In his first State of the Union Address, President Trump built on his campaign promise to “rebuild our crumbling infrastructure.” While the speech was light on details, the president made the scale of his aspiration clear by increasing his total goal to $1.5 trillion in new investment, up from what started as a $550 million promise and had settled at $1 trillion. With his administration poised to release its proposal within the next several weeks, he’ll have an opportunity to live up to his promise.
But perhaps more importantly than committing to build “gleaming new roads, bridges, highways, railways, and waterways all across our land,” the administration should commit to fundamentally restructuring the outdated way the federal government funds and oversees the nation’s infrastructure.
While the details remain elusive, it initially appears the administration’s plan will spend $200 billion over 10 years, hoping to motivate local governments and the private sector to cough up $800 billion to hit the president’s $1.5 trillion goal.
But why does the administration think it’s necessary for the federal government to siphon billions more to infrastructure in the first place, especially in the current fiscal environment?
The government’s own data on major infrastructure reports that it’s far from “crumbling”: The nation’s bridges are improving apace, major highways are well paved, and airports are capable of moving more people than ever. (Although one could forgive frequenters of New York’s ineptly run public airports for thinking they’re all lousy.) Total public spending on infrastructure has grown some 200% (including inflation) since the late 1950s, while remaining a stable share of the economy.
The “shovel ready” jobs justification rings even more hollow: Unemployment stands at 4.1%, its lowest point since 2000. In fact, many contractors have reported a skilled labor shortage.
That’s not to say nothing can be done; U.S. infrastructure does lag that of other nations in some respects. But that’s not because the federal government is standing idly by. It’s because it’s standing in the way. Though the federal government accounts for just one-quarter of infrastructure spending in the U.S., it has ensnared nearly every type of infrastructure through expansive regulations, mandates, and political control. The federal diktats begin before shovels even hit the ground: which studies must be completed, where the materials and contractors can permissibly be sourced, etc., and proliferate throughout construction.
But the feds’ control doesn’t stop upon project completion—they continue to have say over everything from safety standards down to how airports can portray themselves in advertisements or the amount of artistic flair cities can add to their sidewalks.
Thus, the best way to go about improving the nation’s infrastructure is not by doubling down on this model. It’s to extend the president’s much-touted rollback of federal regulations to the field of infrastructure to unleash vast swaths of investment.
Off the bat, the administration should target regulations that needlessly drive up the cost of federally funded projects. These include the Davis-Bacon Act and project labor agreements, which significantly increase labor costs. Protectionist laws that further increase costs and limit competition, such as Buy America and the Jones Act, should likewise be rolled back. Eradicating these impediments could save more than $100 billion, which could be reinvested in nationally significant projects.
Streamlining the cumbersome environmental review processes would also get a wide array of overregulated projects off the ground much more quickly. It would vastly reduce construction costs, increase certainty, and free up hundreds of billions in investment currently lost to a process that often takes a decade or longer.
More fundamentally, the administration should reform the broken top-down infrastructure-funding paradigm. The current funding system for much of our infrastructure consists of the federal government acting as an impertinent middleman: It collects broad-based taxes from infrastructure users, exposes the revenues to Congressional and bureaucratic meddling, and then redistributes them back to infrastructure projects laden with mandates. Letting users directly pay for the infrastructure they use would be would be much more simple, precise, and efficient—if only it were allowed.
Airports are a prime case: While private airports efficiently serve the majority of traffic in Europe, public airports in the U.S. are hamstrung by Washington, which uses the aviation taxes it collects and redistributes as a cudgel. Giving airports wider autonomy—especially in collecting their own revenues, as is practice in other countries—would be hugely beneficial. The same goes for allowing users to pay for improvements to the nation’s inland waterways infrastructure, which has been strangled by an inadequate federal funding mechanism.
Furthering direct user funding and public-private partnership by repealing the federal ban on tolling the interstate highways would serve a similar goal. This is especially important, as the government needs to look beyond the regressive and increasingly obsolete gas tax as a funding source for road repairs.
Making bold reforms is not always easier for politicians than spending money, no matter how fruitless it may be. But if Trump truly wants to be remembered as a rebuilder, perhaps the best blueprints he can draw up involve releasing the federal shackles and allowing a decentralized market system to flourish.
Michael Sargent is a policy analyst specializing in transportation issues at The Heritage Foundation.