Digging Out of the Infrastructure Dilemma
Originally posted on GE's Ideas Lab
Karan Bhatia’s recent piece on Ideas Lab provides an important – and needed – private sector perspective on the importance of infrastructure investment. As cited by Mr. Bhatia, the American Society of Civil Engineers recently gave our national infrastructure a grade of D+. Mr. Bhatia also cites the McKinsey analysis that starkly conveys the magnitude of this crisis – $57 trillion in infrastructure investment will be required between now and 2030 simply to keep up with projected global GDP growth. In order to maintain our economic competitiveness in a global economy, America has to invest in our transportation and energy infrastructure.
Of course, the truly complicating and somewhat inexplicable factor in this mess: Virtually everyone in Washington agrees that our lack of investment in infrastructure is a problem, yet can’t agree on how to address it.
In this era of constrained budgets, is there anything we can do to fix this problem?
The short answer is yes. We can take action on policy solutions at all levels – federal, state and local. We can seek greater private sector investment. We can forge more effective partnerships across the board, including at the regional level.
On the federal level, President Obama has offered a suite of infrastructure policies that are a good place to start. The President’s proposal has a handful of major components. The Obama Administration’s ‘Fix it First’ program would be a $50 billion shot in the arm to our transportation infrastructure, with 80% targeted for the most urgent fixes.
Under the umbrella of the Rebuild America Partnership, the Administration has proposed a handful of ways to help attract private money to infrastructure projects, including America Fast Forward Bonds, growing the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, and the creation of a national Infrastructure Bank.
All of these proposals *should* move forward. The question is if they will. TIFIA has been a successful model for building roads, but to date, the model has been less successful for more complicated infrastructure upgrades like transit. The concept of a national infrastructure bank has been around for years, yet it still hasn’t materialized. Unless Congress can find a path forward, the infrastructure bank may be left by the wayside.
Given the general state of paralysis in Congress, we can’t count on Washington alone to generate action on Infrastructure. After all, infrastructure is ultimately a local and regional investment. As a nation, we should follow the lead of some really interesting and innovative solutions that are occurring on the state and regional level.
An interesting example of regionalism can be found in the West Coast Infrastructure Exchange (WCX). The west coast states of Washington, Oregon, and California – along with the Canadian province British Columbia – realized that in terms of infrastructure, their fates are tied together. Rather than a piecemeal approach, these states joined together as a region to form an infrastructure exchange to focus on developing new ways to finance regional infrastructure to enhance regional economic competitiveness. Needless to say, this is a departure from business as usual, and it’s an important model for other communities across America. Projects like WCX are a complement to a national infrastructure bank. Most importantly, regional solutions like WCX create a more robust system that creates a stronger pipeline of projects. That’s probably why The West Coast Infrastructure Exchange was named an “Innovation to Watch“ by our colleagues at the Brookings Institution.
We have a lot of work in front of us when it comes to infrastructure. Fortunately, digging our way out of this problem (sometimes literally) has a wide range of economic benefits including increased competitiveness, job creation, and enhancing the overall ecosystem for entrepreneurs to thrive.
