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President Obama called for renewed efforts in nation-building recently — not in Afghanistan or Iraq – but here, at home, in America. The president was referring to the state of the country’s aging and in many cases, poorly maintained infrastructure. More than a quarter of the country’s bridges need significant repairs. Over four thousand dams are considered “unsafe”. A billion gallons of water is lost every year due to leaking pipes. Nearly everyone agrees that more spending on infrastructure is needed, the billion dollar question is — how are we going to pay for it.
- Tyler Duvall Infrastructure-strategy consultant with McKinsey and Company
- Jack Basso Director, program finance and management, American Association of State Highway and Transportation Official (AASHTO)
- Ed Rendell Building America’s Future Co-Chair, and former Pennsylvania governor
- Maureen McAvey Executive Vice President, Urban Land Institute
- Rep. John Mica (R-FL) Chairman of the House Transportation and Infrastructure Committee
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. America's infrastructure deficit is in excess of $2.3 trillion and growing. But resistance to raising taxes is stronger than ever, and federal funding is drying up.
MS. DIANE REHMHere to talk about America's failing infrastructure and the impact on our economy and our global competitiveness: Tyler Duvall from McKinsey and Associates, Maureen McAvey of the Urban Land Council, Jack Basso of the American Association of State Highway and Transportation Officials and former Gov. Ed Rendell. He's co-chair of Building America's Future. He joins us on the line from New York.
MS. DIANE REHMWe'll take your calls throughout the hour, 800-433-8850. Send us your email to firstname.lastname@example.org. Send us your Facebook and Twitter postings. Good morning to all of you.
MS. MAUREEN MCAVEYGood morning.
MR. TYLER DUVALLGood morning.
MR. JACK BASSOGood morning.
REHMAnd, Gov. Rendell, if I could start with you, I know that you co-chair Building America's Future. There is a new report out this morning that really paints a grim picture of the country's infrastructure. Give us an overall picture of what it looks like.
GOV. ED RENDELLWell, our report, which was financed by The Rockefeller Foundation, is an exhaustive report looking at the American infrastructure. And it's called "Falling Apart and Falling Behind." And it has three parts. Number one, it demonstrates how we're falling apart, what the infrastructure gap is. But that's not news to anybody, Diane.
GOV. ED RENDELLThe American Society of Civil Engineers, AASHTO -- many organizations have outlined exactly how far we're falling behind, and you're right. We have at least a $2.3 trillion gap. Secondly, we talk about falling behind, that we're falling behind our competitor nations, the nations that are competing with us for economic viability. And you look at the E.U., Canada, Australia, China, Brazil, India, France, England and Germany and Japan.
GOV. ED RENDELLAnd they've either completed recently a multi-year infrastructure revitalization program or they're in the midst of it. Even in this tough economic time for the world, many countries -- the U.K., Australia, Canada -- have launched infrastructure repair programs. And, of course, the Chinese are spending almost 10 percent of their GDP on their transportation infrastructure and maintenance.
GOV. ED RENDELLIt's incredible how far we are falling behind, whether it's high-speed rail or the condition of our roads or airports, rail. You name it. The World Economic Forum, right, the American infrastructure first in the world in 2005, now, six years later, we're 15th in the world. In rail infrastructure, we're 18th in the world, in port infrastructure, 22nd in the world.
GOV. ED RENDELLAnd in air transport infrastructure, we're 32nd in the world, behind countries like Panama, Malaysia and Chile. So that's the second part of the report. And the third part of the report is recommendations. And we recommend that we start looking at infrastructure, not just transportation, in a whole different way. First, we have to have a long-term strategic vision.
GOV. ED RENDELLAnd Building America's Future recommends a 10-year infrastructure revitalization program that spends $200 billion more a year on infrastructure, so $2 trillion of spending above and beyond what we're spending now in the next 10 years. Secondly, that we do it in a way that promotes accountability and innovation.
GOV. ED RENDELLAnd decisions are made not based on politics, but based on what's good for the economy, based on cost-benefit analysis. And, thirdly, that we promote innovation in all aspects of how we do it, and, fourth and last, that we look at all funding options. So, for example, it's time to unlock the bar, the federal bar, on tolling work that's done on federal highways.
GOV. ED RENDELLThe state should be allowed to toll those highways and use that money for not only repairing those highways, but for helping their other infrastructure. Three Ps, public-private partnerships. We've got to pass laws to make it easier for the private sector, that we estimate is waiting with about $200 to $300 billion to invest in the American infrastructure, that they can so do that, and the National Infrastructure Bank is the key to that.
GOV. ED RENDELLAnd we recommend that as well. So we analyze the problems. We compare where we are competitively to our economic competitors, and we propose a real solution. We've got to do infrastructure revitalization. We've got to do it properly, so there's public confidence. And we've got to do it at the right scale.
REHMAll right. And, I think, what I and I'm sure many of our listeners want to know, why is it so bad? Why have we gotten to this point?
RENDELLSimply because we've been unwilling to invest, unwilling to do what our grandfathers and grandmothers did 50 years ago. We haven't had a strategic infrastructure vision for this country since Dwight David Eisenhower did the interstate highway plan. We have let infrastructure spending go down each and every year. When I left office, we were spending 12 percent of our non-military domestic spending on infrastructure.
RENDELLToday, we spend less than 2.5 percent on infrastructure. And it's gotten that way, in part, because we've neglected it and, in part, because of this mania that exists, that we cannot spend money on anything, even when it's investing in something that's going to save us money in the long run. You also -- the American Society of Civil Engineers report that says our deteriorating infrastructure cost the American family over $1,000 a year out of their pockets.
RENDELLAnd the longer we delay, the higher the infrastructure repair bill is going to go.
REHMAll right. And...
RENDELLSo we can do this. And, Diane, now is the time to do it because the economy, everyone agrees, needs a shot in the arm. This is the best job producer of anything America can do. Every analyst says that for $1 billion of infrastructure spending, we create 25,000 new jobs on the construction sites, back in the factories that produce the steel and the concrete and the aggregate and all the materials that are used.
RENDELLWe can, if we spend $200 billion more a year, produce 5 million well-paying jobs each year for the next 10.
REHMAnd, Governor, you know as well as I that the news this morning is that Standard & Poor's has downgraded America's standing from a AAA to a AA+. And the question is, in this kind of environment, what do you really expect the Congress to do, especially because S&P focused on the inability of the Congress to get anything done?
RENDELLWell, what we're hoping is that this report by Building America's Future will be a wake-up call to the Congress. Yes. We can do meaningful deficit reduction. And we ought to be doing it at the $-, $4.5 trillion range. And that means everything's on the table. But at the same time, every economist agrees, we've got to invest in things that will keep us economically competitive in the long run and create jobs in the short run.
RENDELLAnd that's exactly what this will do. And, by the way, when I say $200 billion more a year, that's not $200 billion from the Federal Treasury. That's money that's going to come from the private sector. That's money that we can take by repatriating all that foreign income that's abroad and that they owe taxes on at a lower rate. We can take some of that. It's building America's bonds. It's tolling. It's increasing the TIFIA program, things that cost us very little.
RENDELLThe average yearly cost to the federal government would be less than $36 billion a year in this plan, and about $18 billion of that would come back in increased taxes -- taxes by the 5 million people who are working, taxes by the companies who will be making more money. An interesting -- let me close. I know you want to talk to some of your other guests, Diane.
RENDELLBut in 2008, the CBO issued a report saying issues and options in infrastructure investment -- and I want to quote from the report -- that direct properly targeted government spending of $185 billion a year on infrastructure would generate an economic and social benefit that would far exceed the cost.
RENDELLBingo. That's the conservative CBO.
REHMAnd you've been listening to the voice of former Pennsylvania Gov. Ed Rendell. He is now the co-chair of Building America's Future. Turning to you, Jack Basso, it's been over half a century...
DUVALLAlong with the great mayor of New York, Mike Bloomberg.
REHM...since the interstate system was built. And, of course, that was our last big strategic plan on a national scale. Has the appetite for this kind of program simply diminished?
BASSOWell, let me, Diane, just comment on that. I think what's happened is the interstate system was very focused. It was a map. It showed every part of this country, what they were going to get and where it was going to go. And the effects there, it was very powerful. As that system wound down, the situation changed in that we really didn't reset a direction. I know Gov. Rendell's report talks about that, and many others do, too.
BASSOBut we need to reset a strategic direction. And, I think, we need to also be able to relate, like that map did, to state and local and voters in those areas explicitly what they will receive in terms of benefits and changes in their areas.
REHMIs it a problem of the so-called earmarks, the so-called pork that many in Congress want to move away from that they no longer believe that these bridges should be repaired in certain communities because, somehow, that represents pork?
BASSOYes. I would say the pork issue, particularly the last transportation bill, became a public relations nightmare. I remember seeing, on the cover of Parade magazine, this issue and really recognizing that we need to change that dynamic 'cause that's not really the reality of what's going on.
REHMJack Basso, he is director of the program and finance management for the American Association of State Highway and Transportation Officials. We'll talk with our other guests when we come back.
REHMAnd joining us now is Florida Republican Congressman John Mica. He's chair of the House Transportation Committee. Good morning to you, sir.
REP. JOHN MICAWell, good morning. Good to be with you.
REHMThank you. Congressman Mica, why, in this era of real need for infrastructure repair, are you proposing reduced government spending on that very infrastructure?
MICAWell, actually, what we're proposing in the House is to basically live within the means of the trust fund. People pay 18.4 cents per gallon or whatever their fuel tax is, and the fees go into a trust fund. We get in about $35 billion a year. And we propose to spend within the means and the amount of money that we have.
MICABut what we're basing our expenditure on is actually looking at how we can take that money and better utilize it and then also actually get money out.
REHMWhen you say better utilize it, what do you mean?
MICAWell, again -- okay, I'm handed the cards that the House rules say we have to live within our means and also the budget. So that gives me $35 billion. What can I do with that $35 billion? Well, two things. First thing, I can spend it wisely and use the financing tools that I have available, some creative financing. We take programs that work well, make them work better. We take programs that work and make them work.
MICASo I can turn my $35 billion a year into $70 billion. Then the second part of what we're looking to do is streamline the process, even with the $63 billion that was given for infrastructure out of a $787 billion stimulus bill. The $63 billion, as of a few months ago, had $39 billion still in the Federal Treasury. So I need to streamline the process in getting money out.
REHMYou have probably heard former Gov. Ed Rendell earlier say that what is needed is at least an investment of $200 billion a year in both government and private funding in order to try to begin bringing our infrastructure back to par. We have dropped from first on the list internationally, now to 15th. Does that concern you?
MICAWell, I think it does concern me. We are falling. Ed, is right. He's a great advocate for transportation nationally. He -- when he was governor, he even tried some of the things that we're looking at doing. And that's take some of the assets. Sometimes, I say in both -- some of the reports we've done, and also to get people's attention, I say, you have stop sitting on your assets.
MICABut he was taking -- proposed to take part of his interstate toll and use the revenues to expand again programs both transit and highway. We're looking at the same thing, although I don't favor tolling any existing free lanes. But we can take the right-of-way and the other asset, define how you can use it, and then also create good financing tools to attract private sector dollars. So we can get close to that figure that Ed Rendell is talking about.
REHMI wonder whether, in fact, the -- pardon me -- the lack of investment could hurt the economy more than extra borrowing would.
MICAWell, it hurt the economy. You know, the Democrats proposed a $787 billion stimulus bill. Everybody thought that was going to be infrastructure. It turned out less than 7 percent. Sixty-three billion dollars was infrastructure. And as I said, we did a hearing two months ago and 39 percent of the money was still sitting in the Federal Treasury.
MICASo not only do I have to obtain better ways to leverage the money that we have, but I've got to figure out a way to streamline the process. And I refer to that sometimes as my 437-day process.
REHMGov. Rendell, any comment?
RENDELLWell, number one, I agree with a lot of what Congressman Mica said. He's right. We have to streamline the process. It's absolutely crushing, how long it takes. And these environmental reviews, for example, they're necessary, but they don't need to take the amount of time that they're normally given. We've got to up-tempo that process and do it fast. That's number one.
RENDELLNumber two, the congressman is right about the need to do creative financing. And he that does in his bill, and we advocate that as well. Number three, I know John Mica very well, and he believes in transportation. And, by the way, Diane, just so our listeners are aware, when BAF says we need to spend $200 billion above what we're spending now, that's for all infrastructure, not just transportation.
RENDELLBut John knows because the Congress asked a special committee. It was called the Congress' Surface Transportation Reform Commission to look at transportation needs in this country. And they recommended that, on Surface Transportation, the overall spending, state, local and federal, which is about $84 billion a year, be increased to $220 billion a year.
RENDELLAnd I know if John Mica was king of the world, we wouldn't be -- we would not be cutting the transportation bill by 30 percent. We would be increasing it by 30 percent.
REHMAnd, Congressman Mica, back to you, you pushed public-private partnerships as a way of boosting spending. Explain to us how that would work.
MICAWell, again, I go back to the term I use, sitting on our assets. We look at some infrastructure that we have, just like Gov. Rendell had done in Pennsylvania. Gov. Mitch Daniels of Indiana, he took his pay -- toll way, turned it over to the private sector, got somewhere in the neighborhood of $3.5-, $4 billion because they can run it cheaper and better, handle the tolling better. And then he took that money and invested it in infrastructure.
MICANow, I'm not saying we model exactly what he did or how he did it. But there are many, many ways we can take the -- again, the assets that we have, the right-of-way, better utilize them. In fact, we proposed expanding the nation's interstate for the first time. During my 20 years in Congress, all the money that we've collected is on -- for maintenance.
MICAWe've not extended the capacity, really, of the interstate. And I think we could do that using some innovative public-private partnerships.
REHMBut isn't -- if you introduce more toll roads, for example, isn't that simply another form of taxation?
MICAAbsolutely, and it's a user pay as opposed to dipping into general revenues. Right now, why the -- again, the Republican side is -- and they control the House. They said, we're only going to spend within the trust fund because every dollar out of general fund -- I heard 44 cents on another program earlier today. But 42 to 43 cents that's borrowed is deficit spending. Now, it's better -- I don't mind borrowing it.
MICABut we can borrow against the asset, have revenue coming in and pay for the road as people use it. And I think that's a fair way to go since it's -- in this atmosphere, it is not only impossible, it's beyond anybody's capability to go out and just raise gas tax. It's just not going to happen. You see the difficulty we have with other finance issues. It's not going to happen today.
REHMCongressman John Mica, Republican of Florida. He's chair of the House Transportation Committee. Thank you so much for joining us.
RENDELLCan I comment on the last thing that the congressman said?
REHMSure, Gov. Rendell. Go ahead.
RENDELLEven in the 2010 election, arguably the most conservative anti-spending election of any of our lifetimes, even in that election, 64 percent of the transportation initiatives that were on the ballot in various states -- all of which call for either increased tolling, increased taxes or increased borrowing -- 64 percent of them were approved by the voters because the voters, the citizens of this country, know that we've got to invest in infrastructure.
RENDELLThey see it. They know -- when a road is widened from four lanes to eight lanes, they know the difference that it makes in their life. In Charleston, S.C., a very red state, voters agreed to raise the sales tax to revitalize the Port of Charleston 'cause they knew that that would bring in jobs and help the Charleston economy.
REHMAll right. And let's move on now to Maureen McAvey, who's here in the studio. Maureen, I do wonder about our slipping in terms of infrastructure of the U.S. as Gov. Rendell said earlier was number one, and now we've slipped to 15th. Talk about why.
MCAVEYI think some of the points that we've heard already play into this. At the moment, I think many Americans are simply afraid of the future, and they're afraid of strategically investing. And the Urban Land Institute, like so many other organizations, have argued for several years that we do the infrastructure bank, that we consider our competitive analysis. You can't be a great country without having great infrastructure.
MCAVEYAnd if we look at -- China is spending $1 trillion over the next five years. Brazil is spending $900 billion over the next three years, India, $1 trillion, so we call for strategically investing, not just spending, but thinking through where and how we spend the money.
MCAVEYAnd to piggyback on something Gov. Rendell said, over the last 10 years, including the last three years, we have seen these local initiative referendums pass, on average, with 70 percent voter approval. So the voters do understand and are willing to support it when they know where the money will go, how it will be spent and how it will personally improve their lives.
REHMAnd, Tyler Duvall, I know you are the former undersecretary at the Department of Transportation. Considering what Maureen has just said, we have not passed a highway bill since 2005. Why is that?
DUVALLThe lack of political consensus, obviously, is a huge problem in getting a bill enacted in the United States. And that political consensus, really, the lack of it stems from a lack of policy consensus about what the federal program should be trying to achieve.
DUVALLSo there's a wide disagreement, I think, a growing consensus, frankly, but still a wide disagreement about what the purpose of federal investment should be, what the objective should be with those dollars and what the relative roles of the federal, state and local government should be. The political stalemate really reflects that lack of consensus today.
REHMCould the lack of investment hurt the economy in ways that we cannot imagine?
DUVALLYes. There's no question that infrastructure investments drive lots of productivity improvements in the U.S. if done correctly. The multiplier effects have been studied, and they're extremely powerful and high, among the top investments you can make. Now, on the flipside, if you make really poor investments and invest in very low-return projects, the benefits of these investments are minimal, which is the key challenge we've got.
DUVALLAnd both the governor and Congressman Mica referenced the need to invest more intelligently. And, I think, if you look at the U.S. relative to the rest of the world, the size of our infrastructure networks are the biggest in the world. The quality, in terms of physical status, is still actually pretty good. What's missing is the speed, the throughput, the time to deliver and the cost to deliver.
DUVALLWe're really falling down on those performance benchmarks, and we really need to emphasize those as we move forward.
REHMTyler Duvall, he is an infrastructure-strategy consultant with McKinsey and Company. You're listening to "The Diane Rehm Show." Jack Basso, you heard Congressman Mica say, no point in trying to go after that gas tax, which is one of the lowest in the world. Do you think it's time to change that thinking?
BASSOI think it's clearly time to recognize since we haven't raised this gas tax rate since 1993.
REHMIt's 18 cents on each gallon.
BASSO18.4 cents on each gallon at the federal government level.
BASSOSo, yes, I think -- we at AASHTO clearly think that we need to increase that gas tax, but we need to go beyond that. We're going to need, in the long term, to be able to develop collection systems that will allow us to recognize there are other objectives that are taking place right now, for example, expanding mileage from fuels. There's the CAFE standards, which affect mileage, that will affect revenue.
BASSOSo in the short run, it's probably the most efficient thing we could do, is raise the gas tax to...
REHMTo how much?
BASSOOh, take, for example, a program that we laid out, would have required about a 10 to 12 cent gas tax increase and would have allowed us to double, for example, highway and transit programs from around $43 billion up to $73 billion in the transit programs to $18 billion, so...
REHMAnd what's the argument against that? I've heard that raising the gas tax is second only to the estate tax in terms of how people feel so strongly.
BASSOI think there are two or three arguments. The first is, do we invest effectively? You mentioned earmarks earlier. That was -- when I mention a disaster, it's what people perceive the program to be, which is not. That's problem number one. Problem number two is we've got to translate a national program, national investment into a local and state-specific investments and projects.
BASSOThat's what moves people forward when they see something they really believe needs to be done -- clear terms. It's the job we have to do. I think the third thing is there is a mood right now, obviously, any tax is an evil thing, and, consequently, this one, even though it's a user fee, falls into that category. So we've got a real problem with this thing.
REHMI'd like to understand whether there are some areas in the country that are clearly more in need of infrastructure upgrading than others, Tyler Duvall.
DUVALLYes. That's a great question. The country is so diverse in terms of what it needs. And if you look at the upper -- in Northeast and upper Midwest, you have aging systems, populations not growing dramatically, but huge need to recapitalize. So the infrastructure strategy for the Northeast and upper Midwest should look a bit different, should be about optimizing existing systems much more efficiently through technology and recapitalizing the existing asset base.
DUVALLIf you look at the demographic changes in the Southeast and the Southwest, you've got relatively fast growing population. So the need for new capacity tends to outstretch that. And, I think, that's one of the challenges coming up with a unified national strategy. Given how diverse the state and local systems are, it's a huge challenge.
REHMIs it going to take more bridge collapses, like that we saw in Minneapolis, before the Congress gets around to doing something? What's your view, Jack?
BASSOWell, mine, Diane, is just that when that bridge collapsed, I guess, in my personal mind, having doing this most of my life, was this is going to be the moment when the wake-up call came. What I found to be the case was it lasted about two days and then dissipated.
REHMJack Basso, he is with the American Association of State Highway and Transportation Officials. Short break. Your calls when we come back.
REHMWelcome back. We're talking about the country's infrastructure. In some areas it's truly critical. Bridges, highways, passes, overpasses, all of it needs careful review and much investment. Let's open the phones. We'll go first to Plantation, Fla. Good morning, Dennis. You're on the air.
DENNISGood morning, Diane. I just wanted to call and thank you for this program because, finally, somebody has taken this seriously and taken us seriously. I just think the government needs to be a cheerleader with these initiatives by stubbornly focusing and streamlining the message. Also, the media needs to find the (word?) in this issue and stay on it like white on rice.
REHMAll right. Thanks for calling. Maureen.
MCAVEYOne of the things that we have to appreciate is how important this is to each and every one of us, that, currently, congestion costs between $800 and $1,000 per person, per year. When we look at the quality of our infrastructure, we're really jeopardizing the quality of life for the future, for every citizen, for our children, our grandchildren. If we don't do this and do it well, we will have to play catch-up football. And it's an expensive proposition.
REHMAnd to Houston, Texas. Good morning, Boyd. You're on the air.
BOYDHi, Diane. Thank you.
BOYDWith the Tea Party, basically, controlling the debate here on the debt ceiling and the budget, I think that we need to point out how insane some of these policies are. For example, Michele Bachmann saying that we do not need to raise the debt ceiling, we don't need to raise taxes, and yet, somehow, even though 40 percent of our money that we spend is borrowed, we could make ends meet.
BOYDThat's insane, and I think we really need to point that out in order to move ahead.
RENDELLWell, I think there's good news on that horizon. And that is that infrastructure tends to cut across partisan lines. For example, two very conservative senators, Tom Coburn and Jim Inhofe, are strong advocates of spending money on infrastructure. And, look, we've got to build a coalition in Washington that says, yes, we're going to get rid of this deficit. We're going to do it in a fair and balanced way.
RENDELLBut at the same time, we're going to invest in things that are important to the country and talk about the gas tax and -- I don't believe we should try to raise the gas tax now with the economy where it is. But Americans pay the lowest gas tax of any of the 17 most developed nations, the lowest. We pay the lowest for overall price at the pump, by far, among those 17 nations.
RENDELLAnd BAF poll found that 60 percent of Americans think that the gas tax goes up adjusted to inflation every year. That's not true -- says it hasn't been raised since 1993. So when the economy recovers, we've got to raise the gas tax, raise fees on our use of our barges, canals or locks and levies. Raise a lot of things to produce the necessary money to invest because we'll get that money back.
RENDELLWe'll get it back in the jobs created and the money invested. We'll get it back in economic efficiency. Do you know, Diane, that the U.S. and Australia produce metallurgical coal? China desperately wants as much metallurgical coal as they can get because it's the feedstock for coke plants. Well, in Australia, they can get it from where it's mined to their ports one quarter as cheaply as it costs us in America.
RENDELLSo the Chinese buy Australian coal first and then to us secondly.
REHMInteresting. Jack Basso, on that gasoline tax, compare what we, in this country, pay in the way of gas taxes and what Europeans pay.
BASSOYes. In Europe -- and I should start there -- there is a general fund tax that covers paying for infrastructure and other things, unlike what we do here where we have a dedicated gas tax. But the rates in Europe can be as high as $7 to $8 a gallon.
BASSOA gallon or the equivalent in liters of what they have over there. So our rate is miniscule. The other thing I'd mention here is what does the average American pay the federal government who drives 12,000 miles a year? I get interesting answers to this. But it's about $110 a year. For the whole investment we make, it's kind of -- I get answers like thousands of dollars. And I'm often shocked by that.
REHMExactly. Let's go...
RENDELLOn page 30 of this report, BAF report, which is available online at Building America's Future, there's a great chart showing U.S. gas tax and U.S. cost of gas compared to the rest of the world.
REHMWhich is why a great many of us, and I include myself, Governor, feel that gas taxes should go up. Let's go to John in Miami, Fla.. You're on the air.
JOHNYes. I just wanted to comment on something about how this money has been spent in the past. Right now, there's a project in Miami, Fla., where they're spending $4.5 million just to put a little bridge for one lane of an expressway to extend the bicycle and pedestrian walkway path along a major highway here in Miami, Fla. And I think this is just an example of the waste that goes on with these kinds of dollars.
JOHNAnd if you expect the American people to want to spend more money on this, you're going to have to show them the need for projects. And they're not just going to spend $4.5 million just so some bicyclists can go on a little bridge over one lane of an expressway when there's actually a sidewalk where they could ride their bikes right on the opposite side of the road.
REHMAll right, sir. Thanks for calling. Tyler.
DUVALLYes. I'm not going to comment on that specific project. But, I mean, there's little question that the process that we're using in the United States to allocate these huge amounts of capital resources is not (word?) best practices. If you look at leading governments and private entities around the globe, they use extremely disciplined processes using metrics, as I said, rate of return metrics to allocate these resources.
DUVALLIf you look at the railroad sector or the telecommunication sector, electricity, all comparable networks, the discipline associated with making these investment decisions is simply higher. And that doesn't mean it needs to take longer. It just means we need to use these best practices into the public sector more.
BASSOYes. And, again, I wouldn't comment on that project 'cause I don't know. But I do think Mr. Mica and also, I think, the Senate committees that are involved will be looking at this question of what are the fundamental core priorities. And bike lanes come into play. There are people that clearly will appreciate that. But, again, our underinvestment is so dramatic that we have really got to focus, like a laser beam, on the core things we need to do.
REHMAll right. To Charlotte, N.C. Good morning, Mark.
MARKGood morning, Diane. And thank you so much for having this show. First of all, I want to congratulate people like Gov. Rendell, reasonable politicians, who are looking at the future of America and not looking at their own self-interest. For instance, the FAA project that was just recently -- or projects that were delayed was really because of Rep. Mica.
MARKThis was -- this is a project -- I'm an ex-air traffic controller. These are projects that were for control towers, runways, navigation equipment that were paid for in 2004. And because of his bickering, he put them on hold. We don't need leaders like that. I'm sorry. That's just not acceptable. And the roads construction projects, get our people to work. We need to get them to work.
MARKIt's going to be good for them. It's going to be good for us and raise our standing around the world. So thank you so much for having this show.
REHMMy pleasure. Maureen.
MCAVEYOne of the things that, I think, all of us are starting to appreciate is we need appropriate consensus building, and we need to pay attention to facts. You know, there is that old line that facts are stubborn things. And as we look at investing in infrastructure, we need to -- I think each one of us, as Tyler said, as Gov. Rendell said, even Rep. Mica, we need to think through how we use discipline, how we gather facts and make appropriate decisions.
MCAVEYEighty percent of our gross domestic product comes from cities, from cities and suburbs. And if we can reduce congestion, if we can figure out how we appropriately build some density and some appropriate transit, including some bikes and some pedestrians -- at the moment, in some of the cities, we see 14 percent of people commuting actually walk or bicycle to get to their jobs.
MCAVEYSo we need an entire system of transportation, from airports, ports, bikeways, walking, transportation and roads.
REHMAnd, Gov. Rendell, President Obama offered $10 billion in funding to three states to kick-start a high-speed rail initiative. Why did that go down the drain? Why did those governors in Florida, Ohio and Wisconsin turn it down?
RENDELLWell, they don't believe that it's a good expenditure of the state funds that were necessary to match the federal allocation. And that's their judgment. And, look, President Obama said he'd like to bring high-speed rail service to 80 percent of the American population. That's too ambitious a goal. There are places in America where high-speed rail won't work 'cause there's just not enough potential ridership.
RENDELLBut there are places where it would be an incredible plus and reduce the burden on both vehicular traffic and air traffic. And that would be in California, between Los Angeles and San Francisco, in Chicago, as a spoke to the Midwestern cities, and, certainly, in Boston to Washington. The Acela has proved that you can make money on a train line, an effective train line there. And if we had rail, high-speed, it could even be better.
RENDELLSo I think we should concentrate on those three areas, pour all of our money into those and demonstrate that high-speed rail can work here as it's worked all over the country. And interestingly, Diane, the caller, former air traffic controller -- one of our biggest problems, because we don't have enough money to spend on infrastructure, is getting what's called the NextGen or the Next Generation air traffic control system, a system that's based not just on radar and ground control, but more on GPS and high technology.
RENDELLThat system would cut air delays dramatically and save us a whole boatload of money, plus make the system safer. But we just simply don't have the money to adopt it, even though it's been adopted by European and Asian countries right and left.
REHMTyler Duvall, one begins to wonder whether Congress is the best place to be making these decisions about overall transportation needs throughout the country, about repairing bridges, roads, airports. What is your thinking?
DUVALLSo, yeah, I'm not in the political business anymore. But, you know, my sense is that, obviously, Congress can do a lot to provide the framework that will unleash a lot of innovation in the sector right now.
DUVALLWhether we talk about more resources or not, there's a huge amount underneath the resource question that can be done to basically incentivize technologies to be introduced to look at urban congestion, which is a huge and growing problem, huge environmental effects of that. And if they could provide a very clear framework to go after some of these problems, whether or not they had additional resources, I think they would --that would add a lot of value.
REHMLet's take a call in Dallas, Texas. Good morning, Travis.
TRAVISGood morning, Diane. We've been talking a lot on your show, it seems like, about competitiveness, you know, infrastructure. But another area I feel that we can possibly transfer the dialogue would be in the education dialogue as well, getting more people interested in math and sciences to be able to help us complete investment in infrastructure programs in -- for the next generation of engineers.
REHMGood comment. Maureen.
MCAVEYI certainly agree with Travis. We need to think through how we educate our citizens and become competitive internationally when you realize that, in India, for example, they're graduating 600,000 engineers, many of which we import, if you will, into this country because we are not educating as many engineers of all types -- civil, mechanical, electrical, et cetera -- as we need. We need to improve our education systems as well.
REHMMaureen McAvey, she is with the Urban Land Institute. And you're listening to "The Diane Rehm Show." Caller here in Washington, D.C., Sydney, you're on the air.
SYDNEYHi. I would like to discuss why, like here in the D.C. area, on 495, we're doing a lot of HOT lanes and Metro and construction like that, but from what I understand, it's been contracted out to a company from Australia.
REHMSo you're concerned about that. Maureen.
MCAVEYWell, at this point, we are not seeing our own American countries -- or companies...
MCAVEY...as competitive as we would like them to be. And we're seeing companies, like Macquarie, like Syntess, (sp?) getting some of the contracts that, ideally, our companies would be doing here internally.
DUVALLYeah, that actually -- that project actually is a U.S. construction entity floor. The financing arm is a toll road operator based out of Australia, so the caller is correct about that. But huge number of U.S. construction jobs are being created by that contract.
BASSOAnd that project will make a huge difference in the traffic flows on the Capital Beltway. And I think if the Australian bank is being a source of capital -- we have firms in the U.S., if they choose and can compete, to do the same thing. So I think, you know, it's a good use of PPPs.
MCAVEYAnd if we can do more of these projects -- at this point, we're sending some of the money that the large pension funds and insurance companies collect in this country, we're sending a lot of that money overseas because Europe and Australia, China are able to do this P3 projects, these PPP projects. And we haven't been able to get sufficient local approvals for them.
REHMOne last quick question for you, Gov. Rendell. When you were governor of Pennsylvania, I gather you invested heavily in bridge repair and maintenance. But by the end of your term, they were in worse condition. What do you think went wrong?
RENDELLWell, that's actually not true, Diane. When I took over, we had 6,000 structurally deficient bridges. When I left office, we were down to 5,200, and we were actually doing work on 1,700 bridges as I left office. And the good news is that that work not only was repairing Pennsylvania bridges -- not as rapidly as any of us would have liked -- but it was one of the reasons that Pennsylvania has an unemployment rate of 7.5 percent, almost 2 percent lower than the nation average and the lowest of any large industrial state.
RENDELLBecause when you invest in infrastructure, you create those jobs. No question about it. And, Diane, one last answer to your question of why there isn't public confidence, because Congress has abused that funding responsibility in the past with earmarks, which is why we needed infrastructure bank to make decisions on funding big, large regional projects based on merit, not based on...
REHMWho would be on that infrastructure bank?
RENDELLWell, it would be a combination of people appointed, some by the Congress, some by the president, but they would have to be professionals. They wouldn't be elected officials. They wouldn't be anybody interested in running for office. They'd be former state DOT secretaries. They'd be financial people. They'd be a whole conglomerate business people.
RENDELLAnd we need to do that. The infrastructure bank, at the very least, is something we should get done in the next couple of months.
REHMAll right. We'll have to leave it at that. Thank you, Gov. Ed Rendell, former governor of Pennsylvania. He is co-chair of Building America's Future. Tyler Duvall is a strategist with McKinsey and Company. Jack Basso is with the American Association of State Highway and Transportation Officials. Maureen McAvey is with the Urban Land Institute.
REHMLet's hope something starts getting done. Thanks for being here. Thanks for listening, all. I'm Diane Rehm.
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