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The Infrastructure Bill: What It Means for Business

In recent years American infrastructure has deteriorated rapidly.

Historical US Infrastructure Rank

2008 7

2009 8

2010 15

2011 16

2012 14

2013 15

2014 12

2015 11

The ASCE’s report card is bleak.

A = Exceptional

B = Good

C = Mediocre

D = Poor

F = Failing

Energy D+

Parks and Rec C-

Roads D

Ports C

Bridges C+

Wastewater D

Levees D-

Drinking Water D

Schools D

Transit D

Rail C+

Inland Waterways D-

Aviation D

Solid Waste B-

Hazardous Waste D

Dams D

Cumulative GPA D+

Largely a measure of no long term reauthorizations of transportation spending.

Why?

The Highway Trust Fund Deficit

1957-2007 $0

2008 $8.8B

2009 $7.1B

2010 $9.7B

2015 $15B

December 2015: Congress passes a $305 billion bill to fund roads, bridges, and rail lines.

(Senate Vote: 83-16)

$61 billion a year for the next five years.

While it’s the longest reauthorization of transportation spending in a decade, is it enough?

In 2014 the Economic Policy Institute issued a report outlining the effects of three tiers of transportation bills.

Largely affecting our future, including:

overall economic activity

productivity

number and types of jobs

sustainability

Scenarios range from $18-$250 billion annually.

Scenario 1:

$30 billion annually over the next ten years

Cancellation of automatic across-the-board cuts from the sequester

Traditional infrastructure investments

–Largest portions of funding:

Construction (9 out of 18 billion)

Scenario 2:

$92 billion annually over the next ten years

Centered on energy efficiency in residential and commercial buildings

Creation of national “smart grid”

–Largest portions of funding:

Construction (52/92 billion)

Smart Grid (40/92 billion)

Scenario 3:

$250 billion annually until 2020

Centered on traditional infrastructure (water treatment, distribution, and sewage systems)

Would nearly close the US “infrastructure deficit”

–Largest portions of funding

Construction (83/250 billion)

Water and sewage systems (50/250)

Transit and ground passenger transport (35/250)

All Three Options Would Yield Immediate Economic Boosts

Option 1:

cost: $18 billion

Yield: $29 billion increase in GDP and 216,000 new jobs by year one

Option 2:

cost: $92 billion

Yield: $147 billion in GDP and 1.1 million new jobs by year one

Option 3:

cost: $250 billion

Yield: $400 billion and 3 million net new jobs by year one

Employment:

All three options create jobs that are disproportionately male, Latino, high-earning, and skewed away from young workers.

Male/Female

Option 1: 77/23

Option 2:80.4/19.6

Option 3: 74.1/25.9

Economy average: 50.2/49.8

Latino/non-Latino

Option 1: 15.4/84.6

Option 2: 16.2/83.8

Option 3: 14.3/85.7

Economy average: 13.2/86.8

Under 25 Adults/Over

Option 1: 9.3/80.7

Option 2: 9.5/80.5

Option 3: 7.8/82.2

Economy average: 13.2/86.8

Jobs in bottom wage quintile/Above

Option 1: 9.5/90.5

Option 2: 9.4/90.6

Option 3: 11.2/88.8

Economy average: 18.9/82.1

Economy:

Option 3–the most aggressive policy–would increase productivity growth by .3% annually

That’s equal to half of productivity acceleration in the US Economy between 199-2005

One of the most prosperous periods in American history.

Focus on water/sewage and passenger transport sectors would help many of the largest offenders

Cost to economy per year from lagging infrastructure

[type, cost]

Roads: $130 billion

Transit: $90 billion

Bridges: $76 billion

Rail: $24 billion

As well as help save American infrastructure, life blood of the American economy from WWII to the 1990’s.

ROADS

World Rank: 16

32% Poor or Mediocre Condition [pie chart]

Per Year:

Cost to Economy $130B

Needed Investment $179B

Actual Investment $91B

Shortfall $88B

Unfunded Gap

2010 48%

2048 54%

BRIDGES

Per Year:

Cost to Economy $76B

Needed Investment $20.5B

Actual Investment $12.8B

Shortfall $7.7

25% of US bridges are structurally deficient or functionally obsolete.

TRANSIT

Per Year:

Cost to Economy $90B

Needed Investment $62.5B

Actual Investment $37.5B

Shortfall $25B [same format]

Unfunded Gap

2010 40%

2040 55%

$1 trillion economic cost by 2040.

Accessibility Gap

Households With No Transit 45%

Rural Households With No Transit 86%

RAIL

World Rank: 15

Freight (Private)

Investment 1980-2015: $600B

40 cents / $1 Revenue

Congestion Cost to Economy:

2013 $200B

2040 $288B

Passenger (Public)

Ridership

2000 16 million

2014 31 million

50% up

Northeast Corridor Ridership

2014 11.66 million

2040 43.5 million

75% up

Next 15 Years

Needed Investment $15B

Actual Investment (+)$8B

Shortfall $7B

AIRPORT

World Rank: 5

Cost to Economy

2007 $22B

2012 $24B

2020 $34B

2040 $63B

Per Year:

Needed Investment $7.85B

Actual Investment $3.35B

Shortfall $4.3B [same subtraction format]

Increased infrastructure spending is a key component to making America great again.

Citations