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Trans Infrastr Key to Econ

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Trans Infrastr Key to Econ

US infrastructure modernization key to economic competitiveness and growth

Building America’s Future, 11 – a bipartisan coalition of elected officials dedicated to bringing about a new era of U.S. investment in infrastructure that enhances our nation’s prosperity and quality of life. (“Falling Apart and Falling Behind”, Transportation Infrastructure Report, http://www.bafuture.com/sites/default/files/Report_0.pdf)

Rebuilding America’s economic foundation is one of the most important missions we face in the 21st century. Our parents and grandparents built America into the world’s leading economic superpower. We have a responsibility to our own children and grandchildren to strengthen—not squander —that inheritance, and to pass on to them a country whose best days are still ahead. Our citizens live in a turbulent, complicated, and competitive world. The worst recession in eighty years cost us trillions in wealth and drove millions of Americans out of their jobs and homes. Even more, it called into question their belief in our system and faith in the way forward. Our infrastructure—and the good policy making that built it—is a key reason America became an economic superpower. But many of the great decisions which put us on that trajectory are now a half-century old. In the last decade, our global economic competitors have led the way in planning and building the transportation networks of the 21st century. Countries around the world have not only started spending more than the United States does today, but they made those financial commitments—of both public and private dollars—on the basis of 21st-century strategies that will equip them to make commanding strides in economic growth over the next 20-25 years. Unless we make significant changes in our course and direction, the foreign competition will pass us by, and a real opportunity to restore America’s economic strength will be lost. The American people deserve better. Falling Apart and Falling Behind lays out the economic challenges posed by our ailing infrastructure, provides a comparative look at the smart investments being made by our international competitors, and suggests a series of recommendations for crafting new innovative transportation policies in the U.S. A Mounting Crisis This report frames the state of our infrastructure in terms of the new economic realities of the 21st-century economy and presents the challenges we currently face. The surge in global trade has realigned America’s business transport needs, complicating supply chains and increasing the need for sophisticated intermodal transportation. Our economically vital gateways and corridors now operate over capacity, imposing costs of $200 billion a year. Our passenger transport system, especially in our major metropolitan regions, is also burdened with costly congestion as passenger travel increases. Largely run on gasoline, our transportation system is environmentally, politically, and economically unsustainable. We have the world’s worst air traffic congestion, in part because we are still using the radar-based air traffic control system developed in the 1950s.

Substantially expanding investment in transportation infrastructure is key to economic growth

Ruane, 11 - President and CEO, American Road & Transportation Builders' Association (Pete, Senate Commerce, Science and Transportation Committee Hearing - "Building American Transportation Infrastructure Through Innovative Funding.", 7/20, Congressional Documents and Publications lexis)//DH

One of the most attractive benefits of major public investments in transportation infrastructure is they create tangible capital assets that are long-lived. In addition to creating jobs and generating tax revenues throughout the economy during the construction cycle, these investments provide infrastructure improvements that foster and facilitate continuing economic growth over many years beyond the initial investment. The greatest long-term economic returns can often be found in strategic investments that facilitate business activity, especially in industries that depend on the transportation network. Infrastructure investments aimed at reducing traffic congestion or providing faster point-to-point travel, for example, can increase productivity by reducing travel time. Given the recent economic recession and the challenges our country continues to face in terms of unemployment, particularly in the construction sector, passing a robust federal surface transportation bill will help sustain and create jobs and support future economic growth. Current transportation infrastructure investments generate over $380 billion in annual economic activity for the nation - which is nearly 3 percent of U.S. Gross Domestic Product. This activity supports nearly 3.4 million jobs throughout the U.S. economy with a payroll of over $159.3 billion. This includes approximately 1.7 million direct jobs for transportation construction workers and supplier firms. As those 1.7 million people spend their wages by going out to restaurants, buying cars or trucks, purchasing groceries or consuming housing, their spending supports an additional 1.7 million jobs in other sectors of the U.S. economy. Unfortunately, the politicization of the American Recovery & Reinvestment Act (ARRA) has led some to question the job creation/sustaining benefits of federal transportation investment. While there have been a great deal of flawed claims that the ARRA's transportation investments did not work, the simple fact is that transportation is virtually the only construction activity that did not suffer a downturn during the recent recession--almost solely because of the Recovery Act. The measure provided a critical one-time injection of federal investment into transportation improvements. In so doing, it preserved thousands of jobs that would otherwise have disappeared and the improvements resulting from the 14,000 Recovery Act construction projects will benefit communities and businesses for years to come. But the full potential of the Act was undermined by the collapse of private sector construction activity and cuts in state and local transportation construction investment over the last two years. In fact, a recent U.S. Government Accountability Office publication references a preliminary U.S. Department of Transportation report that found 21 states did not meet the ARRA's maintenance of effort requirement and reduced dedicated revenues for transportation at the same time the Recovery Act boosted federal transportation investment. But direct employment is only the tip of the iceberg. Even more important are the jobs and economic activity that could not exist without our nation's modern transportation infrastructure. Every manufacturing plant in the U.S., every retail store, every plumber and service worker, every trucker and millions of other jobs depend on highways, airports and railroads for inputs and to deliver products to customers. If we let our transportation system decay, American workers across the economy will be hurt. There are approximately 78.6 million American jobs in just tourism, manufacturing, transportation and warehousing, agriculture, general construction, mining, retailing and wholesaling alone that are dependent on the work done by the U.S. transportation construction industry. These dependent industries provide a total payroll in excess of $2.8 trillion. The U.S. is experiencing intense competition from emerging economies around the world. Our transportation infrastructure is critical to our competitiveness. We have started with a great advantage - the investment America made in the Interstate Highways. But we are losing that advantage as China, India and Europe are all investing more in new capacity than we are because they recognize the importance of transportation infrastructure to their economic competitiveness. In China, infrastructure spending has increased an average of 20 percent each year over the last two decades. China, which is roughly the same size as the continental U.S., has built over 30,000 miles of new expressways in the last 10 years. Their highway system is expected to extend over 53,000 miles by 2020, surpassing the current 47,000 miles of Interstate in the United States. n2 One of the most powerful things Congress can do to support existing jobs, create new jobs and strengthen the foundation of U.S. economic competitiveness is to pass a robust multi-year reauthorization of the federal highway and transit programs in 2011.

Infrastructure spending creates a short term stimulus

Transportation infrastructure is key to the economy

Gallatin spoke in terms of infrastructure shortening distances and easing communications, even when the only means to do so were roads and canals. Every day, Americans use our nation’s transportation infrastructure to commute to work, visit their friends and family, and travel freely around the country. Businesses depend on a well-functioning infrastructure system to obtain their supplies, manage their inventories, and deliver their goods and services to market. This is true for companies whose businesses rely directly on the infrastructure system, such as shippers like UPS and BNSF, as well as others whose businesses indirectly rely on the infrastructure system, such as farmers who use publicly funded infrastructure to ship crops to buyers, and internet companies that send goods purchased online to customers across the world. A modern transportation infrastructure network is necessary for our economy to function, and is a prerequisite for future growth. President Eisenhower’s vision is even more relevant today than it was in 1955, when he said in his State of the Union Address, "A modern, efficient highway system is essential to meet the needs of our growing population, our expanding economy, and our national security." Today, that vision would include making not only our highways, but our nation’s entire infrastructure system more efficient and effective.

Our analysis indicates that further infrastructure investments would be highly beneficial for the U.S. economy in both the short and long term. First, estimates of economically justifiable investment indicate that American transportation infrastructure is not keeping pace with the needs of our economy. Second, because of high unemployment in sectors such as construction that were especially hard hit by the bursting of the housing bubble, there are underutilized resources that can be used to build infrastructure. Moreover, states and municipalities typically fund a significant portion of infrastructure spending, but are currently strapped for cash; the Federal government has a constructive role to play by stepping up to address the anticipated shortfall and providing more efficient financing mechanisms, such as Build America Bonds. The third key finding is that investing in infrastructure benefits the middle class most of all. Finally, there is considerable support for greater infrastructure investment among American consumers and businesses.

Many studies confirm the link

The United States has a rich history of investing in infrastructure and reaping the long-term economic benefits. Influential research by David Aschauer and others has explored the link between public infrastructure investment and economic growth. 2,3,4 Aschauer’s research and numerous other studies have found evidence of large private sector productivity gains from public infrastructure investments, in many cases with higher returns than private capital investment. Since much of the public capital stock is owned by state and local authorities, more recent research has compared the economic benefits of infrastructure investments between regions in the United States, generally finding smaller but economically significant benefits in comparison to Aschauer’s estimates. 5 Investments in infrastructure allow goods and services to be transported more quickly and at lower costs, resulting in both lower prices for consumers and increased profitability for firms. Major transportation infrastructure initiatives include the building of the national railroad system in the 19th century and the creation of the Eisenhower Interstate System in the 1950s and 1960s. Observers have concluded that in both of these cases there was a causal link running from infrastructure investments to subsequent private sector productivity gains. 6 Alternatively, it is possible that infrastructure investments occur when productivity gains are also likely to follow but for unrelated reasons. Determining causality is difficult. A study by John Fernald makes progress on establishing causality by comparing the impact of infrastructure investment on industries that a priori should experience different benefits from infrastructure spending. 7 He finds that the construction of the interstate highway system in the 1950s and 1960s corresponded with a significant increase in the productivity of vehicle-intensive industries (such as transportation and gas utilities), relative to industries that do not depend on vehicles (such as apparel and textiles and industrial machinery). Fernald’s findings suggest that previous investments in infrastructure led to substantial productivity gains, and highlight the potential for further increases in productivity through additional, well-targeted investments.

Infrastructure is key to the economy

Americans see the consequences of inadequate infrastructure everyday: when we get stuck in traffic jams on our way to work; when we get stuck at the airport because our flights are delayed; when mass transit options are too few or too expensive; when our electric grid fails and leaves us in the dark; when our ports are too small to handle modern cargo ships; and when our bridges must be closed or torn down as a result of structural deficiencies. As individual cases, these deficiencies can be daily annoyances. Together, they form a national crisis. The strength of every country’s economy derives from the productivity of its human capital and natural resources. We have an abundance of both. But what these great gifts produce is meaningless unless they find their way to the marketplace. That is what infrastructure does. It increases human mobility and facilitates efficiency. It enables a healthy economy to channel the flow of goods and services around the corner and around the globe. Done right, infrastructure helps us open new markets to goods and services, drops the costs of transportation, speeds deliveries, and lowers prices for consumers. Capital and jobs flow to the most efficient markets, and the most efficient markets are dependent on modern, reliable, high-tech infrastructure. The infrastructure past generations built for us—and the good policy making that built it—is a key reason America became an economic superpower. But many of the great decisions which put us on that trajectory are now a half-century old. In the last several decades, our political system has failed us.

Increasing transportation infrastructure investment increases export led growth

Treasury Department, 12 - A REPORT PREPARED BY THE DEPARTMENT OF THE TREASURY WITH THE COUNCIL OF ECONOMIC ADVISERS (“A NEW ECONOMIC ANALYSIS OF INFRASTRUCTURE INVESTMENT”, MARCH 23, 2012, http://www.treasury.gov/resource-center/economic-policy/Documents/20120323InfrastructureReport.pdf)

American firms rely on infrastructure to enable efficient supply chain management and the transportation of goods to the point of sale. Investments in transportation infrastructure would allow firms in all 50 states to have the opportunity to benefit from growth in foreign markets. According to an analysis by the Brookings Institution, exports account for 8 percent of total U.S. employment 48 ; smart investments in infrastructure have the potential to create more jobs in export-oriented U.S. companies. The President’s National Export Initiative calls for the “Departments of Commerce and Transportation [to enter] into a Memorandum of Understanding to work together and with stakeholders to develop and implement a comprehensive, competitiveness-focused national freight policy. The resulting policy will foster end-to-end U.S. freight infrastructure improvements that facilitate the movement of goods for export and domestic use.” 49 Moreover, the Department of Transportation “estimates that population growth, economic development, and trade will almost double the demand for rail freight transportation by 2035.” 50 Export growth has been strong during the recovery. In 2011, exports were up over 33 percent from 2009, meaning that America is ahead of schedule in meeting the President’s goal of doubling exports over 2009 levels by the end of 2014.

Transportation infrastructure is vital to the US economy

Caldwell, 11 - ASCE President The American Society of Civil Engineers (Kathy, CQ Congressional Testimony, 3/30, lexis)

Surface transportation infrastructure is a critical engine of the nation's economy. It is the thread which knits the nation together. To compete in the global economy, improve our quality of life and raise our standard of living, we must successfully rebuild America's public infrastructure. Faced with that task, the nation must begin with a significantly improved and expanded surface transportation system. A surface transportation authorization must be founded on a new paradigm; instead of focusing on the movement of cars and trucks from place to place, it must be based on moving people, goods, and services across the economy. Beyond simply building new roads or transit systems, an intermodal approach must be taken to create a new vision for the future.

Transportation investment is key to jobs and economic growth

Caldwell, 11 - ASCE President The American Society of Civil Engineers (Kathy, CQ Congressional Testimony, 3/30, lexis)

Benefits of Multi-Year Surface Transportation Legislation

Money invested in essential public works can create jobs, provide for economic growth, and ensure public safety through a modern, well-engineered transportation system. By improving the nation's deteriorating surface transportation system both economic and job creation opportunities will be provided, while creating a multi- modal transportation system for the Twenty-First Century. The nation's transportation infrastructure system has an annual output of $120 billion in construction work and contributes $244 billion in total economic activity to the nation's gross domestic product. In addition to the significant economic benefits for the entire nation, the Federal Highway Administration estimates that every $1 billion invested in the nation's highways supports 27,823 jobs, including 9,537 on-site construction jobs, 4,324 jobs in supplier industries, and 13,962 jobs throughout the rest of the economy.

The job creation potential of infrastructure investment is only one contributing factor toward how surface transportation allows for the nation to compete on in the global marketplace. Equally, important are the benefits to the region's long term growth and productivity. A significant challenge to this economic growth is increased congestion, which contributes to the deterioration of the nation's infrastructure, Therefore, the importance of freight movement and the impacts of congestion on the nation's economy must be emphasized.

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