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Turn Off the Spigots

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Turn Off the Spigots

Joe Biden’s infrastructure proposal includes no serious attempt to control runaway costs. April 7, 2021
Infrastructure and energy
Politics and law

At long last, President Biden has unveiled an infrastructure bill: a proposal containing $2 trillion in infrastructure spending, including $85 billion on mass transit and another $80 billion on Amtrak and freight rail. Despite popular perception, however, U.S. transportation spending—though on the low side of the range for developed nations—is hardly anomalously low. The poor state of American infrastructure owes mainly to failed cost control—a problem Biden’s proposal won’t solve.

American infrastructure is expensive. Systematic investigations have found that recent rail projects in cities such as New York, San Francisco, and Boston cost several times the typical price tag of projects elsewhere in the world on a per-mile basis. Many urban regions have squandered billions of dollars on expensive mass-transit lines through sparsely populated exurbs. Transit authorities in Dallas–Fort Worth, for instance, have built or are building suburban rail lines costing several hundred thousand dollars per weekday rider. The region is scarcely alone in this regard.

The cost excesses are ultimately the responsibility of state and local leaders, especially managers. In Connecticut, to take just one example, a fierce debate in 2019 over whether to reimpose tolls on some freeways to fund road and rail improvements largely neglected the improvements’ extravagant costs. The state Department of Transportation estimated that a two-mile freeway viaduct replacement would cost $4 billion—a sum far exceeding the price of other, more complex freeway projects in the U.S. and elsewhere (in Europe, it would buy 100 or so miles of high-speed railway). When I pointed this out in an op-ed, Connecticut’s state DOT commissioner issued a virtually contentless response—the only substantive point being a quibble about inflation adjustments that explained only a sliver of the cost excesses—assuring the public that “the employees of the DOT are experienced professionals that work to stretch every dollar as far as possible.” Another example: two highly paid managers in charge of Connecticut rail investments demonstrated at a public meeting in 2019 that they had no knowledge of best industry practices.

The federal government enables this cost bloat by heavily subsidizing new mass infrastructure. It may be in local politicians’ interests to build worthless transit projects if it means providing local jobs with what, as far as they are concerned, is free money. Meantime, the existence of external funding frees transportation managers from having to worry about efficient construction. This problem is hardly exclusive to mass transit: the federal government’s subsidy of about 40 percent of state and local freeway spending has also made for plenty of boondoggles.

To be fair, Biden’s plan does have a paragraph discussing cost issues that suggests at least a vague understanding of American cost difficulties, but it speaks mostly in platitudes, and what details it provides are not promising. The paragraph begins by noting that “America lags its peers—including Canada, the U.K., and Australia—in the on-time and on-budget delivery of infrastructure.” This is a misdiagnosis on two scores: the problem with American infrastructure budgeting is less overrunning budgets than the excess of the budgets in the first place, and the selection of three English-speaking nations as comparisons is misjudged—after the United States, the rest of the Anglosphere has the world’s highest construction costs, in part because its countries copy bad American ideas. The page also assures us, “When President Biden managed the implementation of the Recovery Act, he insisted on the strongest possible accountability and transparency measures to ensure public dollars were invested efficiently and effectively.” That is far from encouraging, given that the American Recovery and Reinvestment Act filled America’s low-density cities with low-ridership light rail systems.

The more concrete details that have emerged about Biden’s plan, meanwhile, show a lack of interest in cost control. For instance, the infrastructure plan promises that all materials used in federal infrastructure projects will have to come from American manufacturers, a provision that has massively inflated costs on previous projects (with most of the surplus going to consultants and corporate managers, not workers). And much of the money seems likely to go to the nation’s leader in cost bloat: New York, where Senator Chuck Schumer has said that a new rail tunnel under the Hudson River and an extension of the city’s Second Avenue Subway, both among the most overpriced projects in the world, are likely to get funding.

The best way for the federal government to control costs? Turn off the spigots. Most transportation infrastructure—including virtually all mass transit—serves local rather than national interests; there is little justification for federal support. Greater local responsibility for transit may force local managers finally to take a serious look at reducing costs. Cut off from a hose of free money, officials might adopt innovative approaches to reducing the risk that new infrastructure poses to public finances, such as public-private partnerships for building new roads that can be financed entirely out of vehicle tolls.

Whatever the solution to improving American infrastructure, rewarding rampant wastefulness with more no-strings-attached federal money is certainly not it.

Photo by Justin Sullivan/Getty Images

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