America’s Infrastructure Summit: Time to Modernize

Thursday, January 18, 2018 - 9:30am
Remarks by Thomas J. Donohue, President and CEO, U.S. Chamber of Commerce

 

 

Introduction

 

Thank you, Jim [Stephenson], and good morning everyone.

The U.S. Chamber has made infrastructure a driving focus at the very beginning of what promises to be another jam-packed year—and for a very simple reason: The time is now.

It’s time to invest in a 21st century infrastructure system to support and grow our 21st century economy. It’s time to make up for decades of underinvestment that today is evident in everything from bone-rattling potholes and endless traffic gridlock, to deadly train derailments and destructive water main breaks. It’s time to embrace innovation and equip our critical infrastructure with the technology that will improve efficiency, productivity, and safety. And it’s time to approach this as a national imperative for long-term growth and competitiveness—not an exercise in parochial politics.

This will be no small undertaking.

The American Society of Civil Engineers estimates that we need some $3.7 trillion through 2025 to maintain and update our infrastructure.  And the longer we wait to make this investment, the worse our infrastructure will get, and the more it will cost us—not only in money to fix it, but in lost time, lost productivity, and lost lives … things we can never get back.

That is why the Chamber is determined to seize this moment for significant progress—when our nation’s leaders are focused on this problem and ready to do something about it. And that’s why we’ve brought all of you together today. The diversity of this group reflects the fact that we are all stakeholders in this effort—every state and district, every industry, every business, and every household. 

A meaningful infrastructure package should come together through the exchange of ideas and in the spirit of collaboration.

The Chamber wants to kick it off with a few thoughts of our own. So today, I’ll outline a four-part plan for infrastructure investment. The first two points are focused on how we can fund our infrastructure needs.

The second two points are about how we ensure that projects are built in a timely fashion.

To be clear, this isn’t a set of demands. It’s a handful of ideas that we believe policymakers should consider as they begin work on this critical national priority.

 

Investing in Surface Transportation

 

First, how are we going to pay for rebuilding and modernizing our roads, bridges, and transit systems?

When it comes to our nation’s surface transportation, there happens to be an easy answer. We need to increase the federal fuel user fee, which hasn’t been raised in 25 years.

I’ve been saying this for years—sometimes I’ve been a lonely voice in the debate, but lately a growing chorus of smart people have come out in agreement. Why? It’s the simplest, fairest, and most effective way to raise the money we need for roads, bridges, and transit.

Today, I’ll even give you a number. How about a quarter? Five cents a year for five years. And if policymakers want to do a quarter all at once, I wouldn’t be opposed! Increasing the fee by a total of $.25 cents, indexed for inflation and improving fuel economy, would raise $394 billion over the next 10 years.

So let’s do it now, when increased fuel efficiency is already saving people money at the pump—and when we can promise that by paying just a little more, they can get better and safer roads. And that promise must extend everywhere that there is a need—including rural roads that too often get overlooked.

By a 22-point margin—50 to 28—voters support implementing a federal fuel user fee, provided the money will go toward modernizing our infrastructure. And I am not surprised voters are willing to contribute to this investment.

While the user fee increase I proposed would cost the average motorist about $9 a month, our badly deteriorating roads are causing approximately $40 a month in increased maintenance and operating costs. Our broken infrastructure is also robbing Americans of time with their families. Between 1990 and 2015, the time Americans spend commuting has increased by about 35 minutes a week.

Yet even with strong public support, there are many who still claim that raising the federal user fee is politically impossible. Well, there are 39 states that have done it since 1993—some multiple times. Their success would suggest otherwise.

Just a minute ago, Jim said that not a single lawmaker in Georgia lost a seat for raising the gas tax in 2015. Let me repeat that, not a single lawmaker lost their seat because they supported a gas tax increase. And I’ve got a $100 bill for anyone who can find me a politician in any of the 38 other states who were thrown out over the gas tax.  

Our leaders need to stop hiding behind the fallacy that this can’t be done—and just go do it!

 

Investing in Critical Infrastructure

 

Now, the gas tax is a start—but it’s not a panacea. Because, as everyone knows, we’ve got a lot more to update than just roads, bridges, and transit. Our critical infrastructure includes water and water ways … electrical grids and broadband … airports and sea ports … dams, levees, rail ... and more. You start factoring all that in and the price tag goes up in a hurry.

That’s why we need a multi-faceted approach that leverages greater public and private resources.

Innovative financing mechanisms will allow us to meet today’s infrastructure needs and build for the future while financing the costs over the long-term. Think of it the way most Americans finance the purchase of a home.

When it comes to private funding, there is huge potential. Between 2005 and 2015, infrastructure equity bonds raised about $350 billion. Since equity is about 25% of a typical public-private partnership, that $350 billion could support projects worth $1.4 trillion.

To make it easier and more attractive for the private sector to participate in infrastructure projects, we should strengthen and expand federal loan programs—such as TIFIA and RRIF loans, Private Activity Bonds, grants, and other mechanisms to facilitate public-private partnerships, or P3s.

Not everyone is excited about P3s, but they hold tremendous promise.

For example, the city-owned St. Louis Airport recently received FAA approval to consider privatizing airport operations—a move that would help revitalize the airport now without asking taxpayers to foot 100% of the bill today. This may be a novel approach here in the United States, but other industrialized nations have been doing it successfully for years.

State and local governments are also turning to federally-backed loans to leverage their public dollars in support of major projects.

The Department of Transportation recently approved a TIFIA loan allowing local government in Orange County, California, to begin major improvements to I-405. This isn’t just another road improvement project.

Once completed, it will substantially upgrade the vital freight network that serves the Ports of Los Angeles and Long Beach—the two largest seaports in the country. And it will equip this critical infrastructure with state of the art technology using new innovations.

These are the kinds of things we should be doing all across the country. Depending on the design of the financing mechanism, just $1 dollar of federal funds today can, by some estimates, leverage up to $40 for new infrastructure projects.

On the other hand, when you think about a $1 trillion infrastructure package as a massive, government-funded deal that you pay for up front and all at once—well, then of course it’s going to break the bank. But if you get a little creative, you can come up with innovative financing strategies that include a mix of federal, state, local, and private funding—and a long-term payment structure.

That’s how we’ve got to start thinking—and that’s how we’ll ultimately pay. 

If we can get the money part figured out, we’ll be well on our way to getting this done. But we still need two more things to make an infrastructure package worth doing.

 

Streamlining the Permitting Process

 

We need a streamlined permitting process.  

Despite recent improvements under MAP-21 and the FAST ACT, the permitting process for major infrastructure projects remains broken. Projects become seriously delayed or even canceled and their budgets skyrocket due to an uncertain and seemingly endless permitting process.

The environmental review alone takes an average of five years. The Empire State building was constructed in less than a year and half.  You could build at least three Empire State buildings in the average time it takes bureaucrats to review paperwork today.

It shouldn’t take longer to approve a project than to build it. That’s a surefire way to scare off private investment.

The Chamber believes that all federal infrastructure approvals should be completed within 2 years. State and local projects benefiting from federal funding or financing should also adhere to a two-year timeline, which should run concurrent to the federal process. And to help streamline permitting and eliminate duplicative reviews, a single lead agency should shepherd a project through the process from start to finish.

The Chamber applauds the administration’s “One Federal Decision” executive order requiring several of these important changes—and we call on Congress to codify them into law. Without permitting reform, all the funding the financing you could dream of won’t get the job done.  

 

Expanding the Workforce

 

Finally, modernizing America’s infrastructure will require people—the men and women of various skill levels who will do the work.

But today, we simply don’t have enough workers ready and able to take on new projects. Nearly 80% of construction firms report that they are having a hard time finding qualified workers. At the same time, by some estimates, every $1 million in additional infrastructure spending, means an additional six to seven construction jobs. Who is going to fill those positions? And when you’re talking about a $1 trillion infrastructure package—well, you do math! 

There are a number of ways we can expand the workforce.

One is promoting work-based learning, like apprenticeships. We’ll hear a lot more about this approach during one of our panels this afternoon. I’m proud to serve on the President’s Task Force for Apprenticeship Expansion, which brings together leaders from trade and industry groups, companies, and unions—many with expertise that is highly relevant to this effort. We’re going to take a hard look at opportunities in infrastructure.

Additionally, policymakers should expand the network of sector-based construction partnerships under federal workforce programs. They should also reform and boost support for federal career and technical education programs, like the Perkins Act.

Finally, what’s the first rule when you find yourself in a hole you don’t want to be in? Stop digging! So let’s keep—not kick out—the skilled immigrants who have been legally contributing to our economy for years thanks to programs like DACA and TPS. Nearly 100,000 of DACA and TPS beneficiaries are in the construction industry. These builders could lose their status if Congress doesn’t act very soon—and our economy would lose badly needed workers.

Once Congress does act—and I believe that it will—let’s get to work on broader immigration reform so we can attract and admit the skilled workers our nation needs.

 

Conclusion

 

In closing, I want to reiterate my optimism that this can be done. And with leadership from both ends of Pennsylvania Avenue and from the business community, I think it can even be done this year.

If you think about it, we’ve already lined up some of the most essential building blocks—political will, bipartisan leadership, and public support. Without those things, any major undertaking like this would be dead on arrival.

Now it’s down to the details—coming up with the money to get started, figuring out the long-term financing, streamlining the permitting process, and expanding the workforce. Different people and different groups will have different ideas on how to do those things—and we welcome them.

This is just the beginning of the conversation. And these are just a few of our ideas. We will work with anyone—Democrats and Republicans; federal, state, and local leaders; industry associations and chamber partners; labor unions; and people with money—anyone who is committed to getting this done for our country.

Based on the outstanding group of people we’ll hear from during today’s program, I don’t have any doubt that top leaders and key organizations will line up to be a part of this effort.

This is the next great opportunity to do something significant, something long-lasting, and something long-overdue, for our nation’s future. And it will benefit all of us.

Thank you.

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