Why are our Bridges Falling? The Economics of the Infrastructure Deficit
Tonight I turned on the news to learn that a major bridge over the Skagit River on Washingon State’s I-5 had fallen down. The bridge is not far from where I live. I have driven over it more times than I like to think. Why did it fall?
The proximate cause is clear: A large truck, carrying an oversize load, hit a crucial girder and the whole thing collapsed. The economic cause is also clear: Our political leaders are so obsessed with one isolated part of the national balance sheet—the balance of the federal government’s financial assets and liabilities—that they have not noticed other, even larger threats to our national balance sheet. Like infrastructure deficit.
There are a lot of things we do not yet know about today’s event, but one thing is clear: The bridge that fell down was “functionally obsolete.” Washington State authorities insist that the bridge was well maintained, and certainly, in my many trips across it, I have seen no rusty girders nor felt any ominous vibrations.
The National Transportation Safety Board’s Deborah Hersman explained to CNN’s Wolf Bltizer what functionally obsolete meant for this particular bridge, which was designed in 1954 and built in 1955 when traffic on the I-5 corridor between Seattle and Vancouver was a fraction of what it is today. A new bridge would have shoulders; this one did not. A new bridge would have had more overhead clearance. On the face of it, either of these features would seem sufficient to have prevented the accident.
So why are we sending 21st century highway traffic across Elvis Presley era Interstate bridges? The answer is simple: We are not spending enough to stay even with our infrastructure deficit. Our bridges, roads, dams, electric grid, sewers, and water treatment plants are wearing out faster than we are replacing them. And that is happening, in large part, because of our misguided obsession with the federal fiscal deficit.
A good starting point to understand what is going on is to ask why we are concerned with the budget deficit in the first place. The cliché is that we do not want to be the first generation to leave our children a national balance sheet with a thinner margin between assets and liabilities than we inherited from our parents.
The trouble is, the federal budget deficit is not the only thing that shapes the national balance sheet. Infrastructure is also a part of the equation. The infrastructure deficit is the difference between what the country invests each year in new bridges, sewers, and power lines and the rate at which the old ones fall apart. If investment in infrastructure exceeds depreciation, the country is that much richer at the end of the year. If depreciation exceeds investment, it is poorer, as surely as if the Treasury sells bonds and uses the proceeds for the most shortsighted spending programs you can think of.
If you have any doubt that the infrastructure deficit is real, try taking a look at the Report Card for America’s Infrastructure published every four years by the American Society of Civil Engineers (ASCE). The Report Card assigns grades of “A” through “F” to various infrastructure categories. The 2013 report begins on an optimistic note: the cumulative GPA for our infrastructure is up. Good news! It is up! Up to D+! We are UP to totally pathetic!
Unbelievably, bridges are one of the bright spots in the report. They rate a C+. Wow! C+! In the language of the report card, “only” one in nine of the nation’s bridges is rated as structurally deficient. (Structurally deficient means not only functionally obsolete, but inadequately maintained. It is an even worse rating than the bridge that fell down today.) The average age of the nation’s 607,380 bridges is currently “only” 42 years, 16 years younger than the fallen Skagit span. The Federal Highway Administration (FHWA) estimates that to eliminate the nation’s bridge deficiency backlog by 2028, we would need to invest $20.5 billion annually. Unfortunately, though, we are currently spending only $12.8 billion. The challenge for federal, state, and local governments is to increase bridge investments by $8 billion annually to address the identified $76 billion in needs for deficient bridges across the United States. If we don’t do it, we are not going to hold on to that exalted C+ for long.
Only rail ranks as high as bridges. No, not our passenger rail, which is the laughing stock of the high-speed world, but our pretty credible freight rail system. Ports and aviation rate a D without the plus. Inland waterways and levees are a D-. But who cares about levees? We have federal flood insurance to take care of any random leaks in the dike, don’t we?
A rational person would look at the report card and conclude that we should be very careful when cutting infrastructure spending. Cuts to essential repairs and upgrades will decrease the federal budget deficit only at the cost of increasing the infrastructure deficit. The trade-off is especially unfavorable when deferred maintenance leads to costly catastrophic failures. And realistically, just eliminating the infrastructure deficit isn’t enough. Future economic growth will require an infrastructure surplus, so that wireless communication networks and renewable energy grids can be built at the same time needed repairs are made to aging sewers and bridges.
Still, although cut, cut, cut is not the right approach to infrastructure, spend, spend, spend isn’t the answer, either. The problem is, not all infrastructure projects are created equal. Spending on roads, sewers, and parks has a reputation for pork-barreling and corruption that is all too often deserved. If your community is anything like mine, you probably can’t drive to the store without “benefiting” from some infrastructure project that has no visible purpose other than generating revenue for some politically connected contractor. Is there any way to separate the wheat from the chaff?
A few years ago another useful infrastructure report, this one from the Bipartisan Policy Center, tried to address that question. Although it focused specifically on transportation infrastructure, it made some common sense recommendations that are more widely applicable.
- Beware of putting new, borrowed money into existing distribution channels. Those channels tend to share out funds on political grounds rather than zeroing in on the most productive projects. It would be better not to spend at all than to spend without rational prioritization.
- Focus not just on projects that are “shovel-ready” but on those that are both ready and consistent with long-term productivity standards. We will never catch up with the infrastructure deficit if we fund too many short-term make-work projects.
- Be skeptical of the “jobs multiplier” rationale for infrastructure projects. Focus on the outputs from infrastructure spending, not the inputs.
Unfortunately, these principles are easier to state than they are to implement. At present, the government’s budget process seems to be moving away from them, not toward them. In this era of permanent budget crisis, any infrastructure money that is appropriated comes on an ad-hoc basis, with specific projects thrown in as “sweeteners” to get past a fiscal cliff or a hike in the debt ceiling. Congress seems completely to have abandoned the kind of orderly budgeting-authorization-appropriation process that is supposed to allow considered evaluation of individual spending proposals. Instead, we get omnibus spending bills and across-the-board sequesters that spend and cut without any sense of priorities.
The bottom line: Yes, our political leaders are right to worry about the kind of national balance sheet we will leave to future generations. But the difference between federal financial assets and liabilities is not the only thing on that balance sheet. Highways, railroads, the electric grid, and those invisible but crucial sewers and water mains are on the balance sheet too. The last time I blogged about the infrastructure deficit, the fiscal deficit was still getting worse. Now the economy is slowly recovering and the fiscal deficit is looking a little better. So isn’t it about time to look at the larger picture, and do something about those ready-to-fall bridges and ready-to-bust levees?
35 Responses to “Why are our Bridges Falling? The Economics of the Infrastructure Deficit”
Sadly, there's another dynamic that aggravates this. The US and states underspent on maintence in good times as well. I think the dynamics are political, and go something like this:
1. Entitlements suck up a huge part of the budget, to the point they'll eventually run up against practical limits on taxation.
2. Various other projects which direct money to groups with government's ear get high priority.
3. It's easier to get funding for the spectacular rather than the mundane. Since the bridge in question was not actually in danager of falling down of its own accord, it would never rise to the level of crises needed to get funding. (Until now)
Part II – think about the political thermodynamics (and why "shovel ready" was such a hot button) Politicians want to direct funds in ways that will help them in the next election. Directing funds to mundane tasks that may have a big return to the economy or general well being over, say, 25 years, will always struggle compared to "more money for X" where X and X's supporters are living humans who will vote on whether you keep your job in the next few months. (Not to say that social security, or teachers, or defense, etc. aren't important…. But are then infinitely important?)
I agree with what you say. Here in Washington State, there is also another factor. A few years ago an anti-tax ballot initiative severely cut revenue from motor vehicle registrations, which previously had been a key source of transportation funding. This "starve the beast" mentality that treats all government spending as equally evil is, sadly, a part of the infrastructure equation.
In my observation and opinon those ballots reflect great voter frustration with "look at what I paid in taxes" and "what on Earth did you spend it on!" (I live in Kirkland…) I remember people talking about voting for a new 520 bridge (sure), but also against both of the different measures that might have paid for it (uh oh…) I note that at least in my area, post crises, ballot measures that tie funding specifically to tasks do much much better than anything else.
So one solution might be a unified ballot measure that says "increase fuel taxes by Xc per gallon with the 100% assurance the governor goes to jail if we spend it on anything other than roads, bridges, sidewalks, and bike trails. and it expires in 5 years and you can vote again." Maybe.
I am puzzled than no one seems to see the problem in the bigger picture – the rapid exhaustion of the world's cheap fossil fuels, especially oil. The 'production' of conventional oil is stagnating since about 2006. In the decade from 1999 to 2009, prices per barrel have risen five-fold.
One could think that this affects the US less because it is one of the richest nations and with highest income per capita. Ironically, this wealth stems in a large part from a high energy consumption with a low energy efficiency (in terms of GDP per units of barrels of oil consumed) and that means that the cost structure of the US is not competitive. The same amount of fossil energy which brings one US citizen to their workplace might be sufficient for twenty people from China.
As a result, people in the US drive less, refineries keep closing, and it becomes more and more difficult to maintain the road infrastructure which ultimately needs to be by the net gain of the existence of roads and bridges. The cost of infrastructure per mile driven goes up, because less people drive. At the same time, high energy prices are likely to cause recession and aggravate the already huge trade deficit which stems to no small part from imports of ever-more expensive oil from OPEC lands.
And this dynamics will only accelerate in the future.
You have some good points here; I'd just like to add a couple of ideas:
(1) With regard to energy efficiency ($ of GDP/barrel of oil), yes, the US is behind many other OECD countries, but it is almost twice as efficient as China by that measure (see a list here: http://en.wikipedia.org/wiki/Gross_domestic_produ… )
(2) You are right that less driving makes it harder to pay for road infrastructure. I think the direction to go is to separate road fees from fuel. We should have a carbon tax (or similar) to reflect the cost of climate change externalities, but in place of the old idea of a fuel tax to pay for roads, we should have per mile fees, assessed by annual inspection of odometers, or, more elegantly, collected by transponders as is now often done on bridges and toll roads.
We've known since 1974 with the birth of Stock-Flow Consistent Modeling courtesy of Wynne Godley that modern money based economies are twin-fueled requiring money injections created by both the public and private sectors. Unfortunately most of our global societies with the major exception of China believe we are single fueled based on a magical self-replenishing pool of money somewhere in the non-government sector that government will steal unless put in "manacles."
Perhaps we are over thinking this a bit.
The reason the bridge failed is because a large truck hit a support point.
That is all.
Actually, the real "cause" was the invention of the internal combustion engine.
One truck hitting a bridge doesn't bring a bridge down.Permitting a wide load through our state without a working knowledge of our bridges and interstates has a big contributarory factor.People always want to place blame.The blame rests solely on our state and government for not spending our tax dollars to make these improvments where they should be made instead of building another span over the "Narrows".Really dudes?Seriously? All so they could generate more revenue and keep soaking the people of this state and Americans every where.
"Actually, the real "cause" was the invention of the internal combustion engine."
Yeah but like the internal combustion engine modern economies run on twin fuels, an "oxidiser" and a "gas" ( public and private creation of money ), but the Libertarian Austerians fantasize they only run on one!
We've chosen to wage two admitted wars, chase imaginary for the most part USA civilian terrorists and give the wealthiest of our citizens huge bail – outs for their supposed losses ( we imagine already remedied through their pre – existent insurance coverages) _ so where in Hell would we ever find any more money to repair our needed for Business and Employment Growth _ INFRA-STRUCTURE !
Bridges, tunnels and roads(which are not the same thing as streets) should be funded and maintained via tolls.
Odometer inspections might backfire big time. You make each incremental mile cost more (rather than less as it does now) so people *really* cut down on travel, and tax revenues fall even more. Then one day the popluation concentration around Seattle revolts and one way or another refuses to allow mileage-taxes from the urban area to be spent outside the area. Disaster ensues.
I think that most great things are funded by getting people to pay for them "on the sly" – often by underpaying costs, as well as hiding taxation. Fuel taxes are hidden in the cost of the fuel at the pump. A mileage tax would in effect be visible with every click of the odometer.
How does allowing government to seize more private money increase private investment and actiivty? Why is China a good model for anything anywhere in the democratic world?
May I also add the two following post from my blog concerning the rapid exhaustion of the world's cheap fossil fuels and sustainable lifestyles,
To the many who see government spending on infrastructure as a silver bullet for the economy and as a job creator I would like to raise a word of caution, It may be time for a "truth off'. More "bridges to nowhere" and wasted spending exist then the taxpayer could ever imagine, this does not create real wealth for our country. Good infrastructure makes a country more competitive in the long run producing savings and lowering cost. What we often get in America is replacing perfectly good sidewalks and streetlights.
People everywhere and at all times have been quick buck artists. They never want to cover all costs. So you get all sorts of crappy developments which destroy the environment and quickly turn into eyesores and slums as demographics change and opportunity moves elsewhere.
It only going to get worse because we're running out of environment to despoil and technology and globalization are making ever larger numbers of people economically superfluous (their labor isn't worth anything), especially unskilled or low-skilled labor in first world countries.
So look for an increasingly grim and violent future. Where are you when we need you Mr. Draco?
I keep getting the same comment over and over again. Just a lot of negativity and lot of excuses, deflections, and other reasons not to face our infrastructure problem. The answer is quite simple. We are either willing to spend the money or we are not. We don't get to rob Peter to pay Paul. We have to pay Paul – thats all. Do we have the money. Come on – American is the largest economy on the face of the earth – hands down.
Washington is my former home state and I feel terrible for friends and family who relied on that bridge every or nearly every day and now face huge detours for who knows how long.
I absolutely agree the US has a growing "infrastructure deficit" and I think that is something every fiscal conservative must understand and take into account. But I disagree with your accusation that fiscal conservatives are blindly "obsessed" and ignorant or disregarding of the infrastructure deterioration. Rather I see the fiscal and infrastructure deficits as two aspects of the same economic and political malaise.
It's a very big topic, too big for a comment. Here in brief are some of the many issues involved:
- political corruption is rampant, much much worse than northern Europe, generally on par by scale albeit different by technique with southern Europe or east Asia
- there is no sense of national direction, no galvanizing national leaders, no outside force capable of nudging domestic politics towards planned action for the long term
- aggravated by increasing disparity and declining real median incomes, and lacking confidence that taxes are fair or will be well spent, people are motivated to rebel against any and all taxes in any ways they can, including extremely self-destructive local tax rebellions that mainly take away funds from local schools and doom communities to fall behind
Because as I said there isn't a Magical Self-Replenishing Lake in Non-Government Land where all money is created. Economic growth depends upon both government and non-government sectors creating money as an interdependent unit. There would be no economic growth on aggregate for the non-government sector without a debt-free net money contribution from the government sector. Where do you think on aggregate for this sector the money comes from to pay interest on private bank loans, for reserves for the payment settlement system and for savings?
Whilst China is no model of democracy neither is the West where the Libertarian fantasy that there is only one magical source of money creation located in the non-government sector is pushed down everybody's throats particularly by mooching Banksters who love to blow asset bubbles regardless of the fact they undermine the real economy!
Something that seems like common sense would be to have an ongoing public works program, one that does not depend on appropriations for specific projects. It would never be idle. Since it would be ongoing, it would not depend on pork-barreling, and it would not suffer from the next-election problem, either.
What surprised me about this post was how cheap it would have been to maintain our infrastructure, as a percentage of the Federal budget (not to mention GDP). We have been asleep at the wheel.
There is considerable waste within the current infrastructural budget. In addition to bridges to nowhere, there are subsidies to airports that result in some planes flying with most of the seats empty (e.g., Hagerstown, MD). Spending could be shifted to bridges if
spending were allocated on the basis of benefits relatiave to costs rather than political clout.
A more fundamental problem is that infrastructure and all discretionary spending are being crowded out by entitlements. Spending on social security, medicare, and medicaid
as a percentage of GDP has increased substantially, and it will continue to increase unless lmits are imposed. Without restrictions on entitlement spending, expect more crowding out of spending on bridges, highways, research and development, education, etc.
You write "Spending on social security, medicare, and medicaid
as a percentage of GDP has increased substantially, and it will continue to increase unless lmits are imposed. Without restrictions on entitlement spending, expect more crowding out of spending on bridges, highways, research and development, education, etc. "
Of course, I am all in favor of eliminating waste from all areas of the budget, infrastructure, entitlements, and all the rest. Still, I find it curious that statements like yours are so common, which implicitly assume that tax revenue as a percentage of GDP is an immutable constant. Perhaps the current deadlock in Congress makes that a fact, but as economists, we should not raise the point without noting that it is a political, not an economic constraint.
I was a maintenance engineer. As several other commentors have mentioned, the problems you discuss are political, not economic problems. Particularly in the U.S. there is the attitude: "If it ain't broke, don't fix it". For years the country has been able to "coast" on the well built infrastructure installed in 1900-1955. Remember when Connecticut had a major bridge collapse on a major thorofare to NYC? They "suddenly discovered" many bridges needed urgent replacement, and went to it (a rare thing). Compared to bridges, the municipal water systems of most eastern cities are a disaster. But in an atmoshere of competing desires, infrastructure replacements/improvements are usually at the bottom of any political agenda. And severely degraded systems are somehow rated as "functional".
I totally agree. As Harvard (and other universities and hostpitals) found out, it was easier to get money for new buildings with donors names on them than to get any money for maintenance. See my comment below.
The entire infrastructure in the US has an "end of life" date. Nothing is built to last forever. The US Army Corps of Engineers published a report several years ago stating that the US needs to replace much of what was built in the 1950's at a cost of over 1 trillion dollars. Every decade the number nearly doubles.
If that truck had tried to cross that bridge the day that the bridge opened, the bridge would have collapsed. So why does its collapse mean we have an "infrastructure deficit"? 34,000 people died in auto accidents last year. Not one of them died from collapsing infrastructure. There are far more important places to put our money than into infrastructure replacement.
I agree that tax revenue does not have to be a constant share of GDP. An efficient
way to increase it is to reduce tax rates and increase the tax base by reducing or eliminating loopholes that allow Warren Buffett and Mitt Romney to pay such low taxes relative to their earnings. Politically popular proposals to raise tax rates on "millionaires and billionaires" would be counterproductive. In the 1950s the United States had maximum marginal tax rates of over 90%, but they were eventually dropped because hardly anyone one was paying them.
However, the public is reluctant to raise tax revenue because the Congress and Presidents have performed so poorly in making decisions about taxes, spending, and debt. Congress continues to delay crucial fiscal decisioins until they are faced with an
immediate crisis. I agree that this impasse is a "political constraint", but all actions by the government over the economy are at least partly political. There may be a strong case for spending more on infrastructure, but Congress may be more likely to provide extended tax
exemptions for owners of NASCAR racing tracks, as they did in January at the time of the "fiscal cliff" crisis.
You are right about water systems, etc. The "report card" rates several less visible elements of the infrastructure, including water systems, sewers, and levees even lower than dams.
BTW it looks like Washington state is not going to replace the I-5 bridge. Instead, they will opt for a solution that gets traffic flowing faster, but in the end, leaves the bridge in its original functionally obsolete condition. First they will throw a temporary span over the gap that will carry traffic (at reduced speeds and loads) for a few months. Meanwhile they will build a replacement span on temporary piers next to the existing bridge, and slide it into place when it is finished. There will still be the same clearance and no shoulders. I hope, at least, they have money their budget for a prominent sign that says "OVERSIZE LOADS STAY IN CENTER LANE."
I think many people share your view that there is no point in doing anything about our infrastructure until a lot of people are killed. We can call that the "Hurricane Katrina" attitude. So you can take the satisfaction of being in a majority on this.
You also note that "If that truck had tried to cross that bridge the day that the bridge opened, the bridge would have collapsed." That is true, but the risk/return factors have changed since the 1950s when the bridge was built. The main factor is a very substantial increase in traffic over the route. It was probably sensible to build the bridge with low clearance and no shoulders in the 1950s, but we would not build it that way now. That is the sense in which we have a deficit.
Who said "there is no point in doing anything"? I said that 34,000 people die in auto accidents each year, and making highways safer is a higher priority than replacing bridges that haven't killed anyone in the last four years. "Save Our Bridges" says that "Repairing the top 2,000 bridges will cost $60 billion." I can think of a lot better ways to spend that $60 billion that will save far more lives and do far more to relieve congestion and other problems.
Far from suffering an infrastructure crisis, highway bridges are routinely replaced and repaired. Two decades ago more than 118,000 bridges were considered "structurally deficient." Today it is less than 67,000. Just five years ago, 22,000 bridges were considered "fracture critical"; now it is just 18,000. Those who try to manufacture an infrastructure crisis mainly want to profit from a big but unnecessary federal program.
Building on your comments, we wrote this article last year: http://www.bbvaresearch.com/KETD/fbin/mult/120614…
OK, I misinterpreted your comment and take back the "Hurricane Katrina" remark. I agree, we shouldn't look at bridges in isolation, we should balance spending on them against other possible safety improvements.
You also say "Far from suffering an infrastructure crisis, highway bridges are routinely replaced and repaired. Two decades ago more than 118,000 bridges were considered "structurally deficient." Today it is less than 67,000. Just five years ago, 22,000 bridges were considered "fracture critical"; now it is just 18,000."
Yes, bridges, being more visible than hidden infrastructure like sewers and water systems, do seem to get a little more maintenance, however, there are some caveats even there. One, according to the ASCE, is that the catch up on number of bridges masks the fact that those repaired are disproportionately small ones. Major bridges have a larger share that are not just functionally obsolete, but structurally deficient.
Also, I have checked the report card for here in Washington State, where there are chronic transportation funding problems, and I see that bridges have a lower grade than nationally.