July 21, 2011 by Rich Cooper
America’s transportation infrastructure is the lifeblood of our economy. The roads, railways, waterways, airways and other transportation methods carrying goods and people around the country are what make our vast economy possible. There was a time when the United States’ transportation infrastructure was the envy of the world. Times are changing and U.S. infrastructure isn’t. This poses a significant threat to America’s profitability, economic recovery and international competitiveness.
Recognizing this, the National Chamber Foundation – the U.S. Chamber of Commerce’s think tank – put on a program in conjunction with the Chamber’s Let’s Rebuild America initiative. Titled “Infrastructure: What We Want, What We Need,” the event featured a keynote address by Adm. Thad Allen (who led the federal response to Hurricanes Katrina and Rita, as well as to the 2010 BP oil spill) and the release of the 2011 update to the Chamber’s Transportation Performance Index (TPI).
The TPI is used to quantify how well transportation systems are meeting America’s demands. It shows that transportation infrastructure is a “leading indicator” of economic activity; each 1 point increase in the TPI is correlated with a 0.03 percent increase or decrease in U.S. Gross Domestic Product. In 2009, the TPI reached 56.6, which is the largest improvement in a single year since 1990. The factors contributing to this increase included reduced road congestion, decreased delays on inland waterways, and improvements in freight rail and transit safety.
Yet, this number is somewhat misleading, as it was not America’s infrastructure that improved, but its economy that crashed. The report notes that the TPI peak in 2009 was “due to the economic downturn, rather than strategic policy and regulatory reforms or new investment.”
With less economic activity due to the ongoing recession, the stress on America’s transportation infrastructure haslightened. As we begin the long climb back to prosperity and profitability, our infrastructure must be able to handle the growing volume of people and goods that move throughout the country every day. At present, our infrastructure is hard-pressed to keep up.
Tom Donohue, the Chamber’s president and CEO, noted in the report that “lasting jobs grow where infrastructure is strong.” The challenge then is not simply improving infrastructure for infrastructure’s sake, but is a part of the wider effort to rebuild America. Our nation’s economic recovery is in part dependent on how well we make changes to address the transportation system’s performance needs.
Without a thriving transportation infrastructure, growth in businesses and exports is not possible. It is also essential for travel and tourism, which offers opportunity for the private sector to grow and prosper. Now more than ever, the voice of business needs to speak up to keep infrastructure investment and improvement as a top national priority.
Moving people and goods is critical to the economy, and for the United States to maintain its competitive advantage, we need to strategically invest in infrastructure – the way many other countries are already doing.
Countries such as China, India and Australia, as well as friends and allies in Europe, are not going to stand idly by until we figure out what we’re going to do with our infrastructure. We all live and operate in a global economy where everyone is looking for market edge and opportunity. If you don’t seize those edges and opportunities, someone else will (and will probably take your lunch money too.)
To retain the infrastructure edge and opportunity, the Chamber developed a series of recommendations. Some of these were echoed during the panel discussion that concluded the event.
The first is to orient policy and project decisions around performance criteria; namely, current supply, quality of service and capacity for future growth. Elliot “Lee” G. Sander, Group Chief Executive for Global Transportation at AECOM, noted America’s ability to compete with China, India, Europe and other major markets is at risk. He echoed the concern that the U.S. economy will be hard pressed to fully recover and compete without a robust and resilient transportation system.
In the TPI, the Chamber also recommended a focus on cities or regions with high levels of population growth and development, but with limited access to an already aging infrastructure. Sander said the private sector needs to make clear the challenges occurring now and define for decision makers the implications if the public sector (and to a degree, the private sector) fails to take action.
States and localities also need to embrace public-private partnerships and private investment. John A. Flaherty, a Principal at the Carlyle Group, noted the critical importance in how the public and private sectors talk about infrastructure responsibilities and projects. Given our current budget constraints, Congress will likely not provide additional funding for infrastructure projects and improvements, which means state and local leaders, absent necessary funds, must work with the private sector to achieve local infrastructure improvements. Otherwise, projects that desperately need attention will remain unattended.
Brian Kamoie, the White House’s Senior Director for Preparedness Policy, added that in an emergency, the U.S. government cannot recreate the supply chains that the private sector uses daily to move people and goods around the country. The approach to building strong, resilient communities and transportation infrastructure should therefore incorporate a joint effort by the private and public sectors. Part of this, Kamoie said, will include better information sharing, a sentiment the private sector has been vocal in sharing with the administration.
DHS’ Assistant Secretary for Infrastructure Protection Todd Keil also emphasized the importance of partnerships as a way to collectively build resilience into America’s infrastructure and operations. Yet, while collaboration is critical, so is how we pay for it. With Congress looking for ways to reduce federal spending, Flaherty said that innovative financing is increasingly important. While the funding for needed infrastructure improvements may be lacking, stakeholders on both the public and private sides must look for innovative financial models that address our national financial challenges on the one hand and provide essential infrastructure improvements on the other.
In the end, it all comes down to leadership. Improving and expanding our transportation infrastructure is an economic imperative, though it hasn’t always been considered such by leaders in the public sector or for that matter the public. That must change. Even as Congress looks for ways to cut spending and reduce the deficit, we need to maintain at least the same level of financial investment in infrastructure while exploring new strategies, relationships and concepts to address our requirements. The needs outweigh the capabilities, and we can’t let up now. If we do, the future of our infrastructure and long-term economy will become something none of us wants – bleaker.
You can on the U.S. Chamber website.
This piece was originally posted on the National Chamber Foundation (NCF) blog.