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US infrastructure not yet bad enough to force Trump to negotiating table


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US infrastructure not yet bad enough to force Trump to negotiating table

Despite reports to the contrary, U.S. infrastructure is not on the verge of collapse. That is giving President Donald Trump some breathing space to hold off House Speaker Nancy Pelosi, D-Calif., as she tries to make political hay from his decision to walk out of talks on a potential $2 trillion bill to improve American highways and bridges.

While infrastructure is seen as "very important" by more than 60%, according to a recent Rasmussen Reports poll, transport infrastructure in particular ranked 16th in a January survey carried out by the Pew Research Center, with just 45% saying that it should be a top priority for Trump and Congress this year. That compares with 70% for the economy, 69% for healthcare costs and 68% for education, the three most urgent priorities, according to the Pew report.

While it may be a low-risk political strategy for both Trump and Pelosi to eschew bipartisanship in the run up to next year's presidential election, the U.S. is losing out on hundreds of billions of dollars in unlocked economic value. A U.S. Treasury Department report published in fall 2016 indicated that 40 proposed transportation and water infrastructure projects of major economic significance could generate an estimated $800 billion of net economic benefits across the country, if completed and made available for use.

"All the people who are advocates for infrastructure want to exaggerate how bad things are," said Richard Mudge, who was one of the authors of the 2016 Treasury study. "That's an argument that's been going on since the 1980s and has never gotten people excited, never gotten Congress to do much of anything."

Progress on a bipartisan deal was making some progress until May 22 when Trump walked out of a meeting with Pelosi and said he would not work with Democrats as long as investigations into his administration continue.

The vitriol that followed, with both Trump and Pelosi questioning the other's mental health, suggests that the hostile atmosphere between them and, more broadly, the Democrat-controlled House of Representatives and Republican-controlled Senate, seems unlikely to fade soon.

Upgrades vs. new projects

Moreover, upgrades to existing infrastructure of the kind the U.S. needs most are not likely to stir up the same fanfare new projects would, according to Emil Frankel, a senior fellow at the Eno Center for Transportation, a Washington, D.C., think tank.

"The most important investments are improving the existing system," he said in an interview. "That's not very exciting to people. It's really taking our existing system and making sure it doesn't fall down, that it's adequate and it's efficient."

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Some of the biggest projects awaiting funding include the Gateway project, which includes repairing a tunnel connecting New Jersey and New York under the Hudson River and constructing a new tunnel to increase capacity.

The benefits of completing the project total more than $20.06 billion from 2025-2058 at a 7% discount rate and $51.51 billion over the same period at a 3% discount rate, according to an Amtrak analysis published in December 2016. A discount rate accounts for the value of money over time based on what alternative investments can expect to earn in the future.

Mudge said projects maintaining the U.S. interstate highway system can be a better use of time and funds. The Treasury analysis indicated that a project to improve Interstate 70 in Missouri between St. Louis and Kansas City would produce $7.75 billion in net economic benefits over a 30-year period.

"If you improve your overall network that will change economic structure," he said. "You'll have a shift in supply and demand curves. You'll have positive access for labor of getting to jobs and companies getting access to employees. You'll change access to markets."

Upgrading infrastructure is also key if the U.S. is to improve its resilience to an increasing number of natural disasters, according to an April 30 briefing hosted by The Pew Charitable Trusts and the U.S. Chamber of Commerce. Between 40% and 60% of small businesses do not reopen after a disaster, and 90% fail within a year unless they can restart operations within five days, Pew said.

The longer U.S. politicians wait to get the funding in place, the more it will cost, according to the American Society of Civil Engineers. The necessary upgrades to U.S. infrastructure would have cost $1.3 trillion in 2001, but that figure had risen to $4.59 trillion by 2017, its Infrastructure Report Card shows.

Political realities

A range of political issues, including everything from decisions about how to fund an infrastructure plan and where money is allocated, present challenges to getting an infrastructure package funded.

"Every senator and congressman wants to know: How much money did I bring back for my state?" Mudge said. "It's much easier politically to do something that you can cut a ribbon for."

It is unlikely any major event could force lawmakers and Trump to work together quickly to pass an infrastructure bill, according to Jake Varn, a policy analyst at Washington think tank the Bipartisan Policy Center.

"We haven't seen an infrastructure plan in the past two, three years now," he said. "Not to sound too pessimistic, but I would say no, that there isn't necessarily one big event or series of events that would happen that could force an infrastructure bill along."