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Hughes: Building America great again

By Kent Hughes

Woodrow Wilson Center

Published on February 23, 2018 12:17PM

Kent Hughes

Kent Hughes

In his campaign, President Donald Trump proposed rebuilding America’s infrastructure with a trillion dollar program. In his State of the Union address, he increased the amount by $500 billion.

America has always been a building nation. Federal land grants helped support the building of the transcontinental railroads. Skyscrapers made New York a world-class city. During World War II, military facilities sprang up around the country and around the world.

Pendleton was part of that effort when Works Projects Administration funds upgraded the Pendleton airport. Doolittle’s warriors made good use of the airport as they trained for the famous raid on Tokyo.

After the war, President Eisenhower took the lead in establishing the interstate highway system. The system knitted regional economies into a national economy that opened up economies of scale, added competition and drove innovation.

America badly needs to upgrade its 20th century infrastructure. A few years ago, water flooded into several buildings on the UCLA campus. Why? A 100-year-old wooden pipe had finally burst. There was a flurry of interest after a bridge collapsed in Minnesota, but the country did not pursue a systematic approach to upgrading its infrastructure.

America has been living on investments made long ago. Our civil engineers routinely grade the state of the country’s infrastructure. What have they said recently? Depending on the type of infrastructure, most grades ranged from D- to C+. Only rail transport scored a B. The ten-year cost to improve all the grades for the types of infrastructure would be an estimated $4.59 trillion.

Umatilla County has a stake in maintaining and improving transportation infrastructure. It produces more wheat than any other county in the state. The international competition for wheat and other grains is growing.

Better roads and port facilities will help give Umatilla and other wheat growers an edge in global competition. Umatilla also harvests more melons than any other place in the Pacific Northwest. Good infrastructure helps them reach regional and national markets.

Oregon will also benefit by the extension of high-speed internet to the smaller towns and rural areas in the country. Graduates of BMCC and EOU with an entrepreneurial bent will find access to the added connectivity an advantage in reaching national and even global markets. The entire Oregon delegation is supporting programs to upgrade internet connections in Oregon and elsewhere in rural America.

On Feb. 12, President Trump released his infrastructure plan. He hopes to achieve the promised $1.5 trillion by combining a $200 billion federal contribution with much larger state, local and private contributions. This is a sharp departure from the past. For instance, in building the interstate highway system, the federal government contributed 90 percent with the states providing 10 percent. Under the new Trump program, the states will be expected to provide the bulk of funding with tax revenue, bonds, or partnerships with the private sector.

Because the recent tax bill limits the deductibility of state and local taxes, it could make it more difficult for some states to raise their contribution. For instance, Oregon, with no sales tax, might have to add to the tax burden of the average Oregonian.

The president does keep an earlier promise by setting aside $50 billion, or a quarter of the federal total, for rural America. It will be up to governors to choose what specific projects to support. Oregon’s congressional delegation is pushing for support of a major effort focused on bringing high-speed internet to rural America.

The president is confident that public-private partnerships will support much of the infrastructure. Around the industrial world, public private partnerships have been adopted for roads, water works, and other projects. In the United States, the National Governors Association provides best practice advice for forming public/private partnerships.

The form of the partnership can vary from building a road and relying on tolls to full private ownership of the project. Not all of the partnerships have worked out. Nor is it clear how the program will generate needed investments in schools or other public investments that do not lend themselves to tolls.

The President’s proposal faces some added congressional hurdles. Deficit hawks are already concerned about another spending initiative following a major tax cut and added spending approved in the recently adopted budgets. Some economists are raising a red flag that more spending coupled with low unemployment will lead to an overheated economy and inflation. If the Federal Reserve responds by raising interest rates, growth could slow.

Still, America needs the long-term investment in infrastructure (and other fields as well).

The right kind of investments in infrastructure can raise productivity growth and add to the economy’s growth potential. Every truck forced to drive miles to avoid a rickety bridge or a sub-par roadway adds to costs. Broader access to high-speed internet can facilitate innovations that improve productivity, create new jobs, and even lower the trade deficit.

America is in a long-term competition with China for international standing, leadership in innovation, and global markets. Building America Great Again is one part of a needed response.

Kent Hughes is a public policy fellow at the Woodrow Wilson Center in Washington, D.C. He is a 1958 graduate of Pendleton High School.


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