The authors of the “once-in-a-generation” infrastructure bill don’t seem to understand the federal government’s proper role in the nation’s infrastructure. Their legislation will borrow billions of dollars and spend it by using the same tired mechanisms of the past. That’s a shame, because the federal government could play a significant role in improving infrastructure by limiting regulations that raise costs, delay building projects and impede the effective provision of government services.
Consider federal port restrictions. By law, goods can be transported from one U.S. port to another only in ships built in the United States, crewed by U.S. workers, registered in the United States and owned by U.S. citizens. But America lacks an efficient shipbuilding industry, and Colin Grabow of the Cato Institute tells us that ships built here cost four to five times more than those built in the competitive market. In short, federal restrictions discourage an efficient system of domestic ports.
Things get even worse when we realize that these laws also prevent Puerto Ricans — U.S. citizens — from accessing domestically produced natural gas. They must import their gas from other countries because there are no qualified liquified natural gas ships based in the United States.
Wage requirements attached to federal projects keep us from efficiently building infrastructure. Federal dollars come with strings that mandate union-rate wages for construction work. This requirement increases the costs of construction without improving its quality, thus ensuring more expensive and worse infrastructure than people otherwise would get for their tax dollars. These wage requirements raise the cost of roads, sewers, buildings and any other infrastructure paid for with federal cash.
Federal environmental review requirements also stand in the way of efficient infrastructure development. It’s a good thing for the federal government to ensure that building things doesn’t destroy the habitats of endangered species, but it’s a bad thing when it takes years for the government to figure out whether a given project will do that. Reviews of potential environmental impacts routinely delay projects for years. When those extended reviews eventually recognize that a project will not cause environmental harms, there’s reason to question the benefit of delays.
There are other ways the federal government gets in the way. Regulations bump up the cost of building emissions-free and reliable nuclear power facilities. Federal rules prevent companies from building pipelines, which can provide the safest and most effective transportation of oil and natural gas.
There are many reasons for the policies that prevent the country from building infrastructure efficiently, but there are not many good reasons. Federal port restrictions are pure protectionism — they benefit existing shipping companies and the few shipbuilders we have — at the expense of efficient and effective infrastructure. Wage requirements are favors to unions. Pipeline restrictions please oil prohibitionists.
But it doesn’t have to be this way. Lawmakers could stop the restrictions if they possessed the will to do so. Congress should review these inefficient restrictions to ensure the country actually can “build back better.”
The Biden administration at least pays lip service to the idea that efficient infrastructure is important. Presidential staffers recently explained how infrastructure spending would help the U.S. compete globally, noting that, “Roads, bridges, trains, airports and ports are the lifeblood of strong supply chains.”
While the federal government may say it supports the development of strong infrastructure, it continually stands in the way of ensuring strong supply chains. Lawmakers can do something about it. Instead of borrowing and spending billions of dollars, they should get rid of the rules that make building infrastructure more expensive.
James M. Hohman is the director of fiscal policy at the Mackinac Center for Public Policy, a research and educational institute in Midland, Mich. Follow him on Twitter @JamesHohman.