The real trick to making America great again

There is a path to getting America back on track, but it has nothing to do with whom we elect to be our next president. The singular most significant action each of us can take this year is to demand the members of Congress put the good of the country ahead of partisan gamesmanship and special interests. And, if they don’t, vote them out of office!

Here’s the deal. Experts agree the best way to get out economy moving again is for the Federal government to invest big in repairing the country’s infrastructure. It is up to the government to do it because of what Nobel Prize-winning economist Joseph Stiglitz calls “a deficiency of aggregate demand, brought on by a combination of growing inequality and a mindless wave of fiscal austerity.” Basically, no matter how much they spend, the wealthy just can’t spend enough to adequately stimulate the economy. At the same time, as of the second quarter of 2015, corporate America had more cash on-hand that the economies of Belgium and Sweden combined ($1.43 trillion for S&P companies excluding those in the financial sector.) Tech companies are especially cash rich with Microsoft having $96 billion in cash, Google $70 billion and Cisco $60 billion. Although this hoarding means companies are positioned to weather tough economic times, it hurts the economy (especially since most of this money is held in off-shore accounts to reduce tax liability.)

We are all aware that our country’s infrastructure is in bad shape. Are roads are pothole laden and our bridges are structurally unsound.   The most recent Infrastructure Report Card from the Americans Society of Civil Engineers (ASCE) gives our Nation’s infrastructure a D+, and states that we need to invest $3.6 trillion by 2020 just to get it up to standard. The number one solution toward beginning to raise the grade according to ASCE is to “increase leadership in infrastructure renewal” and the organization maintains, “America’s infrastructure needs bold leadership and a compelling vision at the national level.

Such leadership and vision was provided by President Franklin Roosevelt in his establishment of the Works Progress Administration (WPA.) He designed the public works program “to put more men back to work, both directly on the public works themselves, and indirectly in the industries supplying the materials for these public works,” because “no country, however rich, can afford the waste of its human resources.” 2014 marked the 80th anniversary of the WPA, a Federal government program that provided 8 million Americans jobs during the Great Depression. According to the Smithsonian, “the WPA built, improved or renovated 39,370 schools; 2,550 hospitals; 1,074 libraries; 2,700 firehouses; 15,100 auditoriums, gymnasiums and recreational buildings; 1,050 airports, 500 water treatment plants, 12,800 playgrounds, 900 swimming pools; 1,200 skating rinks, plus many other structures. It also dug more than 1,000 tunnels; surfaced 639,000 miles of roads and installed nearly 1 million miles of sidewalks, curbs and street lighting, in addition to tens of thousands of viaducts, culverts and roadside draining ditches.” The San Antonio River Walk, the development of the park which paved the way for St. Louis’ Gateway Arch, and Camp David in Maryland are also just a few amazing products of the WPA.

Unfortunately, attempts to start even mildly ambitious efforts today have gone nowhere. Ray LaHood, who says, “our infrastructure is on life support”, was the secretary of transportation during Obama’s first administration. He is now co-chairman of Building America’s Future, a bipartisan coalition of current and former elected officials urgently pushing for more spending on infrastructure. In an interview on 60 Minutes, LaHood talked about the federal Highway Trust Fund, which gets its revenue from the federal gas tax of 18 cents per gallon which will be broke in 2016 unless something is done. The last time we raised the gas tax (how we funded the interstate system) was in 1993 said LaHood and spending on infrastructure has fallen to its lowest level since 1947. This reality he said, has caused us to fall from having the best infrastructure in the world, to being ranked 16th according to the World Economic Forum.

Big business recognizes the dire need to find solutions and has been vocal about sounding the alarm. In 2015, the conservative U.S. Chamber of Commerce voiced strong support for raising the gas tax for the first time in 20 years. It isn’t just roads and bridges that they are worried about. Our shortage of airport runways and outmoded air traffic control systems have made US air travel the most congested in the world, only two of our 14 major ports will soon be able to handle the biggest cargo ships, and although there are 14,000 miles of high speed rail around the world, none of it is in the US. ASCE says “by failing to invest in our vital transportation systems by 2020, businesses would pay an extra $430 billion in transportation costs, household incomes would fall by $7,000 and U.S. exports would fall by $28 billion.”

Former Pennsylvania Governor Rendell says, “The cost of inaction is greater than the cost of doing something. It’s become this literally crazed idea that spending money is bad. Federal governments and state governments have to spend money on certain things that are important.” In fact, just to maintain infrastructure as it is, an expert panel at the University of Virginia determined we need to spend $134 to $194 billion more each year through 2035. Total cost estimates to modernize top $2.3 trillion plus over the next decade, just for our transportation, energy and water infrastructure needs. Unfortunately, our infrastructure investment, currently at 2.4 percent of GDP, is only half of what it was 50 years ago.

Continuing to kick this can down the road only means there’s going to be hell to pay. There are over 240,000 water main breaks each year and rail congestion caused Midwest farmers to lose over $500 million in 2013 and 2014 in rail delays. The average ages of bridges and roads exceed 45 years and the average elementary school is 45 years old. “Our substandard roads, for example, cost urban motorists $700 to $1,000 per driver in repairs, wear and tear, and fuel. This doesn’t count the lost time involved in lower speeds and detours.”

And, with the U.S. Treasury’s ability to borrow at essentially zero (low interest rates offset by inflation), this is the perfect time to make the necessary investments in our infrastructure. Even if we only invested $18 billion per year, according to the Economic Policy Institute, it would produce a $29 billion increase in GDP and a net addition of 216,000 jobs within the first year. Of course, our real needs in terms of infrastructure investment are over $1 trillion, so the jobs eventually created could easily top one million.

So why won’t Congress get off the dime on infrastructure spending? There are a number of reasons, but I believe it basically boils down to the exact opposite of “it would be amazing how much we could get done if no one cares who gets the credit” and, the desire to starve the beast that is the Federal government. So, once again, ideology and partisan gridlock is keeping our Nation, and the rest of the world by association, from moving forward. Want to do your part to drive the required action? Use the only power many of us have left. VOTE!

Stay tuned for a subsequent discussion about Arizona’s infrastructure story.

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2 thoughts on “The real trick to making America great again

  1. Thanks for this blog post regarding how to really “make America great again”; I really enjoyed it and am definitely recommending this blog to my friends and family. I’m a 15 year old with a blog on finance and economics at shreysfinanceblog.com, and would really appreciate it if you could read and comment on some of my articles, and perhaps follow, reblog and share some of my posts on social media. Thanks again for this fantastic post.

  2. We can all see our infrastructure falling apart around us. One of the problems of course is the advancement of fuel efficient and renewal sources of power for transportation. {Hybrid & Electric Cars} The gasoline tax revenue has been worn out for funding too many projects and related transportation uses. A new source of funds need to be found and enacted.
    Possible import taxes on newly arriving automobiles from outside the United States could supply some new money. To completely to rely on sales taxes, licensing fees, and outdated gasoline taxes misses the relationship of benefits to the broad base of public services provided to the general population. Transportation and the infrastructure supporting it demand additional revenue and common sense mandates wider participation in revenue collection. A new formula of distribution of revenue sharing from the federal government to the states needs to be put in place. Generally I would see two separate pools of distribution, one based on population of the states and the other based on geographical size of the states one taking in the transit needs the other the highway requirements.
    A gross federal income tax requiring universal tax participation or a transaction tax, possibly on online purchases now missing state and local sales taxes to the disadvantage of local merchants.
    Whatever is done, a broad-base burden and benefits system needs to be put in place and unlike WPA we shouldn’t go in debt for maintenance funds but only new development in infrastructure which is also desperately needed.

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