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A Blueprint for Renewing America's Infrastructure

CHARTING A COURSE FOR GROWTH

Infrastructure — that integrated collection of transportation, water, energy and other public utility networks — is the backbone of a modern, competitive economy. It is a platform for business innovation, productivity growth and job creation. Modern infrastructure provides the basis for an economy that supports a high quality of life.

For the better part of a century, American infrastructure was the envy of the world. U.S. roads, airports, water and energy systems helped make the U.S. standard of living the highest in the world. Other nations looked on, envious of the bold commitment America had made to our economic foundation.

America’s historic success in consistently designing and building the world’s best, most extensive infrastructure rested on a social contract that supported public financing, private investment, reasonable regulatory standards, and predictable timelines for approving and completing major projects.

Over time, each of these pillars has eroded. Public financing has not kept pace with economic and population growth. Private investment has been siphoned off by better returns elsewhere. The U.S. regulatory system has grown increasingly complex, offering many more avenues for critics or opponents to delay or derail projects.

PRINCIPLES FOR SOUND INFRASTRUCTURE POLICY

Business Roundtable has developed a set of principles to guide policymakers as they encourage the development of 21st century American infrastructure. These include:

INFRASTRUCTURE SYSTEMS: CHALLENGES AND RECOMMENDATIONS

Securing adequate funding to respond to these pressures and expand system capacity continues to be a major challenge. Specifically, funding levels for the Highway Trust Fund (HTF), the primary source of federal spending on roads and mass transit systems, are in systemic, long-term decline as the motor fuel tax generates less and less revenue over time. And although the nation’s freight rail network continues to benefit from substantial private-sector investment, a balanced regulatory environment and additional investments are needed to alleviate bottlenecks at key hubs where freight and passenger traffic intersect. Finally, more can be done to expedite the review and permitting processes for projects that do secure funding — keeping development costs down and accelerating project delivery.

Port and Inland Waterway Infrastructure

The U.S. network of ports and inland waterways is unique among the nation’s infrastructure systems in that it is primarily dedicated to commercial transportation: Ports serve as gateways for international trade while inland waterways provide cost-effective intermodal freight transportation. 

Dedicated federal funding is needed to support spending by state and local governments to update and expand the capacity of U.S. ports, and steps must be taken to both improve asset management and attract new sources of funding for the country’s aging inland waterway network.

Aviation Infrastructure

Aviation infrastructure is an asset that pays dividends across the U.S. economy. The civil aviation sector creates and sustains high-paying jobs, anchors many regional growth and development strategies, and accounts for roughly 5 percent of U.S. gross domestic product. 

 In fact, the U.S. Travel Association estimates that 39 of the nation’s 50 largest airports will soon begin experiencing “Thanksgiving-like” congestion conditions at least one day per week. Moreover, the Federal Aviation Administration’s Next Generation Air Transportation System (NextGen) program — designed to increase efficiency and flexibility at airports while mitigating environmental impacts — is behind schedule and will fail to deliver on its promised impacts.

Key policy and programmatic changes must be made to address these issues, unlock new sources of much- needed investment and modernize the aviation infrastructure system.

Drinking and Wastewater Infrastructure

Well-maintained drinking and wastewater infrastructure systems are necessary for creating healthy and economically vibrant communities. They provide families with clean drinking water; reduce pollution in rivers, lakes and oceans; and prevent sewage overflows that would harm public health and wildlife. 

Despite its critical importance to the most basic activities of everyday life, drinking and wastewater infrastructure across the country is aging, fragmented and strained. Many of these systems were built in the early to mid-20th century, and their assets are approaching the ends of their useful lives. Roughly 240,000 water mains break in the United States each year, leaking billions of gallons of treated drinking water worth approximately $2.6 billion.

Despite these urgent needs, current funding is extremely constrained, and alternative financing sources must be explored. Less than 5 percent of federal infrastructure spending supports drinking and wastewater systems, and the vast majority of U.S. water systems are owned and operated by municipalities, which lack the resources necessary to make capital-intensive investments in maintaining, replacing and upgrading assets. In fact, there are roughly 56,000 community water systems, 19,000 wastewater pipe systems and 14,000 wastewater treatment facilities across the United States.

Within this context, policy changes should prioritize improving the stewardship and management of existing resources, incentivizing market efficiencies, and removing barriers to outside sources of financing.

Energy Infrastructure

America’s energy infrastructure is the backbone of the nation’s energy sector and a key driver of growth, job creation and competitiveness throughout the economy. Maintaining a modern, flexible and secure network of electric power grids, oil and natural gas pipelines, storage facilities, and other assets is essential to delivering affordable and reliable energy to U.S. businesses and consumers. 

Technological and policy drivers are actively reshaping how and where energy is produced and consumed, which in turn places new demands on the nation’s energy infrastructure. Successfully meeting these demands will continue to require substantial levels of private-sector investment. For example, updates to the electricity transmission and distribution network will require an estimated $880 billion in investment by utility companies over the next 20 years.

Regulatory actions taken by the Obama Administration — including mechanisms to expedite the permitting process for large infrastructure projects (Title 41 of the FAST Act or FAST-41) and the creation of a Rapid Response Team for Transmission — represent promising first steps toward simplifying and accelerating the permitting and approval process. However, much more can and should be done to accelerate and unlock critical investments in the nation’s energy infrastructure system and ensure that the United States remains a global leader on energy and innovation.

INNOVATIVE APPROACHES TO FUNDING AND FINANCING

America’s infrastructure gap is too big to be filled by public capital alone. This fact would be true even if the government were to expand funding across all grant programs, make them accessible to a wider range of infrastructure projects, streamline regulations and enact policies that would make it easier for projects to be approved.

Fortunately, a tremendous reservoir of private capital is looking for attractive investment opportunities, and infrastructure projects are well positioned to deliver strong returns. As an asset class, infrastructure offers returns that can outpace traditional investments like stocks and bonds, as returns are tied to long-lived, tangible assets that can provide predictable cash flows well into the future. Moreover, the private sector has shown an interest in not only financing but also building, operating and maintaining infrastructure assets.

If the United States is to close its infrastructure gap, private-sector interest and investment must be encouraged and facilitated at all levels of government by leveling the playing field for private capital, providing guaranteed returns, and exploring more innovative approaches to attracting and leveraging private investment through bond and credit programs.