Friday, August 5, 2016

Donald Trump and The Perennial Myth Of Crumbling Infrastructure

By David Stockman

There is a good reason why Donald Trump’s campaign has been light on policy details. To wit, it seems that every time he gets specific he manages to serve up a steaming pile of hogwash.

So when he told Fox News that he would double-down on Hillary’s $275 billion infrastructure boondoggle, The Donald was right on cue. And in pulling his new $500 billion infrastructure program straight out from under his comb-over, he also demonstrated he has no idea what he is talking about.

Donald Trump on Tuesday proposed a plan to rebuild U.S. infrastructure that costs “at least double” the amount that Hillary Clinton has floated, in what would amount to a massive new government program……“Well, I would say at least double her numbers, and you’re going to really need more than that. We have bridges that are falling down. I don’t know if you’ve seen the warning charts, but we have many, many bridges that are in danger of falling.”
No, Donald, the bridges of America are not falling down and the nation’s infrastructure—-to the extent that it is any business of Imperial Washington at all—-is not “crumbling”. Actually, Washington’s primary job is maintenance of the Interstate Highway System, and that’s in pretty good shape, including its heavily trafficked bridges.

More importantly, if additional investment is needed in the interstate highway grid, then the users should pay for it with a modest increase in the gasoline tax. Or better still, rescind the earmarks which divert upwards o 67% of the existing $45 billion per year of gas tax revenues to state and local roads, mass transit, bike trails, walking paths, weed removal, transportation museums and countless other diversions. In short order the system would be in tip-top shape.

But that’s not the half of Trump’s wild pitch on this one. Having swallowed the infrastructure myth hook, line and sinker, the GOP candidate went a horrid step further and talked up an “infrastructure bank”—–the Democrats’ favorite backdoor route to further ballooning the nation’s already crushing public debt.
Despite insisting that “I’m doing the biggest tax decrease”, Trump saw no sweat at all in coming up with the half trillion dollar price tag for his latest brainstorm:

“We’ll get a fund. We’ll make a phenomenal deal with the low interest rates,” he said. Who would provide the money? “People, investors. People would put money into the fund. The citizens would put money into the fund,” he said, adding that he’d use “infrastructure bonds from the country, from the United States.”
Here’s the thing. Upwards of 95% of what passes for infrastructure investment—-highways, roads, streets, bridges, airports, seaports, mass transit, water and sewer, the power grid, parks and recreation etc—–are the responsibility of the private sector and should be paid for by users or, arguably, constitute local public goods and amenities. The latter should be managed by state and local governments and funded by local users and taxpayers.

But give the beltway lobbies and racketeers an inch and they will take a mile. After decades of Federal mission creep, there is virtually no aspect of “infrastructure” spending that has not wormed its way into the federal budget.

That’s why the nation has $20 trillion of public debt already, but there is also a larger issue. Namely, what’s the point of Federalism—–and some89,000 units of state, county and local government—-if these taxpayer funded agencies can’t even provide for farebox revenues on local bus routes, maintenance of secondary highways and streets or water and sewer services to local residents?
When all of this gets Federalized on an ad hoc basis, of course, you end up with the worst of all possible worlds. That is, random redistribution of resources among localities, waste and inefficient pork barrel allocation of funding and a centralization of politics where the permanent governing class always wins and working taxpayers are left out in the cold.

Even in the case of just highways, the extent of mission creep and pork barrel politics is stunning. The 47,000 miles of Interstate Highways constitute only 1.1% of the 4 million miles of streets, roads and highways in the entire nation.

Indeed, the reason we have state, county, municipal and township government in the US is precisely to take care of the 99% of road surfaces that the great Dwight D. Eisenhower said should remain a non-Federal responsibility—-even as he pioneered the Interstate highway system and trust fund.
Yet at the present time less than $15 billion or one-third of the Ike’s trust fund receipts go to the Interstate Highway system he fathered. The rest gets auctioned off by the Congressional politicians to state, county and local roads and to the far-flung array of non-highway purposes mentioned above.
Worst still, at the center of this abuse and corruption-ridden Washington infrastructure spending complex is a tissue of myths, exaggerations and lies which provide a veneer of justification for its inherent plunder, waste and unfairness.

That is to say, when the beltway bandits run low on excuses to run-up the national debt they trot out florid tales of crumbling infrastructure, including dilapidated roads, collapsing bridges, failing water and sewer systems, inadequate rail and public transit and the rest.

This is variously alleged to represent a national disgrace, an impediment to economic growth and a sensible opportunity for fiscal “stimulus”. But most especially it presents a swell opportunity for Washington to create millions of “jobs”.

Moreover, according to the Obama Administration’s latest budgetary gimmick—-and one now apparently embraced by The Donald—-this can all be done in a fiscally responsible manner. Yes, that would be via the issuance of “green ink” bonds by a national infrastructure bank, as opposed to the conventional “red ink” bonds by the US Treasury.

The implication, of course, is that borrowings incurred to repair the nation’s allegedly “collapsing” infrastructure would be a form of “self-liquidating” debt. That is, these “infrastructure” projects would eventually pay for themselves in the form of enhanced national economic growth and efficiency.
Needless to say, that’s what the government of Japan has been saying for the last 25 years. With debt at 235% of GDP, in fact, what is being liquidated is the nation’s taxpayers, not its “construction” bonds.
Besides that, the evidence for dilapidated infrastructure is just bogus beltway propaganda. It is cynically peddled by the construction and builder lobbies and by state and local officials looking to fob the bill onto any taxpayers except their own.

Moreover, the infrastructure that actually does qualify for self-liquidating investment is overwhelmingly local in nature—-urban highways, metropolitan water and sewer systems, airports. These should be funded by users fees and levies on local taxpayers—not financed with Washington issued bonds and pork-barreled through its wasteful labyrinth of earmarks and plunder.

And that gets us to The Donald’s crumbling bridges. The truth, however, is that nowhere is the stark distinction between myth and reality more evident than in the case of the so-called deficient and obsolete bridges.

 To hear the K-Street lobbies tell it—-motorist all across American are at risk for plunging into the drink at any time owing to defective bridges. Even Ronald Reagan fell for that one.

During the long trauma of the 1981-1982 recession the Reagan Administration had stoutly resisted the temptation to implement a Keynesian style fiscal stimulus and jobs program–—-notwithstanding an unemployment rate that peaked in double digits.

But within just a few months of the bottom, along came a Republican Secretary of Transportation, Drew Lewis, with a Presidential briefing on the alleged disrepair of the nation’s highways and bridges. The briefing was accompanied by a Cabinet Room full of easels bearing pictures of dilapidated bridges and roads and a plan to dramatically increase highway spending and the gas tax.

Not surprisingly, DOT Secretary Drew Lewis was a former governor and the top GOP fundraiser of the era. So the Cabinet Room was soon figuratively surrounded by a muscular coalition of road builders, construction machinery suppliers, asphalt and concrete vendors, governors, mayors and legislators and the AFL-CIO building trades department.

And if that wasn’t enough, Lewis had also made deals to line up the highway safety and beautification lobby, bicycle enthusiasts and all the motley array of mass transit interest groups.

They were all singing from the same crumbling infrastructure playbook. As Lewis summarized and Donald Trump is apparently now channeling,

“We have highways and bridges that are falling down around our ears—that’s really the thrust of the program.”
The Gipper soon joined the crowd:

“No, we are opposed to wasteful borrow and spend”, he recalled,” that’s how we got into this mess. But these projects are different. Roads and bridges are a proper responsibility of government, and they have already been paid for by the gas tax”.
By the time a pork-laden highway bill was rammed through a lame duck session of Congress in December 1982, Reagan too had bought on to the crumbling infrastructure gambit.

Explaining why he signed the bill, the scourge of Big Government noted,

“We have 23,000 bridges in need of replacement or rehabilitation; 40 percent of our bridges are over 40 years old.”
So here we are 34-years later, and those very same bridges are purportedly still falling down !
But they aren’t. What we are dealing with can best be described as “The Tale of Madison County Bridges to Nowhere”.

And there could not be a more striking example of why Donald Trump is way off the deep-end with his half trillion dollar infrastructure boondoggle; and also why the principle that local users and taxpayers should fund local infrastructure is such a crucial tenet of both fiscal solvency and honest government.
In this context, the crumbling bridges myth starts with the claim by DOT and the industry lobbies that there are 63,000 bridges across the nation that are “structurally deficient”. This suggests that millions of motorists are at risk for a perilous dive into the drink.

But here’s the thing. Roughly one-third or 20,000 of these purportedly hazardous bridges are located in six rural states in America’s mid-section: Iowa, Oklahoma, Missouri, Kansas, Nebraska and South Dakota.

The fact that these states account for only 5.9% of the nation’s population seems more than a little incongruous but that isn’t even half the puzzle. It seems that these thinly populated town and country states have a grand total of 118,000 bridges.

That is, one bridge for every 160 citizens. Men, women and children included.

And the biggest bridge state among them is, well, yes, Iowa. The state has 3 million souls and nearly 25,000 bridges–—-one for every 125 people.

So suddenly the picture is crystal clear. These are not the kind of bridges that thousands of cars and heavy duty trucks pass over each day. No, they are mainly the kind Clint Eastwood needed a local farm-wife to locate—so he could take pictures for a National Geographic spread on “covered bridges”.
Stated differently, the overwhelming bulk of the 600,000 so-called “bridges” in America are so little used that they are more often crossed by dogs, cows, cats and tractors than they are by passenger motorists.

These country bridges are essentially no different than local playgrounds and municipal parks. They have nothing to do with interstate commerce, GDP growth or national public infrastructure.
If they are structurally “deficient” as measured by DOT engineering standards that is not exactly startling news to the host village, township and county governments which choose not to upgrade them.

So if Iowa is content to live with 5,000 bridges—one in five of its 25,000 bridges— that are deemed structurally deficient by DOT, why is this a national crisis?

Self-evidently, the electorate and officialdom of Iowa do not consider these bridges to be a public safety hazard or something would have been done long ago.

The evidence for that is in another startling “fun fact” about the nation’s bridges. Compared to the 20,000 so-called “structurally deficient” bridges in the six rural states reviewed here, there are also 19,000 such deficient bridges in another group of 35 states–including Texas, Maryland, 

Massachusetts,  Virginia, Washington, Oregon, Michigan, Arizona, Colorado, Florida, New Jersey and Wisconsin, among others.

But these states have a combined population of 175 million not 19 million as in the six rural states; and more than 600 citizens per bridge, not 125 as in Iowa. Moreover, only 7% of the bridges in these 35 states are considered to be structurally deficient rather than 21% as in Iowa.

So the long and short of it is self-evident: Iowa still has a lot of one-horse bridges and Massachusetts— with 1,300 citizens per “bridge”— does not. None of this is remotely relevant to a purported national infrastructure crisis today—any more than it was in 1982 when even Ronald Reagan fell for“23,000 bridges in need of replacement or rehabilitation”.

Yes, the few thousands of bridges actually used heavily in commerce and passenger transportation in American do fall into disrepair and need periodic reinvestment. But the proof that even this is an overwhelmingly state and local problem is evident in another list maintained by the DOT.

That list would be a rank ordering called “The Most Travelled Structurally Deficient Bridges”. These are the opposite of the covered bridges of Madison County, but even here there is a cautionary tale.
It seems that of the 100 most heavily traveled bridges in the US by rank order, and which were in need of serious repair in 2013, 80% of them are in California!

Moreover, they were overwhelmingly state highway and municipal road and street bridges located in Los Angeles, Orange County and the Inland Empire. Stated differently, Governor Moonbeam has not miraculously solved California endemic fiscal crisis; he’d just neglected the local infrastructure.

There is no obvious reasons why taxpayers in Indiana or North Carolina need to be fixing California’s bridges—so that the latter can continue to finance its outrageously costly public employee pension system.

And so it goes with the rest of the so-called infrastructure slate. There is almost nothing there that is truly national in scope and little that is in a state of crumbling and crisis.

Indeed, the one national asset—the Interstate Highway System—is generally in such good shape that most of the “shovel ready” projects on it during the Obama stimulus turned out to be resurfacing projects that were not yet needed and would have been done in the ordinary course anyway, and the construction of new over-passes for lightly traveled country roads that have happily been dead-ends for decades.

One thing is clear. There is no case for adding to our staggering $20 trillion national debt in order to replace the bridges of Madison county; or to fix state and local highways or build white elephant high speed rail systems; or to relieve air travelers of paying user fees to upgrade local airports or local taxpayers of their obligation to pay fees and taxes to maintain their water and sewer systems.

At the end of the day, the ballyhooed national infrastructure crisis is a beltway racket of the first order. It has been for decades.

And now even The Donald has taken the bait.

David Stockman is the former Director of the Office of Management and Budget during part of the Reagan Administration, from 1981 to 1985. He is the author of The Great Deformation: The Corruption of Capitalism in America and The Triumph of Politics: Why the Reagan Revolution Failed.

 The above originally appeared at David Stockman's Contra Corner and is reprinted with permission. 

1 comment:

  1. While it is most certainly NOT Washington's responsibility/business, I would disagree that the infrastructure is not crumbling -- especially in California. The Dems piss away all the infrastructure money on their constituencies then moan about needing to raise various taxes, which with the fungibility of money, ends up pissed away on anything but infrastructure.

    In some parts of LA, driving the public roads is rougher than 4-wheeling in the dirt. Some parts of Orange County aren't that far behind.