Rhode Island governor Dan McKee, an early supporter of Joe Biden in his bid for the presidency, journeyed to the White House in November 2021 to celebrate the signing of Biden’s $1 trillion infrastructure bill. “Rhode Island is ready to repair roads and bridges, expand broadband, enhance public transit, improve access to clean water, boost climate resilience, and more—all while creating good-paying jobs,” McKee said jubilantly at the time. California governor Gavin Newsom also predicted the bill would be “a once-in-a-generation investment” that would help upgrade and modernize his state.
McKee and Newsom weren’t the only governors to welcome this federal spending blowout, but they had reason to be among the most grateful. The two states rank among the worst in road conditions, according to federal data. Still, any informed resident would have to wonder just how much good the federal windfall would do. Rhode Island and California are already among the nation’s biggest spenders on roads and bridges—while ranking near the bottom on quality. And they’re not alone. According to a new study, states with the worst roads in America also spend the most per mile on their roads. The contrast between these and other states is so striking that the authors of the study proclaim, “how much each state spends on roads has no correlation with road quality.”
States and their municipalities have been on a spending binge for the past three years, aided by some $5 trillion in successive rounds of Covid aid sent to institutions, households, businesses, schools, and local governments. The federal government sent that money initially to get everyone through the pandemic, then to help in the recovery, and finally, when Biden had taken office amid an emerging rebound, just to fulfill campaign promises. (This included the massive infrastructure bill.) Thus, governments not only have increased what they spend on traditional categories like roads but also ventured into all sorts of new funding areas. They’re subsidizing a vast expansion of broadband networks, pouring billions into affordable housing, rolling out programs to deal with problems like homelessness, and investing taxpayer dollars in unprecedented efforts like paying residents of some communities a basic income.
We will likely never know whether much of this money accomplishes what it was intended to, or even if it is spent the way it was supposed to be. After a year-long investigation, the Washington Post concluded, “Washington could not fully track this historic distribution of federal spending. It’s clear that billions of dollars were misspent or stolen, but officials aren’t sure exactly how much.”
One reason to be skeptical: it’s becoming increasingly difficult to see the payoff from spending more. In the study on road conditions, five of the states that spend the most per mile have among the worst roads. That includes, in addition to Rhode Island and California, New York, whose roads rank fifth-worst though it spends the eighth most, and New Jersey, with the third-highest expenditures and the tenth-worst roads. Meantime, states like Georgia, Tennessee, and Minnesota somehow manage to have among the best roads in America with just average spending per mile.
Some states have tried to defend their poor records on roads by arguing that local conditions make their infrastructure harder to maintain. But state policies clearly play a part in overspending and poor quality. New York, California, and New Jersey all have prevailing-wage laws that require contractors on their building programs to pay essentially the equivalent of union wages, raising costs by at least 10 percent. For decades, New York State has taken revenues from gas taxes designated for roads and used some of it to pay for the inflated compensation of transportation bureaucrats, a way to offload some of the expense of these generous salaries and benefits from the state budget at the cost of road maintenance. New Jersey maintains a vast and expensive bureaucracy that includes both a Department of Transportation and a Turnpike Authority.
Increasingly, one gets the sense that states are spending on problems of their own creation. Take homelessness. The issue has plagued California since before the pandemic. The state’s response has been vastly to expand spending, investing nearly $10 billion in additional money between 2018 and 2021 alone. Yet the more the state spends, the worse things get. Recently, Governor Newsom even pleaded with Biden for federal funds. Listening to Newsom’s appeals for intervention from Washington, one might think homelessness is a national problem, worsened by the pandemic and a housing shortage, as advocates argue. But since 2019, homelessness has declined in nearly half the states and is up just 2.6 percent nationally, according to the federal government’s annual assessment. In the past 15 years, homelessness in the U.S. is down 10 percent.
Homelessness was even declining in California—until suddenly it wasn’t. Between 2007 and 2014, the state’s homeless population fell by about 25,000, or 18 percent, before it started rising again, well ahead of the Covid lockdowns. What changed? California did. Though experts agree that homelessness is overwhelmingly a problem of mental health and addiction, California embarked on a path of decriminalization of crimes like shoplifting and downgraded possession of controlled substances like cocaine to misdemeanors with Proposition 47, passed in late 2014. Then in 2016, voters legalized recreational marijuana use.
As both crime and drug dependency subsequently soared, California’s progressive policymakers then decided that government should stop demanding that homeless individuals enter mental-health or addiction-recovery programs as a condition of receiving housing. Instead, the state provided “housing first.” But the more the state has built for the homeless (spending some $5 billion on new units), the more homelessness has grown. Lenient local politicians, meantime, have allowed encampments to spread, plaguing the social order in many communities. As a result, the number of homeless has increased by 51 percent in the Golden State since 2014. Nationally, the increase was 1 percent. The experience of California, along with those of states following similar policies, such as Oregon, illustrates a basic principle of human behavior: if you incentivize something, you will get more of it.
Spending other people’s money, the way politicians and bureaucrats do, is rarely a prescription for efficiency. But we have entered a new era in which some politicians see all government spending—even on basics like roads and bridges—as a vehicle for social agendas. Pursuit of those agendas is likely to further raise costs and reduce efficiency. The Biden administration is leading this charge. The 2022 CHIPS and Science Act came with billions of dollars of subsidies for semiconductor companies, but it requires them to finance day care, institute paid-leave policies for employees, and pay prevailing wages for any construction projects that the industry undertakes with government money. Meantime, the infrastructure bill that Newsom and McKee welcomed has its own vast and expensive agenda of requirements that states must comply with to use the money.
State politicians pursuing their own goals will add to the costs. For instance, 13 states have already signed on to an Equity in Infrastructure project, by which they pledge to use the money gusher from Washington for “more opportunities for Historically Underutilized Businesses (HUBs) to build generational wealth and reduce the racial wealth gap.” Such government programs, often amounting to specific set asides for businesses, typically add significantly to the cost of government contracts—sometimes by as much as a third. These arrangements also have a long history of fraud, which further drives up the price tag.
Much of this spending produces so little at such high cost that one wonders why citizens don’t vote out the politicians who approve them. One explanation may be that, in places like California and New York, the political culture has become so monolithic that virtually everyone in office shares some of the blame. Still, what comes through even in a study like the one on roads is how states with the worst records are also among those with the highest rates of outmigration. More and more people, it turns out, are taking those lousy, expensive roads to somewhere else.
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