Infrastructure Spending: Saving Pennies Costs Dollars

Infrastructure Spending

The Hill reported on the appropriations bill for transportation and housing last week:

“The House late Tuesday passed the fifth of a dozen spending bills for fiscal 2016 to fund transportation and housing projects.

Lawmakers approved the $55.3 billion measure by a razor-thin margin, 216-210, after rejecting amendments from Democrats that would have increased funding for Amtrak and the D.C. Metro, as well as doing away with a provision restricting travel to Cuba.

All but three Democrats voted against the bill, while all but 31 Republicans voted in favor. Lawmakers could be seen gazing up at the gallery displaying their votes as the bill appeared close to failing.”

Yet the meager spending for infrastructure needs was entirely too much for Heritage Action, the ultra-conservative lobby arm of the Heritage Foundation.  True to its corporate oriented interests, if anyone in the gallery was representing Heritage Action, they were looking for: the closing of the Federal Transit Administration; the elimination of all operating and debt service grants to Amtrak; the elimination of the Maritime Administration; the privatization of the Saint Lawrence Seaway Development Corporation; the elimination of the Transportation Investment Generating Economic Recovery (TIGER) grant program; eliminating the Essential Air Service Program; privatizing the FAA; shuttering the Appalachian Regional Commission; and eliminating subsidies for the D.C. Metro.  Heritage Action must be smiling at Representative Mo Brooks:

“Rep. Mo Brooks (R-Ala.) offered two amendments to slash Amtrak funding further. His first proposal, rejected 143-283 with 99 Republicans in opposition, would eliminate all $288.5 million for Amtrak operating grants. The other amendment, defeated 139-286, would strike the entire $850 million allocation for Amtrak capital and debt service grants.” [TheHill]

At least someone recognized that approximately 840,000 people commute to work on rail lines every work day. [Cap] Nevada Representatives Heck, Hardy, and Amodei voted in favor of the funding bill.  [HR 2577 rc 329]  Representative Titus voted against this measure to further diminish investment in our national infrastructure.

Pie in the Sky Meets Rubber on the Road

Perhaps there’s something about buzz words (Freedom and Free Market for example) which tend to obscure the obvious – that the failure to invest – as a nation – in our infrastructure has a negative effect on our economy.

Let’s stay with the rail line topic for a moment. The need is readily apparent in the Northeast Corridor,  which is:

“The most heavily traveled portion of the national passenger rail system is the Northeast Corridor, or NEC, which stretches from Washington, D.C., to Boston, Massachusetts. The Northeast mega-region is home to one in every seven Americans, or more than 50 million people. All told, the region accounts for $1 out of every $5 of economic productivity.” [Cap] (emphasis added)

One region accounts for 20% of our total economic productivity.  So, how do people get to work (to be productive) in this region?

“As highway congestion within the region has grown, so has Amtrak’s role as an efficient alternative to driving. In 2001, Amtrak provided 37 percent of combined air and passenger rail trips between Washington, D.C., and New York City. By 2011, its share of combined service had risen to 75 percent. The mode share growth for the segment from New York to Boston is also impressive. In 2001, Amtrak provided just 20 percent of combined rail and air trips. This share grew to 54 percent by 2011.” [Cap]

And, it’s not just congestion on the highways that is a problem, airlines are experiencing it as well.  The Bureau of Transportation Statistics reported on May 14, 2015 that:

“Load factor in February (84.2) was higher than in any month since the peaks in January and February 2014. The February 2015 load factor was the third highest all-time, just below the first two months of 2014 (Table 2). Load factors have generally increased since the recession because passenger travel has increased at a faster pace than capacity. In February, RPMs (revenue per mile) were at the second highest level, down from the all-time high set in December but exceeding January, the third highest month. The last 10 months, starting with May 2014 through February 2015 are the 10 all-time highest months for RPMs (Table 4).

“Capacity declined in February from December, the highest all-time level, and from January, the eighth highest month, revised from last month’s Air Traffic press release. November, December and January are the only post-recession months among the top 10 for capacity, showing that after six years, capacity has returned to pre-recession levels (Table 6). Systemwide enplanements in February were the highest since the recession. February international enplanements were the fifth highest all-time. Domestic enplanements have been rising slowly but remain below pre-recession levels. Domestic enplanements in February were at the highest level since March 2008 (Tables 8, 10, 12).” [BTS]

Translation: Loads are up, capacity is down, and we’re all trying to fly at rates not seen since the Recession of 2007-2008.   There’s always the family wagon?  In 1980 we had 9,215 miles of interstate highways, and another 6,774 miles of “other freeways and expressways,” by 2013 these numbers grew to 17,866 interstate miles and another 11,602 in the “other” category [FHWA] And we can jam them up on any given rush hour and holiday weekend. These numbers actually don’t mean all that much until we take into account our attempts to maintain this system with a Highway Trust Fund which has a closing balance down 17.8% from last year. [FHWA]

It’s all well and good to offer Pie In The Sky privatization schemes and other “market driven” fantasies, however what our economy needs is a nationwide transportation system which gets people to work and products to market.

“Highway bottlenecks affecting freight are a problem today because they delay large numbers of truck freight shipments. They will become increasingly problematic in the future as the U.S. economy grows and generates more demand for truck freight shipments. If the U.S. economy grows at a conservative annual rate of 2.5 to 3 percent over the next 20 years, domestic freight tonnage will almost double and the volume of freight moving through the largest international gateways may triple or quadruple.” [FHWA]

The following map from FHWA shows where these bottlenecks are at present, not that we couldn’t guess:

Highway bottlenecks Every time a freight load is delayed in these interchange bottlenecks it costs money, and there are other kinds of bottlenecks as well. Steep grade bottlenecks costs in 2006 (12% of total truck hours of delay) were  about $32.15 per hour.  Signal bottlenecks can also cost approximately $32.15 per hour.   If we believe in a “market based” economy then perhaps we ought to think of the market inefficiency created by various and sundry bottlenecks which are costing us $32.15 per hour for Nothing.  Now, think of a truck load of goods experiencing an interchange bottleneck, a signal bottleneck, and a steep grade bottleneck?

We could be working on these bottlenecks, and on the maintenance of our highway system – but that would cost money, including money from the TIGER grants from the Department of Transportation.  (TIGER = Transportation Investment Generating Economic Recovery) So, what did the House do?

“The overwhelmingly popular TIGER program would shrink from $500 million to $100 million. In addition, the size of grants would be far smaller, within a range of $2-15 million, down from last year’s range of $10-200 million. This year’s T-HUD also reduces the share that the federal government will cover for TIGER projects, from 60 percent to 50 percent, requiring more local or state money to be brought to the table.” [T4Am]

Remember, the idea of a national transportation system in a modern economy is to get goods to a nationwide market.  Across the rails, over the highways, or via air freight, none of which the House of Representatives thought worthy of increased appropriations – in the “interest” of fiscal austerity.  It’s penny wise and pound foolish, as the old saw goes, and worse still it places the seamless transportation of both workers and the products they make increasingly at the mercy of state and local governments which are unable to raise the funds to complete the necessary maintenance and improvement projects.

It’s obvious what outdated and uninspected components can do to a transportation system – train wrecks, highway deaths, delayed freight, air accidents.  It’s not so obvious when the drain is hidden from view – hours wasted in any one of the three types of bottlenecks measured by the Federal Highway Administration, hours and money wasted in unnecessarily long commutes, congestion delays at airports and railway freight terminals … Time is money and we’re wasting both commodities.

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