The State of American Infrastructure Spending in Four Charts
If you’ve checked the news on the subject of American transportation infrastructure lately, you’ve probably heard that the sky is falling. It’s true that Congress can’t get its act together and pass a decent transportation bill, but the amount of money that’s being spent isn’t the problem so much as the fact that we’re spending it on expanding highways instead of keeping the stuff we have in good shape.
A new report from the Congressional Budget Office adds some useful perspective on public infrastructure spending (federal, state, and local, including water infrastructure) since 1956 [PDF]. Here are four major takeaways.
Infrastructure Spending is Fairly Stable as a Share of GDP
Measured as a share of Gross Domestic Product, public infrastructure spending has been fairly stable throughout the last six decades at about 2.4 percent, reports the CBO. The most recent bump came in 2009 and 2010 because of the stimulus package, when it rose to 2.7 percent. It has declined somewhat since 2011.
But Costs Have Climbed
Beginning in 2003, the cost of raw materials like concrete and asphalt increased more rapidly than the prices of other goods, the CBO reports. So if you factor in these specific costs, inflation-adjusted public infrastructure spending has declined about 9 percent since 2003 (the dark blue line).
Highways Are the Biggest Category of Spending
Of the $416 billion spent on infrastructure by federal, state and local governments in 2014, about 40 percent was dedicated to highways. About 16 percent went to transit and about a third went to water infrastructure.
Spending on Expansion Has Been Moving in the Right Direction
While state DOTs still spend many billions of dollars on highway expansions that erode their ability to maintain existing roads, the situation seems getting better. In recent years, a greater share of public infrastructure spending has been going to maintenance instead of expansion. However, it’s not clear how much this trend applies to highways, since the CBO included transit and water infrastructure in this chart as well.
That chart does call into question the funding shortage. And as for the “transportation specific” inflation index, it sounds a lot like what you here in other government-funded industries. We increase our pensions and gave ourselves raises, therefore our funding has dropped relative to our needs.
In New York and New Jersey, at least, there is another side to the story, however. Spending that before the early 1990s was funded by taxes has been funded by debt since. So it is highly questionable whether that 2.4% spending as a share of GDP will continue.
I haven’t seen any research on this, but my opinion is that we are building significantly better infrastructure (part of the cost explanation)…
the move to epoxy-coated rebar alone probably doubled the lifespan of reinforced concrete. foundation work is much more high-tech than at the advent of the highway era. where you can see the original concrete in the NYC subway system, it’s obviously of very poor quality with voids and grapefruit sized inclusions.
There are some misleading statistics here.
The first chart shows that spending is stable as a percent of GDP. But there is no reason for growth in infrastructure spending to keep up with growth in GDP. It makes more sense for infrastructure to keep up with population – so we have the same amount of transportation and water per person, not per dollar. If anything, we should want water use and transportation per person to decline, as we conserve water and build smart growth that requires less transportation.
The second chart shows that cost of construction in dollars has increased. In combination with the first chart, this gives the impression that we are not keeping up with the rising cost of infrastructure – but in reality, the first chart shows spending as a percent of GDP, not spending in dollars, so the impression that we are not keeping up is misleading.
I think that streetsblog readers realize that, in the past, we often built too much infrastructure. Robert Moses was the world champion in building infrastructure.
As a result we have too much of some kinds of infrastructure (freeways) and too little of other kinds (public transit, rail, electrical grid). To those who conflate thenm all and just say we need more infrastructure, I respond http://preservenet.blogspot.com/2008/02/we-need-more-infrastructure.html
No, it doesn’t make more sense that infrastructure spending should keep pace with population over GDP. GDP is how much wealth the country produces. Thus, GDP determines how much money we have to spend. If you make only $30,000 a year, and you pop out six kids, just because you have 6 kids, doesn’t mean you should spend 90% of your budget on housing. Does not matter how many kids you have, if you can’t afford a bigger house. Your spending should be within ratio of your income. Just like infrastructure spending, should be within ratio of your GDP.
Extend the chart in exhibit one back 20 more years and we will see that era where expenditures were double the relatively flat line percentage of GDP they been since. That era denotes the large amount of supply that was added to our infrastructure bank in the 50s. Meanwhile, population and development have continued to expand in that surplus of capacity is now a deficit of capacity and it will take a similar doubling of expenditures to get back to par.
http://www.edencrete.com/
The National Highway system was built in the 50s. It was Ike’s signature program..