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Americas Infrastructure
Challenges and Opportunities
Ben Secrist August 2013
In Brief
For decades the American infrastructure has been allowed to decay. Poor quality of wireless broadband access, deteriorating roads, unsafe bridges, and power interruptions are all indicators of a lack of investment in infrastructure. The World Economic Forum has ranked the U.S. 20th globally in overall infrastructure rating. The American Society of Civil Engineers has consistently given the U.S. low rankings, including a D+ in 2013. This has serious effects on our economies efficiency as it takes longer and costs more to transport people, goods, information, and energy across the country. Climate change poses a daunting challenge for policymakers and business leaders as powerful storms cause billions of dollars in both damage and lost business. Taking proactive steps for preparing our countrys infrastructure is far less expensive than acting once the damage has been done. Every $1 spent in preparedness spending is worth $15 in relief payments after a disaster has struck. A possible solution is to create an infrastructure bank with bonds to leverage private capital that would allow for public and private sector cooperation on upgrading and building projects of regional or national significance. With current low interest rates, latent private capital is looking for a place to invest with guaranteed and longterm returns.
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Climate change, for example, poses an unprecedented and unique test for how we prepare and react to natural disasters and the impact they will continue to have on some of our countrys most populous and commercially vital areas. Opportunities for cooperation exist as well; both the private and public sector have enormous interests at stake in keeping Americas roads and bridges reliable as possible. With interest rates relatively low one option for bringing private investment would be an infrastructure bank that could provide a model for private business who are looking to invest their considerable amounts of latent capital with long-term, guaranteed returns.2 A deteriorating infrastructure is not an abstract problem for the American people. Spotty cell phone coverage, crumbling roads, unsafe bridges, and power interruptions are all symptoms of an infrastructure that deserves a refocus of our resources.
with initial seed money of $10 billion that could provide up to $160 billion in financial assistance over the next decade.17 They estimate this investment could pull in between $320 billion and $640 billion in additional nonfederal spending. Levels of investment of this magnitude could make a huge difference in our countrys economy because it helps several major sectors. Benefits for the Private Sector An Infrastructure Bank: Supports the construction industry as well as heavy manufacturing, both of which were hit hard from the recession. Single institution rather than a diverse group of smaller banks, therefore making the process more efficient and less likely to encounter overlaps. Low interest loans and guarantees could be made for state, local, and importantly private investors. Provides long-term, guaranteed returns for sidelined private capital. Federal oversight could also help find the models that protect wages and collective bargaining rights. Because of the great potential for quality jobs and solid returns on their investments both the U.S. Chamber of Commerce and the AFL-CIO support the bill.18 This rare agreement between big business and big labor is a telling sign for how important creating an infrastructure bank is. The American Society of Civil Engineers gave the U.S. infrastructure a D+ rating in 2013, rising slightly from a 2009 low of D. Calculating an underinvestment of $1.76 trillion. From 2009-2014 the ASCE estimated a $2.2 trillion investment was necessary, whereas only $974 billion was actually spent.19,20,21 While these investment requirements are high, the numbers will not get any better over time. Spending on upgrading Americas infrastructure has a high return on investment and therefore deserves a coordinated and concerted effort to fix.
Conclusion
The backbone of a countrys economy is its infrastructure. For decades the United States has let its roads, bridges, and electrical grid decay into mediocrity. Inefficiencies and delays caused by decaying infrastructure cost us billions in lost opportunities. If the United States is to remain internationally competitive then we must upgrade and modernize our infrastructure. Climate change poses a daunting challenge for our future, but preventative action is far cheaper than retroactive repairs. Finally an Infrastructure Bank is a common sense solution that enables cooperation between the public and private sectors. With low interest rates and sidelined capital, private industry is looking for places to invest for long-term and guaranteed returns. Creating an infrastructure bank with substantial federal seed money could be used to leverage enormous amounts of capital that would go a long way in making a serious impact on our countrys infrastructure, creating jobs and reviving industries hit hard from the recession. Ben Secrist is an Adjunct Junior Fellow at the American Security Project in American Competitiveness. He graduated from the University of Massachusetts Amherst with a degree in Business Management and a second major in Political Science. Ben hopes to continue to work on matters of national security.
Endnotes
1. Schwab, Klaus. (2012). The Global Competitiveness Report 2012-2013. World Economic Forum. Avaliable at: http:// www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf 2. Cole, August. (November 2012). American Competitiveness: A Matter of National Security. Washington D.C. American Security Project. Available at: http://americansecurityproject.org/featured-items/2012/american-competitiveness-report-anissue-of-national-security-2/ 3. Springer,D. & Dierkers, G. (2008.) An Infrastructure Vision for the 21st Century. National Governors Association. Washington D.C. Available at: http://www.nga.org/files/live/sites/NGA/files/pdf/0902INFRASTRUCTUREVISION.PDF 4. ibid., p.3. 5. ibid. 6. U.S. Department of Transportation. (2011.) Highways for LIFE. Available at: http://www.fhwa.dot.gov/hfl/about.cfm 7. Economic Development Research Group. (2013). Failure to Act: The Impact of Current Infrastructure Investment on Americas Future. American Society of Civil Engineers. Reston, Virginia. Available at: http://www.asce.org/uploadedFiles/ Infrastructure/Failure_to_Act/Failure_to_Act_Report.pdf 8. ibid., p.17. 9. U.S. Department of Energy. (2005). Berkley Lab Estimates $80 billion Annual Cost of Power Interruptions. Available at: http://www.lbl.gov/Science-Articles/Archive/EETD-power-interruptions.html 10. Kurtenbach, Elaine. (2010, Dec. 20). U.S. Infrastructure Spending Falling Far Behind China, Emerging Economies. Huffington Post. Available at: http://www.huffingtonpost.com/2010/12/20/us-infrastructure-spendin_n_798979.html 11. Springer,D. & Dierkers, G. (2008.) An Infrastructure Vision for the 21st Century. National Governors Association. Washington D.C. Available at: http://www.nga.org/files/live/sites/NGA/files/pdf/0902INFRASTRUCTUREVISION.PDF 12. ibid., p.7. 13. ibid., p.8. 14. Nutter, Franklin, President Reinsurance Association of America. (2013, July 18). Testimony Before the Senate Committee on Environment and Public Works. Retrieved July 23, 2013, from http://www.epw.senate.gov/public/index. cfm?FuseAction=Files.View&FileStore_id=f86b767e-7a71-48b4-8eef-7bd9ad1d3884 15. AP. (2012, November 2). Damage From Sandy Could Cost as Much as $50B, Says Forecasting Firm. CBS News. Available at: http://www.cbsnews.com/8301-201_162-57543923/damage-from-sandy-could-cost-as-much-as-$50b-says-forecastingfirm/ 16. Healy, A., & Malhotra, N. (August 2009). Myopic Voters and Natural Disaster Policy. American Political Science Review. Vol.103, No.3. Available at: http://myweb.lmu.edu/ahealy/papers/healy_malhotra_2009.pdf 17. Miller, K., Costa, K., & Cooper, D. (September 2012). Creating a National Infrastructure Bank and Infrastructure Planning Council. Washington D.C. Center for American Progress. Available at: http://www.americanprogress.org/wp-content/ uploads/2012/09/InfrastructureBankReport.pdf 18. U.S. Chamber of Commerce. (2011, Mach 16). U.S. Chamber of Commerce, AFL-CIO Urge Infrastructure Bank. Washington D.C. Available at: http://www.uschamber.com/press/releases/2011/march/us-chamber-afl-cio-urgeinfrastructure-bank 19. Cole, August. (November 2012). American Competitiveness: A Matter of National Security. Washington D.C. American Security Project. Available at: http://americansecurityproject.org/featured-items/2012/american-competitiveness-report-anissue-of-national-security-2/ 20. American Society of Civil Engineers. (2013). 2013 Report Card for Americas Infrastructure. Available at: http://www. infrastructurereportcard.org/a/#p/overview/executive-summary 21. Weisenthal, Joe. 2013, May 24). The Collapse of Public Infrastructure Spending in One Chart. Available at: http://www. businessinsider.com/skagit-bridge-collapse-infrastructure-spending-2013-5
BOARD OF DIRECTORS
Raj Fernando Senator Hart served the State of Colorado in the U.S. Senate and was a member of the Committee on Armed Services during his tenure. Raj Fernando is CEO and founder of Chopper Trading, a technology based trading
Vice Admiral Lee Gunn, USN (Ret.) Brigadier General Stephen A. Cheney, USMC (Ret.) Brigadier General Cheney is the Chief Executive Vice Admiral Gunn is the President of the Institute of Public Research at the CNA
Norman R. Augustine Mr. Augustine was Chairman and Principal years and Chairman of the Council of the National Academy of Engineering.
Lieutenant General Claudia Kennedy, USA (Ret.) to achieve the rank of three-star general in the United States Army.
General Lester L. Lyles, USAF (Ret.) Lieutenant General Daniel Christman, USA (Ret.) Lieutenant General Christman is Senior Vice States Chamber of Commerce. General Lyles retired from the United States Air Force after a distinguished 35 year career. He is presently Chairman of USAA, a member of the Defense Science Board, and a member of the Presidents Intelligence Advisory Board.
Dennis Mehiel Dennis Mehiel is the Principal Shareholder and Chairman of U.S. Corrugated, Inc.
Lieutenant General John Castellaw, USMC (Ret.) John Castellaw is President of the Crockett Policy Institute (CPI), a non-partisan policy and research organization headquartered in Tennessee.
Ed Reilly Edward Reilly is CEO of Americas of FD International Limited, a leading global communications consultancy that is part of FTI Consulting, Inc.
Lee Cullum Lee Cullum, at one time a commentator on the on NPR, currently contributes to the Dallas Morning News and hosts CEO.
Governor Christine Todd Whitman Christine Todd Whitman is the President of the specializes in energy and environmental issues.
Admiral William Fallon, USN (Ret.) Admiral Fallon has led U.S. and Allied forces and played a leadership role in military and diplomatic matters at the highest levels of the U.S. government.
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