Road Work Ahead
By: Dr. M. Ray Perryman
Published in syndication August 11, 2021
The US Senate recently passed a $1.2 trillion infrastructure bill in a rare and much needed bipartisan action to inject funds to fix and expand roads, bridges, water systems, the power grid, and other pressing priorities. It will doubtlessly go through some delays, detours, and drama in the House, but seems destined to ultimately make its way to the President's desk and a waiting pen (hopefully sooner rather than later). After a laughable number of "Infrastructure Weeks" in Washington DC for many years, we are finally on the cusp of an "Infrastructure Decade."
The bill, once implemented, will fund a wide variety of infrastructure projects. Aging, congested, and unsafe highways and bridges can be upgraded and expanded after an extended period of deferred maintenance, improving efficiency and safety. Rail and transit facilities will be enhanced. Water systems will be modernized and expanded to meet growing needs. The electric grid will become more robust. Key assets will be better protected from cyberattacks. The bill also provides billions to fight climate change.
Broadband expansion is also on the list, together with resources for access by low-income families. More readily available broadband would not only protect communities and families in the event of future shutdowns such as we saw with COVID-19, but also allow for continuation of remote work as hybrid office situations emerge.
While both sides can point to changes they might prefer and other measures addressing "human infrastructure" are likely to follow, the significance of this measure should not be ignored. Moving people, goods, power, water, and data around the country brings enormous gains in efficiency and, thus, economic potential. We've studied the benefits associated with all types of infrastructure on many occasions. Well-conceived projects typically generate a 25%-35% annual rate of return to overall activity over and above the short-term gains from the construction itself (which alone yields about $3.90 in total spending per dollar of direct outlays). One of our more interesting finding is that the US economy would be 20%-25% smaller today in the absence of the development of the interstate highway system beginning in the 1950s.
This bill certainly does not resolve all of the issues confronting the US today. It doesn't contain the Delta variant, it doesn't fix the immediate supply chain issues, and it doesn't address the educational gaps or family hardships that were already massive and recently made decidedly worse by the pandemic. It does, however, accomplish a great deal to secure our ability to grow in the future and achieve greater economic heights (not to mention the breath of fresh air from seeing the parties cooperate on something of consequence). "Road Work Ahead" is a very good sign indeed. Stay safe!