America’s infrastructure is getting creaky. From roads, rails, waterways, and pipelines to airports, seaports, bridges, and transit stops in between, the physical platform of the nation’s economy is nearing the end of its useful life. And though it is widely recognized that infrastructure improvements are essential to job creation, economic growth, and enhanced U.S. competitiveness, the political will to make the necessary investments remains elusive.  

The consequences of inaction on infrastructure are profound. The U.S. Chamber’s Transportation Performance Index shows that the steady decline in the quality of surface, air, and water transportation systems costs the U.S. economy $1 trillion a year in lost economic growth. In just over five years, U.S. infrastructure has plummeted from No. 1 to No. 15 in the World Economic Forum’s economic competitiveness ranking.

Congested electricity bottlenecks result in power outages and power quality disturbances that cost the economy between $25 billion and $180 billion annually.

Drinking water systems face an annual shortfall of at least $11 billion in funding needed to replace aging facilities. In addition, in September 2002, the Environmental Protection Agency estimated that over the next two decades the United States must spend nearly $390 billion to replace existing wastewater infrastructure systems and build new ones. With no increase in investment, however, there will be a roughly $6 billion gap between actual and needed expenditures.

Transportation

 Congress has recently begun addressing some long-neglected transportation issues. In February, it passed and the president signed legislation authorizing $63.4 billion in Federal Aviation Administration spending through 2015, including funds for the accelerated development of the new GPS-based air traffic control system known as NextGen and for investments in airports. The legislation is the first long-term law guiding U.S. aviation policy and spending since the last such measure expired in 2007.

Congress has since turned its attention to soon-to-expire legislation to reform federal policy and programs and to fund investment in roads, bridges, and public transit systems. The Chamber is using the March 31 expiration date to send a clear and urgent message to lawmakers: Make transportation job No. 1 in 2012.

The Chamber is pushing for a multiyear bill that, at a minimum, maintains current funding levels. For more than two years, Congress has merely strung together short-term extensions. Without certainty of multiyear funding mechanisms, projects will continue to move along haltingly, allowing road and transit systems to fall to greater levels of disrepair and costs to fix those problems to increase as land, labor, and materials costs rise.

Earlier this year, the Chamber and more than 1,000 companies, local and state chambers, associations, and labor groups from all 50 states signed a letter to Congress asking it to pass federal highway, transit, and safety legislation. In addition, the Chamber-led Americans for Transportation Mobility (ATM) Coalition in February executed a six-figure television, radio, and online ad campaign and grassroots initiative, Make Transportation Job #1 Campaign, in Washington, D.C., and in key states and districts around the country.

According to Chamber President and CEO Tom Donohue, “Reversing our downward trend and making infrastructure a driver of economic growth must be a national priority.”

Funding Conundrums

Janet Kavinoky, the Chamber’s lead infrastructure lobbyist and vice president of the ATM, says, “The main issue surrounding all infrastructure is funding.” The issue is most acute in highways and transit, where the Highway Trust Fund receipts are lagging due to stagnant gasoline and diesel taxes. The Chamber supports modest increases to these user fees—which haven’t risen in 19 years—when the economy recovers.

Nevertheless, Kavinoky acknowledges that Congress doesn’t have the stomach to increase these user fees, or any of the taxes and fees that fund infrastructure, especially in an election year. “With federal funding dwindling and political will at an all-time low, we’ve got to get more creative about financing and get the private sector and state and local governments involved,” she says.

To make that happen, Congress must reform core transportation legislation to encourage public-private partnerships and to leverage private capital. Every $1 billion in federal money attracts $30 billion in private infrastructure investment. “We’ve got to tear down the regulatory impediments that are taking an estimated $250 billion in private capital out of play,” Donohue says. “If we do, we could create 1.9 million jobs over 10 years and give our economy a jolt of energy.”

The Chamber has supported the concept of a $10 billion national infrastructure bank that could leverage more than $600 billion in private investments.

Norm Chambers, chairman, president, and chief executive officer of NCI Building Systems, Inc., a large integrated manufacturer of metal products for the nonresidential building industry, says, “We need to be thinking more broadly and more like visionaries in terms of infrastructure. The trick is to shine a bright light and bring attention to those states and counties and cities that are approaching this challenge and opportunity in a way that is consistent with taking advantage of all the resources available to them.”

Virginia is one such state, Chambers says. It has created an independent office within the agency to identify a “pipeline of projects” that could benefit from public-private partnerships. Under Gov. Bob McDonnell’s (R-VA) leadership, Virginia used private funds in projects such as the Capital Beltway High Occupancy Toll (HOT) lanes project, which is being delivered by the Virginia Department of Transportation (VDOT) in partnership with Transurban-Fluor.

Energy Infrastructure

Developing our energy infrastructure is also moving at a snail’s pace. Case in point: The administration earlier this year rejected the expansion of the Keystone XL pipeline to transport oil from Canada to Gulf Coast refineries. The project would have created 20,000 jobs immediately and 250,000 over the life of the project.

Keystone may be one of the most high-profile examples of foot-dragging on energy projects, but it’s hardly the only one. Across the country, more than 350 energy projects, including those for renewable energy, are mired in permitting delays advocated by extreme environmentalists and Not-In-My-Backyard activists. The Chamber is calling for permitting reform to move these projects forward.

Water Infrastructure

Water infrastructure—everything from inland waterways and ports to pipelines that deliver drinking water to our kitchens and waste to sewers—is also in dire need of a facelift.

The movement of waterborne cargo and related economic activities contributes more than $742 billion annually to the U.S. gross domestic product, sustaining more than 13 million jobs. To ensure that water routes used by cargo-carrying ships can handle ever-increasing volume, the Chamber is urging Congress to expeditiously authorize the Water Resources Development Act, which provides federal funding for water projects.

To spur investment in wastewater and drinking water infrastructure, the Chamber recommends, among other things, lifting the cap on private activity bonds and leveraging local and private investment through federal funding.