President Trump will use his State of the Union address to take credit for economic progress made in 2017. Arguably, he has every right to take a bow for positive trends in unemployment, economic growth and the stock markets.
He will also use this speech to frame unfinished business and new initiatives that he would like to undertake in 2018 and beyond. One of these issues — infrastructure — should be right up there with education, training, tax cuts and trade agreements as a competitiveness issue, but it won’t be.
{mosads}According to McKinsey and Company data, China spends 8.5 percent of its gross domestic product on infrastructure, while the United States spends 2.6 percent. By 2020, China will expand the number of airports by 62 percent; the length of its expressways by 157 percent; and the capacity of its container terminals by 132 percent. The ability of a nation to move goods and people is one of the best measurements of a nation’s capacity to successfully compete in global markets.
In March 2017, Virginia Department of Transportation posted, “How a Road Gets Built.” The outline lists six steps that must be completed before construction begins. These steps include planning, scoping, design and rights-of-way. In total, the pre-construction phases can take up to seven-and-a-half years. The construction that follows can take one to three years to complete.
Trump is committed to taming the regulatory environment. Congress has begun the process. It will require streamlining the permitting process to modernize America’s infrastructure, the U.S. Chamber of Commerce writes, noting: “Title 41 of the Fixing America’s Surface Transportation Act (FAST-41) established a process for environmental review that caps the amount of time for reviews, places a statute of limitations on lawsuits on reviews, and designates a lead agency that coordinates concurrent reviews among all reviewing agencies.”
We should rethink the fundamentals of regulatory issues that focus more time and resources on the approval process, rather than on construction. The question is whether the American public is ready for such a conversation.
The second phase of the Trump proposal on infrastructure would shift funding away from the federal government, return it to state governments and encourage private investment.
This is a paradigm shift for transportation. The federal government, since the building of the interstate system, has funded interstate highway and bridge projects with 80-20, or even 90-10, matches from state and local governments.
Yet, states have not been sitting idly by waiting for the federal government to act on transportation funding — which it has not done, in terms of revenue enhancements, since 1993. According to the advocacy group Transportation for America, 31 states have approved plans to raise additional revenue for transportation since 2012.
That said, states are not prepared for the shift in funding proposed by Trump. In Pennsylvania, which has the highest state gasoline tax in the nation, the promised $2.4 billion in additional revenue is being diluted by payments to the Pennsylvania State Police and the legislature borrowing against the fund to close budget shortfalls. In five years, $400 million in funding for transit will disappear as the Pennsylvania Turnpike Commission’s lease requirement of Interstate 80 (under Act 44 of 2007) will expire.
Also, private investment is not a panacea. The Washington Post reported, “Projects happen either when there is an investable private opportunity or when the government levies a tax or authorizes a user charge, such as a toll, to fund the repayment of a capital investment.”
The reality is that private money to invest goes where the congestion is. Most of America does not fit into this category. Therefore, don’t expect much private money in low-density areas.
So what will happen in the wake of Trump’s State of the Union address? Infrastructure in America, in general, lacks thought leaders. Trump will hand the industry a lit match, but no one has gathered kindling on which to use the match to ignite a fire around the issue.
As a result, in a month or two, the issue will slowly fade into the background as Republicans refuse to raise taxes on the heels of their tax cuts, and Democrats will not risk exposure of raising taxes in a year when they think they can regain majority control in Congress.
As long as the infrastructure industry relegates the funding issue to lobbying and relationship-building with elected officials, and does not invest in thought leadership and strategic engagement of the public, it will continue to be disappointed by the results it receives from government.
Dennis M. Powell is president of Massey Powell, a public affairs consultancy in Plymouth Meeting, Pa. He consults nationally on transportation issues.