America’s Infrastructure: Challenges and Opportunities

7/27/2019 Americas Infrastructure: Challenges and Opportunities

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FactSheet

www.AmericanSecurityProject.org 1100 New York Avenue, NW Suite 710W Washington, DC

Americas InrastructureChallenges and OpportunitiesBen Secrist

August 2013

In Brie

For decades the American inrastructure has been allowed to decay. Poor qualityo wireless broadband access, deteriorating roads, unsae bridges, and power

interruptions are all indicators o a lack o investment in inrastructure.

Te World Economic Forum has ranked the U.S. 20th globally in overall inrastructurerating. Te American Society o Civil Engineers has consistently given the U.S.low rankings, including a D+ in 2013. Tis has serious eects on our economieseciency as it takes longer and costs more to transport people, goods, inormation,and energy across the country.

Climate change poses a daunting challenge or policymakers and business leaders aspowerul storms cause billions o dollars in both damage and lost business. akingproactive steps or preparing our countrys inrastructure is ar less expensive than

acting once the damage has been done. Every $1 spent in preparedness spending isworth $15 in relie payments ater a disaster has struck.

A possible solution is to create an inrastructure bank with bonds to leverage privatecapital that would allow or public and private sector cooperation on upgrading andbuilding projects o regional or national signicance. With current low interestrates, latent private capital is looking or a place to invest with guaranteed and long-term returns.


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AMERICAN SECURITY PROJECT

What is a Countrys Inrastructure?

A countrys inrastructure is the interconnected network that allows or the movement o people, goodinormation, and energy- it is generally, but not exclusively, publicly owned and nanced. Roads, bridgerailways, and the electrical grid are just part o the system that allows or a countrys economy to unction.

In the years to come our leaders will ace many challenges in relation to how we deal with our inrastructurrom climate change, to technological advancements, and paying or upgrading an inrastructure in great neeo it during times o budget cuts.

Acting proactively in preparing or what climate change may bring is ar cheaper than reacting to the damaonce a weather-related disaster has struck. While storms will cause certain amounts o unavoidable damagsteps can be taken to mitigate the impact.

Business leaders and lawmakers can work together to authorize and und an inrastructure bank that wouleverage special bonds to attract private capital. Not only would this provide long-term, guaranteed return

or investors but upgrading a deteriorating inrastructure would make business more eective or the countas a whole. Creating an inrastructure bank has bipartisan support, and the extra unding rom a bank wougo a long way in retaking our place on top with the most eective and ecient inrastructures in the world

Challenges and Opportunities

Te quality o a countrys inrastructure is a strong contributor towards its global competitiveness.

Americas Interstate Highway System is one criticalcomponent our inrastructure. Passed into law in1956 under the National Interstate and DeenseHighways Act the idea was to provide moreecient transportation or men and materialsduring times o war and open roads or commercein times o peace. For years Americas highways

were the envy o the world, helping to acilitateAmericas rise as the singular global superpower.

However Americas inrastructure has largelybeen allowed to decay over the decades. For its

2012-2013 competitiveness ranking, the WorldEconomic Forum ranked the U.S. 20th in overallinrastructure rating.1

Te uture brings both opportunities and challenges or policymakers and business leaders on how to addreour countrys inrastructure.


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Climate change, or example, poses an unprecedented and unique test or how we prepare and react to naturaldisasters and the impact they will continue to have on some o our countrys most populous and commerciallyvital areas.

Opportunities or cooperation exist as well; both the private and public sector have enormous interests atstake in keeping Americas roads and bridges reliable as possible.

With interest rates relatively low one option or bringing private investment would be an inrastructure bankthat could provide a model or private business who are looking to invest their considerable amounts o latentcapital with long-term, guaranteed returns.2

A deteriorating inrastructure is not an abstract problem or the American people. Spotty cell phone coverage,crumbling roads, unsae bridges, and power interruptions are all symptoms o an inrastructure that deservesa reocus o our resources.

Why Is Updating Our Inrastructure So Important?

Our nations inrastructure consists o approximately 4 million miles o roads, 600,000 bridges, 79,000dams, 300 ports, 19,000 airports, and many more interconnected systems.3

For every $1.25 billion invested in transportation inrastructure, it is claimed that 35,000 jobs arecreated and supported.4

By 2020, 90% o urban Interstate Highways will be at orexceeding capacity.5

One-third o trac atalities can be directly attributed tosubstandard road conditions. Tat is about 15,000 people

every year over the last decade.6

Aging inrastructure costs business and amilies up to $130billion ever year.7

By 2020, Americas transportation inrastructure decienciesare expected to cost the national economy almost $900million in GDP.18

Rolling blackouts and ineciencies in the electrical grid cost the U.S. economy approximately $80billion per year.9

Te U.S. spends approximately two percent o its GDP on inrastructure investment, Europe spendsve percent, and China spends nine percent.10

Freight and intercity rail system will need $200 billion by 2035 to accommodate anticipated growth.11

Demand or reight rail is expected to increase by 84% by 2035.12

Approximately 12% o the nations bridges are structurally decient.13


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Climate Change and Preparing Our Countrys Inrastructure

On July 18th, the president o the Reinsurance Association o America gave testimony to the Senate Commiton Environment and Public Works regarding climate change and how it aects the national insurancompanies.14

Tis past year was especially tough as SuperstormSandy slammed into the East Coast and causednearly $50 billion in damage, knocking out poweror millions o people and destroying vast amountso private property.15 Te RAAs president,Franklin Nutter, noted that North America hasseen a veold increase in natural catastrophessince 1980, a act his association cannot ignore,and neither should our policymakers.

Te costs o recovering rom a natural disasteron the scale o Sandy is huge, being proactivebeorehand would reduce the costs. Research showsthat $1 in preparedness spending is worth $15 inrelie payments in preventing uture disasters.16

While the sheer power o these storms makes a certain amount o damage unavoidable there are steps thcan be taken to mitigate the losses. Business leaders and politicians can work together on assessing the movulnerable parts o the countrys inrastructure. Private businesses, both large and small, should have a say

what the priorities need to be so that disruption to their businesses is minimized.

Creating an Inrastructure Bank Trough Public-Private Cooperatio

One o the most eective ways to counteract our crumbling inrastructure across the country would be establish a National Inrastructure Bank. Tis bank would have ederal lending power with the ability nance and coordinate urgent and high-value investments across the country. Up-ront costs or the edegovernment would be high but because all the unds distributed by the bank would be paid back with interollowing the completion o the projects, over the long term costs to the ederal government would be qu

low.

Originally proposed in 2007 by then-Senators Dodd and Hagel, the NationalInrastructure Bank would use special bonds to leverage private sector unds tound projects o regional or national signicance. Former Senator John Kerry(D-MA) along with Sen. Kay Bailey Hutchinson (R-X), Sen. Mark Warner (D-VA), and Sen. Lindsey Graham (R-SC) took up the proposal ater Hagel andDodd retired rom the Senate in 2009. Teir bill proposed an inrastructure bank


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with initial seed money o $10 billion that could provide up to $160 billion in nancial assistance overthe next decade.17 Tey estimate this investment could pull in between $320 billion and $640 billion inadditional nonederal spending.

Levels o investment o this magnitude could make a huge dierence in our countrys economy because ithelps several major sectors.

Benefts or the Private Sector

An Inrastructure Bank: Supports the construction industry as well as heavy manuacturing, both o which were hit hard rom

the recession.

Single institution rather than a diverse group o smaller banks, thereore making the process moreecient and less likely to encounter overlaps.

Low interest loans and guarantees could be made or state, local, and importantly private investors.

Provides long-term, guaranteed returns or sidelined private capital.

Federal oversight could also help nd the models that protect wages and collective bargaining rights. Becauseo the great potential or quality jobs and solid returns on their investments both the U.S. Chamber oCommerce and the AFL-CIO support the bill.18 Tis rare agreement between big business and big labor is atelling sign or how important creating an inrastructure bank is.

Te American Society o Civil Engineers gave the U.S. inrastructure a D+ rating in 2013, rising slightlyrom a 2009 low o D. Calculating an underinvestment o $1.76 trillion. From 2009-2014 the ASCEestimated 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 upgradingAmericas inrastructure has a high return on investment and thereore deserves a coordinated and concertedeort to x.


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ConclusionTe backbone o a countrys economy is its inrastructure.

For decades the United States has let its roads, bridges, and electrical grid decay into mediocrity. Inecienciand delays caused by decaying inrastructure cost us billions in lost opportunities. I the United States is remain internationally competitive then we must upgrade and modernize our inrastructure.

Climate change poses a daunting challenge or our uture, but preventative action is ar cheaper than retroactivrepairs.

Finally an Inrastructure Bank is a common sense solution that enables cooperation between the public anprivate sectors. With low interest rates and sidelined capital, private industry is looking or places to invest long-term and guaranteed returns. Creating an inrastructure bank with substantial ederal seed money coube used to leverage enormous amounts o capital that would go a long way in making a serious impact on oucountrys inrastructure, creating jobs and reviving industries hit hard rom the recession.

Ben Secrist is an Adjunct Junior Fellow at the American Security Project in American Competitiveness. Hegraduated 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.


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Endnotes

1. Schwab, Klaus. (2012). Te Global Competitiveness Report 2012-2013. World Economic Forum. Avaliable at: http://www3.weorum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pd

2. Cole, August. (November 2012). American Competitiveness: A Matter o National Security. Washington D.C. AmericanSecurity Project. Available at: http://americansecurityproject.org/eatured-items/2012/american-competitiveness-report-an-issue-o-national-security-2/

3. Springer,D. & Dierkers, G. (2008.) An Inrastructure Vision or the 21st Century. National Governors Association.

Washington D.C. Available at: http://www.nga.org/les/live/sites/NGA/les/pd/0902INFRASRUCUREVISION.PDF4. ibid., p.3.5. ibid.6. U.S. Department o ransportation. (2011.) Highways or LIFE. Available at: http://www.hwa.dot.gov/hf/about.cm7. Economic Development Research Group. (2013). Failure to Act: Te Impact o Current Inrastructure Investment on

Americas Future. American Society o Civil Engineers. Reston, Virginia. Available at: http://www.asce.org/uploadedFiles/Inrastructure/Failure_to_Act/Failure_to_Act_Report.pd

8. ibid., p.17.9. U.S. Department o Energy. (2005). Berkley Lab Estimates $80 billion Annual Cost o Power Interruptions. Available at:

http://www.lbl.gov/Science-Articles/Archive/EED-power-interruptions.html10. Kurtenbach, Elaine. (2010, Dec. 20). U.S. Inrastructure Spending Falling Far Behind China, Emerging Economies.

Hungton Post. Available at: http://www.hungtonpost.com/2010/12/20/us-inrastructure-spendin_n_798979.html11. Springer,D. & Dierkers, G. (2008.) An Inrastructure Vision or the 21st Century. National Governors Association.

Washington D.C. Available at: http://www.nga.org/les/live/sites/NGA/les/pd/0902INFRASRUCUREVISION.PDF12. ibid., p.7.

13. ibid., p.8.14. Nutter, Franklin, President Reinsurance Association o America. (2013, July 18). estimony Beore the Senate

Committee on Environment and Public Works. Retrieved July 23, 2013, rom http://www.epw.senate.gov/public/index.cm?FuseAction=Files.View&FileStore_id=86b767e-7a71-48b4-8ee-7bd9ad1d3884

15. AP. (2012, November 2). Damage From Sandy Could Cost as Much as $50B, Says Forecasting Firm. CBS News. Availableat: http://www.cbsnews.com/8301-201_162-57543923/damage-rom-sandy-could-cost-as-much-as-$50b-says-orecasting-rm/

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.pd

17. Miller, K., Costa, K., & Cooper, D. (September 2012). Creating a National Inrastructure Bank and Inrastructure PlanningCouncil. Washington D.C. Center or American Progress. Available at: http://www.americanprogress.org/wp-content/uploads/2012/09/InrastructureBankReport.pd

18. U.S. Chamber o Commerce. (2011, Mach 16). U.S. Chamber o Commerce, AFL-CIO Urge Inrastructure Bank.Washington D.C. Available at: http://www.uschamber.com/press/releases/2011/march/us-chamber-af-cio-urge-inrastructure-bank

19. Cole, August. (November 2012). American Competitiveness: A Matter o National Security. Washington D.C. AmericanSecurity Project. Available at: http://americansecurityproject.org/eatured-items/2012/american-competitiveness-report-an-issue-o-national-security-2/

20. American Society o Civil Engineers. (2013). 2013 Report Card or Americas Inrastructure. Available at: http://www.inrastructurereportcard.org/a/#p/overview/executive-summary

21. Weisenthal, Joe. 2013, May 24). Te Collapse o Public Inrastructure Spending in One Chart. Available at: http://www.businessinsider.com/skagit-bridge-collapse-inrastructure-spending-2013-5
http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdfhttp://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdfhttp://americansecurityproject.org/featured-items/2012/american-competitiveness-report-an-issue-of-national-security-2/http://americansecurityproject.org/featured-items/2012/american-competitiveness-report-an-issue-of-national-security-2/http://www.nga.org/files/live/sites/NGA/files/pdf/0902INFRASTRUCTUREVISION.PDFhttp://www.fhwa.dot.gov/hfl/about.cfmhttp://www.asce.org/uploadedFiles/Infrastructure/Failure_to_Act/Failure_to_Act_Report.pdfhttp://www.asce.org/uploadedFiles/Infrastructure/Failure_to_Act/Failure_to_Act_Report.pdfhttp://www.lbl.gov/Science-Articles/Archive/EETD-power-interruptions.htmlhttp://www.huffingtonpost.com/2010/12/20/us-infrastructure-spendin_n_798979.htmlhttp://www.nga.org/files/live/sites/NGA/files/pdf/0902INFRASTRUCTUREVISION.PDFhttp://www.epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=f86b767e-7a71-48b4-8eef-7bd9ad1d3884http://www.epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=f86b767e-7a71-48b4-8eef-7bd9ad1d3884http://www.cbsnews.com/8301-201_162-57543923/damage-from-sandy-could-cost-as-much-as-$50b-says-forecasting-firm/http://www.cbsnews.com/8301-201_162-57543923/damage-from-sandy-could-cost-as-much-as-$50b-says-forecasting-firm/http://myweb.lmu.edu/ahealy/papers/healy_malhotra_2009.pdfhttp://www.americanprogress.org/wp-content/uploads/2012/09/InfrastructureBankReport.pdfhttp://www.americanprogress.org/wp-content/uploads/2012/09/InfrastructureBankReport.pdfhttp://www.uschamber.com/press/releases/2011/march/us-chamber-afl-cio-urge-infrastructure-bankhttp://www.uschamber.com/press/releases/2011/march/us-chamber-afl-cio-urge-infrastructure-bankhttp://americansecurityproject.org/featured-items/2012/american-competitiveness-report-an-issue-of-national-security-2/http://americansecurityproject.org/featured-items/2012/american-competitiveness-report-an-issue-of-national-security-2/http://www.infrastructurereportcard.org/a/#p/overview/executive-summaryhttp://www.infrastructurereportcard.org/a/#p/overview/executive-summaryhttp://www.businessinsider.com/skagit-bridge-collapse-infrastructure-spending-2013-5http://www.businessinsider.com/skagit-bridge-collapse-infrastructure-spending-2013-5http://www.businessinsider.com/skagit-bridge-collapse-infrastructure-spending-2013-5http://www.businessinsider.com/skagit-bridge-collapse-infrastructure-spending-2013-5http://www.infrastructurereportcard.org/a/#p/overview/executive-summaryhttp://www.infrastructurereportcard.org/a/#p/overview/executive-summaryhttp://americansecurityproject.org/featured-items/2012/american-competitiveness-report-an-issue-of-national-security-2/http://americansecurityproject.org/featured-items/2012/american-competitiveness-report-an-issue-of-national-security-2/http://www.uschamber.com/press/releases/2011/march/us-chamber-afl-cio-urge-infrastructure-bankhttp://www.uschamber.com/press/releases/2011/march/us-chamber-afl-cio-urge-infrastructure-bankhttp://www.americanprogress.org/wp-content/uploads/2012/09/InfrastructureBankReport.pdfhttp://www.americanprogress.org/wp-content/uploads/2012/09/InfrastructureBankReport.pdfhttp://myweb.lmu.edu/ahealy/papers/healy_malhotra_2009.pdfhttp://www.cbsnews.com/8301-201_162-57543923/damage-from-sandy-could-cost-as-much-as-$50b-says-forecasting-firm/http://www.cbsnews.com/8301-201_162-57543923/damage-from-sandy-could-cost-as-much-as-$50b-says-forecasting-firm/http://www.epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=f86b767e-7a71-48b4-8eef-7bd9ad1d3884http://www.epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=f86b767e-7a71-48b4-8eef-7bd9ad1d3884http://www.nga.org/files/live/sites/NGA/files/pdf/0902INFRASTRUCTUREVISION.PDFhttp://www.huffingtonpost.com/2010/12/20/us-infrastructure-spendin_n_798979.htmlhttp://www.lbl.gov/Science-Articles/Archive/EETD-power-interruptions.htmlhttp://www.asce.org/uploadedFiles/Infrastructure/Failure_to_Act/Failure_to_Act_Report.pdfhttp://www.asce.org/uploadedFiles/Infrastructure/Failure_to_Act/Failure_to_Act_Report.pdfhttp://www.fhwa.dot.gov/hfl/about.cfmhttp://www.nga.org/files/live/sites/NGA/files/pdf/0902INFRASTRUCTUREVISION.PDFhttp://americansecurityproject.org/featured-items/2012/american-competitiveness-report-an-issue-of-national-security-2/http://americansecurityproject.org/featured-items/2012/american-competitiveness-report-an-issue-of-national-security-2/http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdfhttp://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2012-13.pdf


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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.

Brigadier General Stephen A. Cheney, USMC (Ret.)

Brigadier General Cheney is the Chief Executive

Norman R. Augustine

Mr. Augustine was Chairman and Principal

years and Chairman of the Council of the

National Academy of Engineering.

Lieutenant General Daniel Christman, USA (Ret.)

Lieutenant General Christman is Senior Vice

States Chamber of Commerce.

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.

Nelson W. Cunningham

Nelson Cunningham is President of

McLarty Associates.

BOARD OF DIRECTORS

Lee Cullum

Lee Cullum, at one time a commentator on the

on NPR, currently contributes to the DallasMorning News and hosts CEO.

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.

Raj Fernando

Raj Fernando is CEO and founder of

Chopper Trading, a technology based trading

Vice Admiral Lee Gunn, USN (Ret.)

Vice Admiral Gunn is the President of the

Institute of Public Research at the CNA

General Lester L. Lyles, USAF (Ret.)

General Lyles retired from the United States Air

after a distinguished 35 year career. He is present

Chairman of USAA, a member of the Defense

Science Board, and a member of the Presidents

Intelligence Advisory Board.

Lieutenant General Claudia Kennedy, USA (R

to achieve the rank of three-star general in the

United States Army.

Dennis Mehiel

Dennis Mehiel is the Principal Shareholder

and Chairman of U.S. Corrugated, Inc.

Ed Reilly

Edward Reilly is CEO of Americas of FD

International Limited, a leading global

communications consultancy that is part of FTI

Consulting, Inc.

Governor Christine Todd Whitman

Christine Todd Whitman is the President of the

specializes in energy and environmental issues.


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Building a New American Arsenal

Te American Security Project (ASP) is a nonpartisan initiative to educate

the American public about the changing nature o national security in the

21st century.

Gone are the days when a nations strength could be measured by bombers

and battleships. Security in this new era requires a New American Arsenal

harnessing all o Americas strengths: the orce o our diplomacy; the might o

our military; the vigor o our economy; and the power o our ideals.

We believe that America must lead other nations in the pursuit o our

common goals and shared security. We must conront international

challenges with all the tools at our disposal. We must address emerging

problems beore they become security crises. And to do this, we must orge a

new bipartisan consensus at home.

ASP brings together prominent American leaders, current and ormer

members o Congress, retired military ocers, and ormer government

ocials. Sta direct research on a broad range o issues and engages and

empowers the American public by taking its fndings directly to them.

We live in a time when the threats to our security are as complex and diverse

as terrorism, the spread o weapons o mass destruction, climate change,ailed and ailing states, disease, and pandemics. Te same-old solutions

and partisan bickering wont do. America needs an honest dialogue about

security that is as robust as it is realistic.

ASP exists to promote that dialogue, to orge consensus, and to spur

constructive action so that America meets the challenges to its security while

seizing the opportunities the new century oers.

www.americansecurityproject.org

Documents

America’s Infrastructure: Challenges and Opportunities