Why Infrastructure Could Be Our Most Important Investment

Having proper infrastructure is essential to driving economic growth in any country.

Historically, the main areas of focus for infrastructure have been roads, transit systems, bridges, power grids and water/sewer systems. However, within the last few decades, internet connectivity has also become an important factor to consider when thinking about the country’s infrastructure.

Most infrastructure systems in the U.S. were built decades ago. Now, there is an urgent need for an infrastructure update or complete overall.

However, updating and strengthening the country’s infrastructure is not a simple process. The process will require not only a lot of time, but also massive funding.

During President Donald Trump’s 2016 campaign, he vowed to invest over $1 trillion toward modernizing the current infrastructure. However, while everyone recognizes the need for more infrastructure investment, no one can agree on where it should come from.

Types of Infrastructure

There are three main types of infrastructure in a country. The first is soft infrastructure, which refers to entities that provide services to communities. This includes law enforcement, education and health care.

Hard infrastructure, on the other hand, are physical systems used every day to operate in a post-industrial society. This is where road repair and energy grid systems come in.

Finally, there’s critical infrastructure. This is responsible for providing the must-have systems that are integral to the nation’s functioning, such as telecommunication systems, agriculture and shelter.

The federal government usually provides between 20 to 28 percent of funding for infrastructure. The rest comes from the states through general funds, bond proceeds, surpluses and more.

How Poor Infrastructure Affects Daily Life

Infrastructure can affect everything from road congestion and accident rates to job opportunities and tourism. Poor infrastructure not only creates economic instability but also poses a danger to civilians. In fact, experts warn about dam breaches and bridge collapses if serious measures are not taken to improve current infrastructure.

The American Road and Transportation Builders Association (ARTBA) reported in 2018 that the pace of national bridge repairs had slowed considerably, bringing the estimated completion time for these repairs to over 80 years.

Experts believe that the deterioration of public infrastructure, such as roads, transit systems and highways has contributed to the increase in vehicular accidents within the last few years.

In addition, when infrastructure is not optimized, it creates road congestion which leads to delays and fuel waste. According to the American Society of Civil Engineers (ASCE), road congestion cost the country $160 billion, 42 hours of delay per commuter and over $3 billion in wasted fuel in 2014.

However, poor infrastructure is not just responsible for an increase in accident rates. It has also resulted in cybersecurity issues. High-speed internet access systems are now an integral part of the U.S. infrastructure.

If national systems are not optimized, they leave cracks open for foreign powers to take advantage. Following the 2016 election and the investigation surrounding Russian interference, cybersecurity is a top concern.

With this in mind, the impact of faulty infrastructure spreads way beyond the economy. This is why infrastructure repair and expansion have been priorities for Democrats and Republicans alike.

State of the Current U.S. Infrastructure

Recently, there has been a push to put more money toward infrastructure projects as the current systems are in need of serious improvements and repairs.

Every four years, the ASCE publishes a report card, grading the U.S. on its infrastructure. In 2017, the country received a D+.

The organization proposes a $4.5 trillion infrastructure investment to improve the current system, which shows concerning figures:

  • 39 percent of bridges in the U.S. are over 50 years old.
  • Territories like Florida, Utah and the District of Columbia have the highest percentage of structurally deficient bridges. 
  • As of 2016, there were over 15,000 dams that were considered high-hazard.

Current Proposals for Infrastructure Funding

According to reports, the U.S. spends on average $400 billion on infrastructure every year. The money goes to priorities like fixing roads and providing renewable energy resources. More recently, it has also been used to secure power grids and internet access systems throughout the nation to prevent cyberattacks.

Who supports investing in infrastructure?

At least on the surface, it seems like infrastructure investment enjoys bipartisan support. During the 2016 presidential election, Democratic candidate Hillary Clinton proposed a $275 billion investment in infrastructure. Then-Republican candidate, Donald Trump, believed that was not enough and suggest a plan with at least double that amount.

However, President Trump’s infrastructure management strategy involved using only a portion of federal funding and focusing on private investments over the course of 10 years.

How would we pay for infrastructure improvements?

As for who would invest in the infrastructure projects, the president and his economic advisors proposed providing a tax credit to companies who financed and invested in the project. The remaining portion of the funding would come through loans from private partners.

Some argue that there is a better way to find infrastructure funding for renewable resources and upgraded sanitary sewer systems along other important systems. According to the ASCE, using federal, state and local tax dollars is the way to go. They have also suggested an increase in the gas and diesel tax, calling it the “easiest short-term solution.”

That approach, though supported by some, has been controversial.

Some politicians believe backing a tax hike could upset their constituents and jeopardize their seats in office. Despite that risk, however, certain organizations are insisting that lawmakers take appropriate measures to fund infrastructure as soon as possible.

What about sustainable infrastructure?

A report by the Center for American Progress suggested that investing in green infrastructure could be an effective step in fighting climate change. Their 2019 report states that the investment could result in a 13 percent decrease in carbon pollution within the next 10 years, if the new infrastructure plan:

  • Incentivizes companies who support environmentally friendly stocks.
  • Provides renewable energy resources to cut harmful vehicle and building emissions.

Currently, the U.S. Congress has reached an impasse and still has not found a solution to the growing infrastructure funding issue.

In early 2019, the Senate Environment and Public Works committee had approved a $287 funding bill for infrastructure. However, that process hit a wall following the Democrat-led probe into President Trump’s potential collusion with Russia.

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