Future Infrastructure budget cuts are inevitable – We must locate other means of investment to rebuild and innovate
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- Expanding port infrastructure is vital to US global economic leadership
- Economic leadership prevents economic collapse—leadership key to resilience
- A highly economically interdependent world would go nuclear without US leadership
Adv: PortsThe Panama Canal expansion will fundamentally change seaborne commerce – US ports require new harbor deepening or they won’t be able to compete for post-Panamax ships and exports—the time is nowBridges 2011 –Chairman of the Board of the American Association of Port Authorities and Executive Director of Virginia Port Authority (Jerry A., “Testimony of Jerry A. Bridges Chairman of the Board of the American Association of Port Authorities and Executive Director of Virginia Port Authority before the United States House of Representatives Transportation and Infrastructure Committee Water Resources and Environment Subcommittee Hearing: the Economic importance of Seaports: Is the United States Prepared for 21st Century Trade Realities?” , October 26, 2011, http://republicans.transportation.house.gov/Media/file/TestimonyWater/2011-10-26%20Bridges.pdf)//MM Since the birth of our nation, U.S. seaports and waterways that connect them have served as a vital economic lifeline by bringing goods and services to people around the world and by delivering prosperity to our nation. U.S. seaports are responsible for moving more than 99 percent of our country’s overseas cargo. Today, international trade accounts for more than a quarter of Americas Gross Domestic Product. Americas seaports support the employment of 13.3 million U.S. workers, and seaport- related jobs account for $649 billion in annual personal income. For every $1 billion in exports shipped through seaports, 15,000 U.S. jobs are created. Seaports facilitate trade and commerce, create jobs, help secure our borders, support our military and serve as stewards of valuable coastal environmental resources. Ports are dynamic, vibrant centers of trade and commerce, but what is most important to understand is that seaports rely on partnerships. Seaports invest more than $2.5 billion every year to maintain and improve their infrastructure. In recent years, however, this commitment has not been adequately matched by the federal government. Federal funding for dredging federal navigation channels has slowed and decreased, especially for new construction. Further, maintenance dredging is sorely underfunded, despite a more than $6 billion and growing surplus in the Harbor Maintenance Trust Fund. Landside improvements have also been too low a priority, with little of the highway funds going to freight transportation projects. The only bright light has been the newly created TIGER grants, although not enough of this funding benefited ports. Virginia Port Authority received a TIGER grant for its heartland project. As we look to the future, we do know that there are challenges and opportunities. As we recover from this economic downturn, we must make investments today to address the trade realities of the future. Here are some the challenges and we have to ask: are we ready?
So are we ready? While ports are planning for the future, the federal government has not kept pace with the industry or our international competitors. The federal government has a unique Constitutional responsibility to maintain and improve the infrastructure that enables the flow of commerce, and much of that infrastructure in and around seaports have been neglected for too long. Many of our land and water connections are insufficient and outdated, affecting the ports' ability to move cargo efficiently into and out of the U.S. This hurts U.S. business, hurts U.S. workers and hurts our national economy. Port projects take decades to plan and build and we cannot wait. Federal investments in seaports are an essential and effective utilization of limited resources, paying dividends through increased trade and commerce, long-term job creation, secure borders, military support, environmental stewardship, and more than $200 billion in federal, state and local tax revenue. Earlier this month, the President’s Council on Jobs and Competitiveness made an urgent plea for improvements in the nation's transportation infrastructure, including landside and waterside access to seaports. We cannot wait. The plans ability to increase and maintain available capital at competitive growth rates make it the best and only way to expand ports efficientlyMichael Likosky March 1, 2012 “A Bank for Infrastructure Funding” http://www.governing.com/columns/public-finance/col-bank-infrastructure-funding.html Michael Likosky, director of the Center on Law and Public Finance at New York University, sees a national infrastructure bank as one answer. As bipartisan legislation to create such a bank inches its way through Congress, I tuned into a briefing via telephone by Likosky, sponsored by RBC Capital Markets, on how such a bank might work. What follows is an edited transcript of his remarks. Prioritizing projects: A national infrastructure bank's purpose is to help increase state and local deal flow and private-sector deal flow. The national bank itself isn't going to be a place that has a list of priority projects. This is not a top-down institution. So what we end up with is our state and local governments beginning to move toward priority lists of projects. In many states this is happening; there is starting to be a priority list of what types of projects would be particular candidates for public-private partnerships. As the transportation bill has moved forward, we're getting a clearer idea of what gaps are going to be left in the marketplace where an infrastructure bank is going to become particularly useful. A concrete example of a priority project that would be an infrastructure bank candidate is the expansion of the port in Spartanburg, S.C., so it can handle the larger Panama Canal ships. We're talking about a range of different sectors that are involved, both freight rail, intermodal freight rail and dredging the port, but we're also talking about other types of port build-up manufacturing. The idea is to ramp up manufacturing in the ports at the same time that the expansion happens. What the infrastructure bank would aim to do is increase the pie of available capital with the recognition that we have to achieve fairly high growth rates -- 6 percent -- in a fairly sustained way in order to handle the employment crisis. So in those areas where there's the greatest amount of economic growth possible, that's where the infrastructure bank comes in as especially useful. Expanding port infrastructure is vital to US global economic leadershipKiefer et al, 2k – principal investigator for Planning and Management Consultants– study authorized by Section 401 of the Water Resources Development Act of 1999, report to the US Army Corps of Engineers (Jack, Planning and Management Consultants, “The National Dredging Needs Study of Ports and Harbors Implications to Cost-Sharing of Federal Deep Draft Navigation Projects Due to Changes in the Maritime Industry”, May 2000, http://www.iwr.usace.army.mil/docs/iwrreports/00-R-8.pdf) // CB 2.2.2 Other Tangible Benefits Indirect benefits of Corps projects include gains associated with international trade. Historical expenditures for harbor improvements facilitate international trade by providing ships more efficient access to the Nation's ports. International trade in turn creates and sustains jobs and generates Federal tax revenues. The exact method of computing income and employment associated with international trade is debatable, but one of the best techniques is to calculate the value added by U.S. businesses and households to imports and exports. 5 Computations reveal that nearly 20 percent of all U.S. jobs are directly associated with international trade. A slightly higher percentage of personal income would be associated with international trade because such jobs pay somewhat more than the U.S. average. In addition, about $553 million were collected for the Harbor Maintenance Trust Fund in 1999. Some benefits of harbor improvements are difficult or impossible to quantify. For individual projects these are given little attention. Policy decisions concerning project authorizations and appropriations should consider intangible benefits as well as tangible direct and secondary benefits. This idea is particularly applicable to international trade and specifically container trade. For example, America is such a big market, international trade gives the U.S. considerable leverage when dealing with foreign governments. Thus, international trade can enhance the United States’ role as a world leader. National harbors are also a vital part of our military’s power projection platform. Economists believe in the law of comparative advantage, which states that nations benefit when they specialize in producing certain goods and services and then trade with each other rather than producing everything themselves. For example, most people perceive that the majority of foreign trade consists of consumer goods such as clothing and televisions. However, as shown in Table 2-2, a significant portion of U.S. foreign trade consists of semi-manufactured commodities and raw materials such as iron and steel or crude petroleum. These products are used to produce other goods, or are further processed in the importing country. For example, in the United States imported car parts are often used to produce exports of finished automobiles. Machinery and electrical equipment are often used the same way. Thus, efficient flow of international commodities is important for all nations including the United States. Global trade is very competitive and profit margins are thin. This is particularly true for maritime transportation including the container shipping industry. . Growth in U.S. foreign trade, even though it is substantial, is not as high as growth in total international trade, particularly with respect to containerships. It is quite possible for some U.S. trade to be diverted or to be serviced by less efficient ships. This may occur if American ports and the Federal government are not able to meet current challenges posed by developments in international trade. 2.2.4 Lost Benefits There are lost benefits associated with delays in the construction of harbor improvement projects. Costs increase with delays, not only because of inflation but because the construction process becomes distorted by available funds. Costs associated with delays can and have been estimated. Typically, a year’s delay in schedule leads to a penalty of more than 10 percent of project cost. This is sizable and should be considered when making cost-sharing policies. Cost-sharing policies should seek to insure that both public ports and the Federal government fund projects in a timely manner. There are also benefits foregone due to lost transportation cost savings with project delays. Project delays affect the Nation in another way. Although these benefits are difficult to quantify, such effects are perhaps more important than those that can be measured. Delays create an uncertain atmosphere that can impact decisions to develop infrastructure elsewhere. Container ports are very capital intensive and require long term planning. Massive containerships are rapidly being put into service at ports throughout the world. Without a clear signal of intent to accommodate these vessels in the United States, necessary ports and facilities may be built elsewhere. Once major investments are made elsewhere, the full efficiencies of large containerships in the form of lower transportation costs for general cargo may be lost to the Nation for a long time to come. 2.3 Geographical Incidence of International Trade Public ports generally have a regional or local economic development mandate along with authorizations to improve harbor facilities. This does not mean, however, that local economies near ports capture all or most of the benefits associated with international trade. For example, when a port unloads crude petroleum from a ship, it charges a fee that generates revenues for the port and the local community. But imported oil also fuels cars and homes throughout the Nation. Likewise, when a port loads grain or coal onto a ship for export, farmers in the U.S. heartland benefit as do coal miners in the hills of West Virginia, Pennsylvania and Kentucky. Container trade benefits all regions of the country as well. As shown in Table 2-3, fifteen U.S. ports account for about 80 percent of international maritime trade in terms of value. These ports represent only ten states, however much of the cargo they handle flows to other regions. Table 2-4 shows the origin and destination of international cargo for each U.S. state measured in terms of value. On average, any given state uses the services of 15 different ports around the country. For example, the California ports of Los Angeles, Long Beach and Oakland collectively handle about $187 billion worth of cargo, but the state of California is the origin or destination of only $106 billion. While most container trade flows in and out of ports on the East and West Coasts, it is distributed throughout the Nation as shown in Tables 2-5 and 2-6. For instance, the Port of Charleston, S.C. handled about 800 thousand TEUs in 1996, but the state of South Carolina was the origin or destination of only 160 thousand of these TEUs. Similarly, the ports of Los Angeles, Long Beach and Oakland handled five million TEUs but only 2.5 million originated or were destined to sites within California. [table omitted] 2.4 Conclusion
[Michael, The Case for Goliath: How America Acts As the World’s Government in the Twenty-First Century, p. 192-195] Although the spread of nuclear weapons, with the corresponding increase in the likelihood that a nuclear shot would be fired in anger somewhere in the world, counted as the most serious potential consequence of the abandonment by the United States of its role as the world's government, it was not the only one. In the previous period of American international reticence, the 1920s and 1930s, the global economy suffered serious damage that a more active American role might have mitigated. A twenty-first-century American retreat could have similarly adverse international economic consequences. The economic collapse of the 1930s caused extensive hardship throughout the world and led indirectly to World War II by paving the way for the people who started it to gain power in Germany and Japan. In retrospect, the Great Depression is widely believed to have been caused by a series of errors in public policy that made an economic downturn far worse than it would have been had governments responded to it in appropriate fashion. Since the 1930s, acting on the lessons drawn from that experience by professional economists, governments have taken steps that have helped to prevent a recurrence of the disasters of that decade.' In the face of reduced demand, for example, governments have increased rather than cut spending. Fiscal and monetary crises have evoked rescue efforts rather than a studied indifference based on the assumption that market forces will readily reestablish a desirable economic equilibrium. In contrast to the widespread practice of the 1930s, political authorities now understand that putting up barriers to imports in an attempt to revive domestic production will in fact worsen economic conditions everywhere. Still, a serious, prolonged failure of the international economy, inflicting the kind of hardship the world experienced in the 1930s (which some Asian countries also suffered as a result of their fiscal crises in the 1990s) does not lie beyond the realm of possibility. Market economies remain subject to cyclical downturns, which public policy can limit but has not found a way to eliminate entirely. Markets also have an inherent tendency to form bubbles, excessive values for particular assets, whether seventeenth century Dutch tulips or twentieth century Japanese real estate and Thai currency, that cause economic harm when the bubble bursts and prices plunge. In responding to these events, governments can make errors. They can act too slowly, or fail to implement the proper policies, or implement improper ones. Moreover, the global economy and the national economies that comprise it, like a living organism, change constantly and sometimes rapidly: Capital flows across sovereign borders, for instance, far more rapidly and in much greater volume in the early twenty-first century than ever before. This means that measures that successfully address economic malfunctions at one time may have less effect at another, just as medical science must cope with the appearance of new strains of influenza against which existing vaccines are not effective. Most importantly, since the Great Depression, an active American international economic role has been crucial both in fortifying the conditions for global economic well-being and in coping with the problems that have occurred, especially periodic recessions and currency crises, by applying the lessons of the past. The absence of such a role could weaken those conditions and aggravate those problems. The overall American role in the world since World War II therefore has something in common with the theme of the Frank Capra film It's a Wonderful Life, in which the angel Clarence, played by Henry Travers, shows James Stewart, playing the bank clerk George Bailey, who believes his existence to have been worthless, how life in his small town of Bedford Falls would have unfolded had he never been born. George Bailey learns that people he knows and loves turn out to be far worse off without him. So it is with the United States and its role as the world's government. Without that role, the world very likely would have been in the past, and would become in the future, a less secure and less prosperous place. The abdication by the United States of some or all of the responsibilities for international security that it had come to bear in the first decade of the twenty-first century would deprive the international system of one of its principal safety features, which keeps countries from smashing into each other, as they are historically prone to do. In this sense, a world without America would be the equivalent of a freeway full of cars without brakes. Similarly, should the American government abandon some or all of the ways in which it had, at the dawn of the new century, come to support global economic activity, the world economy would function less effectively and might even suffer a severe and costly breakdown. A world without the United States would in this way resemble a fleet of cars without gasoline. A highly economically interdependent world would go nuclear without US leadershipMandelbaum, 5 – Professor and Director of the American Foreign Policy Program at Johns Hopkins – 2005 [Michael, The Case for Goliath: How America Acts As the World’s Government in the Twenty-First Century, p. 224] At best, an American withdrawal would bring with it some of the political anxiety typical during the Cold War and a measure of the economic uncertainty that characterized the years before World War II. At worst, the retreat of American power could lead to a repetition of the great global economic failure and the bloody international conflicts the world experienced in the 1930s and 1940s. Indeed, the potential for economic calamity and wartime destruction is greater at the outset of the new century than it was in the first half of the preceding one because of the greater extent of international economic interdependence and the higher levels of prosperity—there is more to lose now than there was then—and because of the presence, in large numbers, of nuclear weapons.
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