Monday, October 12, 2015

How Expensive is Rebuilding Our Crumbling Infrastructure, Anyway? (Part 7 of 13)

(Note: This is the seventh of a series of posts dealing with Bernie Sanders's platform. For the first installment, go here Part 2 Part 3 Part 4 Part 5 Part 6)

I saw this posted on Twitter the other day, and I think it's worth taking a second look at, because it demonstrates a remarkable lack of understanding of Bernie Sanders's platform. Senator Sanders makes it very clear how we will pay for everything that he proposes, but understanding the nuance of this requires first that I disabuse you of a common misconception.

There are many in this country who decry government spending as if the government is incapable of doing anything well. But the critical issue of our times, as Robert Reich eloquently explains on a regular basis, is not how big government is. The critical issue of our times (and Bernie Sanders, more than any other Presidential candidate, understands this) is who government is working for. Whether we're talking about spending in the private sector or spending by the government, at the end of the day, everything that is spent in our economy counts as a cost for America. If Wal-Mart spends $1,000,000 improving the efficiency of the intersections near its stores, it has the same effect on our economy as if the state, local, or federal government spends $1,000,000 on an identical project.

So, with that in mind, how does America pay for Rebuilding our Crumbling Infrastructure, as described in the flyer pictured above? Let's take a look:

Senator Sanders hasn't detailed his policy on his website, but at stump speeches and in interviews he regularly says that he intends to devote $1 trillion over five years to infrastructure spending to create millions of good-paying jobs. According to the American Society of Civil Engineers, deficiencies in America's infrastructure system cost the United States $130 billion in 2010, including $97 billion in vehicle operating costs, $32 billion in travel time delays, $1.2 billion in safety costs and $590 million in environmental costs. If current trends continue, by 2040 the costs will have increased by 351% to $520 billion (with cumulative costs mounting to $2.9 trillion). So if we think about it from the viewpoint of our entire society, over time this investment will return more than its cost in increased productivity.

Still, $200 billion a year is a significant investment, and it's not like we're really going to reduce our military budget to pay for it, so how do we generate sufficient revenue to pay for all this infrastructure spending?

Unfortunately, the bill proposed by Senator Sanders is an appropriations bill, which operates on the assumption that the revenue has already been raised. The Rebuild America Act of 2015 provides for the creation of a National Infrastructure Development Bank, with the authority to issue bonds and make loans, and a capitalization from the government of $5 billion annually from 2015 through 2019.

So I guess I'll have to get creative and think of something on my own. Let's start off with how the ASCE estimates the cost of correcting the deficiencies they identified as imposing costs as high as $520 billion annually - $220 billion per year. Our proposal is to pay $1 trillion over five years, which is about 91% of the estimated cost. Assuming that 91% of the cost would provide 80% of the reduction in expenses, the expenditure would reduce the cost of deficiencies by $472 billion by 2040. Assuming the savings follows a linear progression and the same 80%, the $1 trillion expenditure proposed over the next five years would save about $850 billion.

So we have to figure out how to come up with $150 billion over 5 years, or approximately $30 billion annually. That's about 3% of federal discretionary spending. To put this in perspective, according to the Heritage Foundation, the federal government spends $25 billion annually maintaining vacant federal property, and it lost $34 billion to waste, fraud, and abuse in contracts just with the Department of Homeland Security. If the investment continues for another five years after the first five, the investment will have paid for itself.

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