Rebuilding America will be harder than it sounds

Your roads & bridges portfolio    2:31 PM ET Tue, 17 May 2016 | 02:27

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  Your roads & bridges portfolio   

  2:31 PM ET Tue, 17 May 2016
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It's time to boost spending on new roads, airports, water works and other U.S. infrastructure.

That campaign promise is a reliable applause line for American voters dodging potholes, waiting in long lines at airports and worried about their drinking water.

Rebuilding America won't be easy. Across the 50 states, rising costs of operating and maintaining transportation, power and water systems are consuming a larger share of overall spending.

And many in the workforce now handling this are approaching retirement, creating a potential shortage of skilled workers to take over those jobs, according to Joseph Kane, a researcher at the Brookings Metropolitan Policy Program.

"There is a real retirement crisis as many of these workers are aging and reaching the end of their careers," he said. "We need millions of these rail workers, highway workers, logisticians, cargo agents, through the country to fill long-term positions. But right now there is an overemphasis on the short-term construction work."

Kane analyzed dozens of job titles directly associated with long-term positions operating and maintaining infrastructure, assigning them a "knowledge score" based on the requirements of the job. Many of those long-term positions require a high skill level that generates higher wages than short-term work.

The emphasis on short-term employment was seen in the surge of spending to help pull the economy out of the Great Recession, with an $800 billion stimulus package of "shovel-ready" projects that were stalled for lack of funding. But the pace of investment slowed sharply after the American Recovery and Reinvestment Act of 2009 expired two years later.

Investment in American roadways then stalled badly after Congress failed in multiple attempts to extend long-term funding for the Highway Trust Fund, which teetered on the brink of insolvency for two years. Despite rising costs of maintenance and construction, Congress hasn't raised the gasoline tax used to replenish the fund for more than two decades.

Late last year, with the highway fund running on fumes, Congress came up with a one-time, $70 billion cash infusion for road repairs with a series of accounting gimmicks, including shifting funds from the Federal Reserve, but failed to create a sustainable source of long-term funding.

The Congressional Budget Office recently projected that the money will run out in six years, and the fund faces a shortfall of some $100 billion by 2026.

But much of hundreds of billions of federal, state and local spending is consumed by just keeping existing infrastructure operating as smoothly as possible. Rising costs of operating and maintenance are crowding out dollars for new highways, bridges, airports and railways.

"Many of our facilities are reaching the end of their useful life, as engineers would put it," said Kane. "So by necessity we're pumping more money into operation and maintenance as opposed to capital projects."

It's also gotten a lot more expensive to build those new projects. For more than a decade, infrastructure-related costs of labor and materials rose much faster than the amount being invested, according to the CBO.

While public spending on infrastructure rose by 44 percent between 2003 and 2014, the purchasing power of that money fell by 9 percent. As a share of GDP, spending on transportation and water infrastructure fell by 5 percent during that period.

The funding gap hasn't escaped the attention of the three remaining presidential candidates. In a rare example of consensus, Republican candidate Donald Trump and Democrats Hillary Clinton and Bernie Sanders agree that the U.S. needs to make a substantial investment in rebuilding.

Sanders has proposed spending $1 trillion to create more than 13 million new jobs to rebuild highways, airports and other public infrastructure, noting that these "are jobs that cannot be shipped offshore or outsourced overseas."

Clinton wants to commit $275 billion in public funds over five years, including $25 billion for a national infrastructure bank to generate another $225 billion in direct loans, loan guarantees and other forms of credit.

And while Trump has not proposed a specific funding level, he's in favor of major public investment in infrastructure repair and expansion.

"If we do what we have to do correctly," he wrote in "Crippled America: How to Make America Great Again," "we can create the biggest economic boom in this country since the New Deal when our vast infrastructure was first put into place. It's a no-brainer."

Faced with rising pension costs and tax-weary voters, state governments have also been cutting infrastructure spending as a share of the economy. Since the late 1960s, state and local government spending on capital projects dropped from its high of 3 percent of U.S. GDP to less than 2 percent in 2014, according to the Center on Budget and Policy Priorities.

As federal funding has dried up, some states are stepping up to fill in the funding gaps and the epidemic of potholes on state highways.

"Over the last two years, state and local governments have come to realize that the federal government isn't coming to the rescue," said Kane. "The cavalry isn't coming."

Connecticut and Washington are in the early stages of multiyear transportation improvement programs.

Last year, eight states — Georgia, Idaho, Iowa, Michigan, Nebraska, South Dakota, Utah and Washington — passed legislation to increase gas taxes, according to the National Conference of State Legislatures, and two more states — Kentucky and North Carolina — moved to limit declines in gas taxes from lower pump prices. Several other states are considering boosting gasoline taxes.

Bad roads, bridges could pare $4T from GDP in a decade

That's a start. But the cost of keeping America's roads, airports, waterworks and railways from falling apart continues to rise.

That's the conclusion of the latest "report card" on American roads, bridges, airports, power grid and other critical infrastructure from the American Society of Civil Engineers, which makes the assessment every four years.