In the halls of Congress, there’s no debating that America’s infrastructure needs a major upgrade. A nation’s physical infrastructure is foundational to a modern economy, and America’s is deteriorating, undermining our competitiveness and standard of living. Americans have experienced this firsthand through congested traffic, aging transit, and — most recently — a digital divide that prevented many individuals from working or learning online during the COVID-19 pandemic.
A new Business Roundtable study, conducted in partnership with the Interindustry Forecasting Project at the University of Maryland, estimates that roughly $1 trillion in additional investment is needed over 10 years to return our country’s physical infrastructure to a state of good repair, expand capacity to meet expected demand, and invest in new green infrastructure. Major infrastructure investment by the federal government, states, cities, and the private sector would yield tremendous economic benefits and higher wages. A $1 trillion investment over 10 years would put nearly $1,800 annually into the pockets of the average American family and help generate 1.2 million additional jobs.
Business Roundtable, where I chair the Infrastructure Committee, has long advocated that Congress should focus on upgrading our physical infrastructure, which is the best investment the country can make in our long-term economic growth, jobs, and global competitiveness. Business leaders have been encouraged by detailed infrastructure proposals and initial engagement by lawmakers on both sides of the aisle. While Democrats and Republicans are divided on many difficult economic issues, they agree on the need for infrastructure investment, and their proposals aren’t as far apart as they might seem. The Biden administration has proposed that the federal government invest over $800 billion in new funding for physical infrastructure over eight years. Republicans have proposed spending $568 billion over five years, which includes reauthorization of existing programs. There’s a good deal, which meets the needs of the economy, somewhere in between.
While policymakers generally agree on the benefits of substantial infrastructure investment, they don’t agree on how to pay for it. The Biden administration has proposed corporate tax increases. Business Roundtable as well as other organizations believe such an increase would undermine economic growth, hurt employers’ abilities to maintain good-paying jobs here in the United States, and make us less competitive on our home turf against foreign competitors.
But the good news is that there are many options that can help fund infrastructure, which should allow for a bipartisan way forward. Just as Democrats and Republicans see the benefits of infrastructure, business leaders hope policymakers can come together on the way we pay for it.
Business Roundtable supports a user pays model, which is a responsible, long-term funding mechanism through which users, including businesses, pay for the infrastructure —roads, bridges, broadband, water systems, and more — they use. Unlike corporate tax increases, which would disadvantage American companies, user pays models apply to any company that uses infrastructure on American soil, including our foreign competitors. Above all, user pays models are dependable, long-term sources of funding, which we need because smart infrastructure investments take years to develop.
Other infrastructure funding mechanisms could include greater enforcement of tax laws and potentially repurposing unused COVID-19 funding. And, if necessary, Business Roundtable believes a portion of such a package could be funded with deficit spending, since every dollar in infrastructure investment yields nearly $4 in economic growth. Over time, we would expect to see these infrastructure investments boosting tax revenues as jobs get created, which makes the case for federal spending now even more compelling.
While substantial federal investment is necessary, Congress could also take steps to incentivize more investment from the private sector, which has capital ready to be deployed for long-term investments in America’s infrastructure. Australia has raised an impressive amount of funds through a process called asset recycling, where the government leases existing assets to raise funds for new infrastructure investments. Streamlining permitting and expanding and authorizing bond programs could unleash up to $250 billion in private infrastructure investment.
Business Roundtable CEOs agree with Democrats and Republicans that infrastructure investment is long overdue. We believe that when it comes to the right scope and size of a legislative package, lawmakers should be able to find a middle ground. By focusing now on physical infrastructure and deploying sustainable funding sources, policymakers can deliver bipartisan legislation that yields long-term benefits to our nation, our economy, and our people for generations to come.
Brendan Bechtel is chairman & CEO of Bechtel Group, Inc. and chair of Business Roundtable Infrastructure Committee.