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Why fixing America's aging infrastructure should not be just about creating jobs

When a water main burst at a busy intersection in Sandy, Utah, on a sunny afternoon this fall, tons of asphalt crumbled, an enormous sinkhole appeared, traffic slammed to a halt, and water gushed onto neighboring lawns. The problem turned out to be an old pipe.

The south Salt Lake County community knows the age and condition of over 95 percent of its pipes, says Shane Pace, director of public utilities and the city maintains a detailed replacement schedule. This pipe, lying between two younger lines and unmarked on maps, turned out to have been laid in the 1960s and was among those overdue for replacement.

The break cost the city over $200,000, including the cost of a smaller break caused by the first. To put that monetary loss in perspective, Sandy spends between just under $1.5 million a year to upgrade aging pipes, Pace said. So one burst water main cost the city 13 percent of its annual upgrade budget.

“If you delay,” Pace said, “you’ll start having more and more of these problems, and you’ll spend a lot of money on water line breaks that could be going to line replacement.”

Water main breaks are a fact of life in most American cities. According to the American Society of Civil Engineers, there are 240,000 water main breaks every year — and many of those pipes are pushing 100 years old.

Like the human digestive system, a city's water system lies hidden and unnoticed until something goes wrong. But that doesn't mean it's not aging, corroding and buckling underground.

The same is true of much of the nation’s vital infrastructure, as a growing population strains an aging public works — including bridges, dams, levees, ports, electrical grids, roads, drinking water, sewage and solid waste facilities.

The ASCE estimated in 2013 the country would by 2020 need to spend $1.6 trillion beyond current funding levels to address its infrastructure needs.

The good news is that help could be on the way. Both major presidential nominees in 2016 made infrastructure investment a focal point of their campaigns, and there seems to be bipartisan congressional support to do something.

The bad news is that no one is quite sure what President-elect Donald Trump’s $1 trillion infrastructure proposal would do and who would pay for it.

And some infrastructure experts fear that a huge politically driven spending bill will become a boondoggle that leaves the country deeper in debt without addressing its most pressing needs.

Pressing needs

Every four years, ASCE publishes a national infrastructure scorecard, outlining the costs of inaction and estimating the price tag of needed repairs and improvements.

Sometimes costs are measured in lost productivity. The Federal Aviation Administration has estimated that airport congestion delays in 2012 cost the economy $22 billion. Without measureable upgrades, the FAA projects those delay costs to be $34 billion in 2020 and $63 billion in 2040.

Sometimes human lives are also at stake, as with dams, bridges and levees. The 2005 Hurricane Katrina flood in New Orleans, for example, highlighted the risks stemming from poorly maintained, aging levees. ACSE estimates that $100 billion is needed just to address inadequate levees around the country.

Tallying it all up, ACSE arrived at its $1.6 trillion by 2020 price tag. But not everyone agrees.

Kevin DeGood, director of infrastructure policy at the Center for American Progress, thinks that number is too high and enormous progress could be made with a comparatively modest $500 billion infrastructure investment over current spending levels. By comparison, the 2009 stimulus bill spent $825 billion, with just over $100 billion of that going to infrastructure.

“ACSE doesn’t differentiate between what is needed to repair everything we have, what is needed to make some nice improvements and what would be a gold-plated Ferrari,” DeGood argues.

Brian Pallasch, director of government relations for ACSE, concedes that the civil engineers' wish list is not the last word. He sees a “significant role for innovation in solving these problems,” and he accepts that huge progress could be made with smaller investments.

“We are so far behind now that there is no presumption that in the near term that we’re going to get that much money to invest in infrastructure,” Pallasch said. “We need to do a better job with the money we get, spending it on the right kinds of projects.”

Mixed motives

Spending infrastructure funds on the right projects for the right reasons is difficult when politicians hold the purse.

Going back at least to the Great Depression, infrastructure spending has been seen by elected officials as a reliable way to create solid blue-collar jobs during tough economic times. Those jobs win votes, and infrastructure spending is rarely mentioned by elected officials without a heavy focus on economic stimulus. Jobs and infrastructure were always treated as two ends of the same stick — and jobs were usually the heavier end.

In years past, such rhetoric would be more typically associated with Democrats. Now, it’s almost surreal to hear key Trump supporters echoing the political and economic logic of the late President Franklin D. Roosevelt.

"It's everything related to jobs,” Trump adviser Steve Bannon told The Hollywood Reporter after the election. “The conservatives are going to go crazy. I'm the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it's the greatest opportunity to rebuild everything. Shipyards, ironworks, get them all jacked up. We're just going to throw it up against the wall and see if it sticks.”

Then there is conservative radio icon Rush Limbaugh earlier this month lauding Roosevelt and speaking favorably of public works spending during the Great Depression, especially the building of the Golden Gate and Oakland Bay bridges in San Francisco.

“That money actually produced things,” Limbaugh said. “There were actual results from it, which created taxpaying jobs, which created tax-creating incentives, expanded the tax base, and increased productivity by enabling people in California to get to and from a massive number of new jobs much sooner and easier with those bridges.”

Internalizing costs

A problem with mixing jobs and infrastructure motives is that politicians often plow money into politically favored projects at the expense of rational long-term thinking, argues Clifford Winston, an economist at the Washington, D.C.-based Brookings Institution.

“Trying to spend our way out of infrastructure troubles is misguided,” Winston argues. “We need to make more efficient use of the infrastructure we have now, and then think carefully about additional spending using cost-benefit analysis.”

Before Winston will even talk about spending more on roads, for example, he wants to talk about who is using them and when. And he’s passionate about changing prices to reduce congestion and better pay for wear and tear.

Trucks, he says, should pay a per axle weight tax to encourage more axles and thereby greatly reduce wear. Congestion pricing should be used to encourage better traffic flow, starting with HOT lanes that combine car pools and tolls into one lane. HOT lanes use scanning technology so drivers never need to slow down, and prices rise and fall based on congestion.

Winston also argues that roads should be built from more durable materials that require more upfront investment in the long run, and new roads need to be built with autonomous vehicles in mind.

Autonomous vehicles, he argues, will expand the highway capacity — cars can get closer together, traffic flow will improve, and they won’t rubberneck at accidents. (Ironically, autonomous vehicles also threaten whole sectors of employment, from trucking and delivery to taxis.)

“The engineering mentality of just spending more money is not sustainable or efficient,” Winston said.

Winston also favors privatization where possible, and he hopes that private sector technologies will push government infrastructure to make needed changes.

“Pigs are going to fly before these guys do this,” Winston said. “This is stuff we’ve been talking about forever. They’re just not going to do it. Status quo bias is just very powerful.”

To be clear, Winston is not saying that major infrastructure spending is not in order. He is simply arguing that any money spent should be part of a comprehensive plan, not political expedience.

In addition to not spending money without a plan, a core argument of economists like Winston is that infrastructure will be best maintained and improved when it internalizes the cost of use. That is, users should be paying now for their share of both congestion and wear and tear, with user fees directed to replacements and upgrades.

Keeping ahead

It may be no coincidence that the city of Sandy is not waiting for the federal candy store to open. Nor is it clamoring for private sector equity investors.

When Shane Pace talks about the pending water main replacements, he talks about municipal bonds and managing customer water rates to make sure future needs are covered by current pricing.

The first step is to know your pipes, something the city has a pretty good handle on, with a few exceptions. Sandy suffers 60 to 70 breaks a year, some due to aging, others to corrosion from soil acidity, and still others to pressure surges. Most of the city's water mains were laid between 1970 and 2000, Pace said, which means they are approaching their roughly 50-year lifespans.

The city constantly updates its master plan, Pace said, prioritizing replacement first by the age of the pipes and then in areas where troubles seem to be popping up. Soil acidity, Pace said, can cut into pipe longevity and force the city to tackle younger pipes in one area ahead of older pipes in another.

The key, Pace indicates, is to plan for the future and then internalize pending replacement costs so that current rates cover future upgrades at a steady rate.

“You need elected officials who have the courage to raise rates when you need to,” Pace said, “and fortunately, we have officials in Sandy who have seen the value of staying on top of it.”