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Trump's $1 trillion infrastructure dream faces the same old nightmares

Bloomberg logoBloomberg 3/4/2017 Mark Niquette

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A month before taking office in 2009, Barack Obama promised “a bold agenda” to create jobs rebuilding U.S. roads and bridges with “shovel-ready projects.” Almost two years later, Obama conceded what Donald Trump may yet learn: “There’s no such thing as shovel-ready projects.”

In a Feb. 28 speech to Congress, Trump said he wants legislation to support $1 trillion worth of investments rebuilding roads, bridges, tunnels, airports, and other crumbling infrastructure, putting millions of Americans to work in the process. But as Obama found out with the $787 billion federal stimulus bill, lining up environmental reviews, permits, and the other approvals required for a large-scale project can consume years—in some instances even decades. William Ibbs, a professor of construction management at the University of California at Berkeley and president of Ibbs Consulting Group, points out that it took 23 years to replace the San Francisco-Oakland Bay Bridge after it was damaged in the 1989 earthquake.

Big, transformative, economy-boosting projects don’t happen just because they’ve received funding, says Sarah Kline, a fellow with the Bipartisan Policy Center, a Washington-based research group focused on infrastructure. “Those types of projects are not sort of hanging around just waiting for money to fall from the sky,” she says. “There needs to be a longer-term outlook this time around.”

Trump hasn’t detailed how his infrastructure plan will be funded or what types of projects it will include. Republican and Democratic leaders in Congress disagree about how much new federal spending should be included; Senate Majority Leader Mitch McConnell has said he wants to avoid “a trillion-dollar stimulus.”

The American Recovery and Reinvestment Act of 2009 budgeted $69 billion for infrastructure improvements, including $48.1 billion for transportation. A 2011 Government Accountability Office report found that while the recovery act helped fund tens of thousands of jobs, its “long-term benefits are unclear.” “I believe we missed an opportunity to do more,” Representative Steny Hoyer, the Maryland Democrat who was House majority leader at the time, said at a Feb. 7 event at the Brookings Institution in Washington on funding infrastructure.

The primary objective of the recovery act was to help pull the U.S. economy out of the Great Recession. One often-heard criticism—at the time the legislation was passed and since—was that too much stimulus money was spent on short-term improvements such as bridge repainting and road repairs. That’s because the bill required funding for projects to be committed within about 18 months. The tight deadline precluded work on large-scale works that would have required bidding, design, and approvals, says Ed Rendell, a former Democratic governor of Pennsylvania and a co-founder of Building America’s Future, a bipartisan coalition of elected officials that promotes infrastructure spending. (Michael Bloomberg, founder of Bloomberg LP, which owns Bloomberg Businessweek, is a co-chairman.)

“Although there’s no such thing as being able to stick a shovel in the ground the minute you get the federal award, you can shorten the process dramatically,” Rendell says.

Trump wants to do just that. Among the raft of executive orders he issued during his first week in office was one to expedite environmental reviews and approvals for high-priority infrastructure projects. The federal government has no control over state and local approvals, so Trump’s orders can help only on the margins, says Christy Goldfuss, former managing director of the White House Council on Environmental Quality under Obama. “I do not believe that there is huge opportunity to radically change the system so we can get from point A to point B with so many different players involved any faster,” says Goldfuss, now vice president for energy and environment policy at the Center for American Progress in Washington.

The past two administrations also focused on speeding up reviews for projects, and a process to do that remains in place. The highway bill passed in December 2015 created a Federal Permitting Improvement Steering Council that coordinates the work of different agencies to streamline project reviews and approvals. Says Richard Kidd IV, who headed the council until Jan. 20: “If this is a priority for the new administration, they should fill the executive director role as soon as possible and move out smartly.” A White House spokesman says the council is still operating and a new executive director will be named.

Given the obstacles involved, the most effective approach to accelerating infrastructure projects might be for the federal government to provide more money to states and localities using existing funding formulas for short-term projects, says Jim Tymon, chief operating officer of the American Association of State Highway and Transportation Officials in Washington. The federal government could also help facilitate more longer-term projects.

One lesson Trump should take away from his predecessor’s experience is that the public is impatient for results, says Ray LaHood, a Republican who was U.S. transportation secretary under Obama. If Trump doesn’t make an infrastructure deal with Congress a top priority now, when he has the most political capital to achieve it, he’ll face the same complaints as Obama, LaHood says. “At the end of four years,” he says, “if they haven’t produced a big, bold transportation bill and a big, bold funding package, they will have missed an opportunity, and they will have an unfulfilled promise.”

The bottom line: Obama’s infrastructure plan funded too much routine work, critics say. They hope Trump’s will deliver transformative projects.

To contact the author of this story: Mark Niquette in Columbus at mniquette@bloomberg.net.  To contact the editor responsible for this story: Cristina Lindblad at mlindblad1@bloomberg.net. 

©2017 Bloomberg L.P.

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