (in terms of the Feds increasing costs just because of red tape) but when the condition of bridges all across the country have been found “deficient”, we need to do something. And just because Tea Partiers think infrastructure just grows on trees and doesn’t require money, doesn’t mean they’re right.

    1. “just because Tea Partiers think infrastructure just grows on trees and doesn’t require money”

      Harder! Hit it harder!!

      Bastiat =
      “… every time we object to a thing being done by government, the socialists conclude that we object to its being done at all.

      We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.” “

      The simple fact is that if any project is worth doing on its own merits, a simple municipal bond issue should be sufficient to deliver them. And, as noted – many people are already engaged in these type of projects. And many – like the above-noted ‘AirTrain’ – were fucking disasters that cost billions and hardly used.

      Why should you demand that Federal monies be used for ‘roads and bridges’ that their actual end-users don’t feel particularly keen on upgrading themselves? In my own city, we have to beg them TO STOP wasting money on ‘infrastructure’.

      1. In my town it would take $271 million to fix the roads. The current annual road budget is just over $1 million. In a nutshell the roads where I live will never get better. According to the city engineer, “79 percent [of roads] are in ‘poor’ condition, 18 percent are in ‘fair’ condition and only 3 percent are in ‘good’ condition.”

        From a local news article I learned, “Using the PASER system, nearly 95 percent of the city’s local street lane miles are in ‘poor’ condition […] about 60 percent of the city’s major street road miles are classified ‘poor.’

        Every time the city allocates money to roads it is the same three main streets in town which are repaved. They will dig up 3 miles of road leading to the mall, put new asphalt down, and then dig it up again 2-3 years later. In the mean time all the other roads in town will shake your fillings loose, or snap the front sway bar links on your car when you have to decide which pot hole to hit.

        I’m not keen on allowing any level of government to borrow more money which will be greedily hoovered up by well connected cronies, while tax payers are left holding the bag with nothing to show for the burden they now have to bear.

    2. Its also worth mentioning that some of these past ‘top down’ infrastructure projects that were driven by ‘easy money’ politics and not by bottom-up localized demand have turned out to be enormous piece-of-shit boondoggles.

      Notable, the above-noted “AirTrain” between JFK and Jamaica, Queens (aka, the ‘monorail to nowhere’)

      It was purely an excuse to spend money. It doesn’t even link the airport to any location that makes *sense* on a practical level. Do you really want to ride the subway for 1hr just to have the opportunity to then have a 10min monorail ride? Fuck it = most people just take the A-train all the way. It cost twice what was planned, and is utilized 1/3 as much as they said would make it economically viable. To this day, it sucks. And because no one uses it? It has no budget, and hardly ever works. GOVERNMENT PLANNING FTW!!

    3. Yeah. User fees could never sustain a road or bridge. Unpossible.

  2. If only we had hefty gasoline taxes to pay for roads and the like.
    Oh right, we do.

    1. No we don’t:
      http://www.huffingtonpost.com/…..18169.html

      1. It would be nice if gas taxes actually went to, well, roads.

        http://online.wsj.com/articles…..1405558382

        “Texas spends 25% of its fuel-tax revenue on education programs. Kansas has allocated some of its gas-tax revenue to pay for Medicaid and schools.”

        I have a 35 minute commute to work each day, and I actually support using a gas tax to pay for road construction and maintenance. I don’t have a problem with use taxes, where people utilizing the roads pay for their upkeep. The problem I have with just saying okay to higher taxes is in the rampant misuse of funds, and money being redirected to other purposes. It seems most gas tax revenue is being used to pay for past borrowing for infrastructure projects.

        “New Jersey is projected to collect $541 million in state gas-tax revenue this year, of which $516 million has been set aside to pay for about $1 billion in debt interest. New York last year collected about $2 billion in fuel, auto-rental and related taxes and fees. Those dollars went into a fund that paid $1.4 billion on debt interest payments, up from $870 million in 2008.”

        Federal, state and local governments are over leveraged and debt service is preventing anything useful from being accomplished.

  3. One of the biggest problems with “investing in infrastructure” is that infrastructure spending usually goes to flashy new projects, while existing highways and bridges crumble. We have interstate highway bridges literally falling into the river, while we build airports in backwater towns that will never justify their cost.

    1. This. In New York, the MTA is putting fancy new electronic signs in subway stations that have crumbling concrete and rusty iron and where water pours from the ceiling when it rains.

  4. The biggest problem with infrastructure is that it will need to be maintained and eventually replaced. That cost is never factored in.

  5. Another reason is that, to whatever extent existing infrastructure needs shoring up, that is often because politicians LOVE new toys, but hate to pay for maintenance. The federal highway fund was supposed to pay for the upkeep of the interstates. Somehow, that money got spent on all kinds of other “transportation” projects. Projects like bike and horse paths. Projects that could have a ribbon cutting ceremony. Kind of hard to make an appealing photo-op out of road repair.

    The Feds had a lot of responsibility for maintaining infrastructure that has been allowed to rot. Why let them build more they won’t keep in good condition?

  6. “but when the condition of bridges all across the country have been found “deficient”, we need to do something”

    I’ve been hearing this for decades, but I drive, many times over bridges, and luckily, whew, I made it. Who are these folks deeming bridges deficient and what interest might they have in doing so? I’ve also been told our climate is deficient.

  7. Oleh karena itu mulai dari lima tahun Distributor baja ringan Distributor baja ringan

Please to post comments

Comments are closed.