Building and Funding an FDR-style Infrastructure Program
By Stuart Rosenblatt
Nov. 18, 2017–The following report is a brief summary of potential transformative outputs of a National Infrastructure Bank (NIB), as outlined in a Draft Bill for such a bank now circulating on Capitol Hill. This report compares the results projected from similar outlines of infrastructure projects produced by the Progressive Caucus and the 2017 Senate Democratic “Blueprint to Rebuild America’s Infrastructure” earlier this year, with both known national requirements and the prospects available from the NIB. Since the National Infrastructure Bank proposal begins with potentially $1-3 trillion in capital, which could dramatically increase as the bank expands, the second part of the report will outline potential large-scale outcomes which the adoption of this funding source would make possible.
We begin by taking the Congressional Progressive Caucus’s 21st Century New Deal for Jobs (NDJ) as the point of departure. That report, issued in May, is the most comprehensive proposal in circulation and calls for spending at least $2 trillion on an ambitious infrastructure program. That $2 trillion is budgeted over 10 years and is projected to lead to the creation of more than 10 million new jobs. Those jobs will also, in many cases, pay prevailing wages, i.e. Davis-Bacon, on construction sites; hence they will generate an increased tax base and ensure fair remuneration.
This analysis will use the New Deal for Jobs as a useful starting point from which to put forward a comprehensive infrastructure plan and an additional funding mechanism, the NIB. That mechanism, missing in virtually all, even the best-intentioned plans, pivots around the National Infrastructure Bank concept as utilized by Alexander Hamilton, John Quincy Adams, Franklin Roosevelt, and others.
Part One: Basic Areas of Infrastructure Needs and Investment
Roads and Bridges. The New Deal for Jobs (NDJ) proposes to spend $39 billion/year over ten years, a very strong proposal. It will create 487,500 new jobs in the first year, and presumably just as many thereafter, assuming each $1 billion generates 12,000 or more new jobs, as many analysts project. Two hundred billion dollars ($200 billion) will be especially targeted for urban and rural areas, to address the massive under-investment in these parts of the country.
However, the American Society of Civil Engineers in its latest study estimates that to overcome the massive deterioration in bridges will require $20.5 billion/year over 10 years. And to simply repair our crumbling roads, the Federal Highway Administration says that $170 billion per year in capital investment is needed. This dramatic deficit can be addressed by the Bank, in concert with local officials, banks, corporations, etc.
Schools. The NDJ proposes to spend $10 billion per year over ten years. This will create 125,000 jobs in the first year alone. However, this plan falls far short of what the Department of Education has determined is necessary. According to the DoE, more than 50% of the schools in the nation need repair, which adds up to a price tag of $197 billion. The NDJ plan clearly needs expansion.
Drinking Water and waste disposal. The NDJ proposes $ 35 billion/year to address the crisis in this area. This would create 437,500 new jobs, presumably annually. The EPA says that we need to spend over $655 billion over the next 20 years on new investments just to keep pace with growing needs. The NDJ proposal approximates this figure, but does not account for the massive overhaul required, including additional failures over the 10 year period. For example, according to experts in the field, many current water systems will need to be taken out and replaced entirely, as they duplicate the horrible conditions that plague Flint, Michigan. Further investigations into the cost of such an overhaul remains to be done.
Energy Infrastructure. The NDJ proposes $50 billion/year over 10 years in this area. That would yield 625,000 new jobs per year. The proposal, not yet fleshed out, would shift the production away from fossil fuels and to more green technologies. The NDJ correctly says that an aggressive energy program will create new jobs in all the building trades, and increase the number of jobs by a 3:1 ratio. This report will examine this in a novel way later on, with a proposal to add nuclear energy, a very green approach, to the mix of energy programs. In a growing economy, in contrast to the stagnant one we have been experiencing for decades, energy needs will rise dramatically. We must meet that challenge.
High Speed Broadband. The NDJ proposes $100 billion over ten years, which would create 1.25 million jobs overall.
Housing, especially the affordable kind. The NDJ estimates the need for $60 billion over 10 years, which would yield 750,000 new jobs, mostly in construction. This is certainly no small amount, but a thorough study should be made of need and inventory, and proposals should be made accordingly.
Transportation. The NDJ proposal emphasizes mass transportation, calling for financing public transit and intercity passenger rail to the tune of $350 billion over 10 years. This would mean 437,000 jobs in the first year. The proposal is to use $250 billion to address the municipal transit crisis, starting with the cities in serious crisis, viz. New York, Boston, Washington, D.C., etc. The Department of Transportation says that $90 billion is needed now just to address the backlog of urgent repairs. As for $100 billion for rail, this number is way too low, and will be addressed in the next section of this report, as we propose to ramp up high-speed rail and magnetically levitated rail at a level commensurate with the needs of the nation.
Airports, Ports, and Waterways Modernization. The NDJ calls for $60 billion to be spent over ten years, which would amount to 750,000 new jobs. This is an especially critical area, since investments in this area will create the most long-term jobs post-construction, of any infrastructure investments.
By all accounts, even before considering the damage from recent hurricanes and floods, this amount is woefully inadequate. The amount proposed for aviation is $30 billion for 10 years, but the 2017 ASCE report conservatively estimates the aviation funding gap for the next 10 years to be $42 billion. Ports, Dams and Levees are allocated the remaining $30 billion for the next 10 years. This figure contrasts with the Army Corps of Engineers’ most recent estimates: $80 billion is needed to maintain the nation’s levee system, which totals at least 30,000 miles; $45 billion is needed for dams, with more than 2,000 dams (like the Oroville Dam that flooded this year) in the high hazard category; and $37 billion for ports, just to bring them up to a level of viability and repair.
These figures were all calculated before the recent extensive damage to levees and dams from the hurricanes, floods, and fires of this summer. This issue will also be taken up later, but the crisis begs the question of additional large-scale funding.
Veterans Facilities. The NDJ proposes $3 billion per year and 37,500 new jobs annually to upgrade VA facilities. This amount is again inadequate. The average age of a VA facility is 52 years old, nearly five times the average age of a not-for-profit hospital outside the VA system, which is 10.5 years. The VA’s 10 Year Strategic Capital Investment Plan calls for $51 billion in infrastructure and $5 billion for ongoing projects over 10 years. Even if funding remains constant, the deficit will be $26 billion over 10 years. $26. Again, more funding is needed.
Indian Country and Public Lands. The NDJ proposes $3.5 billion in first year, thus creating 43,750 new jobs.
Resiliency, Protecting Infrastructure, and Cyber-security. The NDJ’s plan calls for $25 billion over ten years, which spells 325,000 jobs. Part of this funding is for preventive programs concerning natural disasters, thus overlapping with the waterways modernization plan. The Cyber-security amount, to be spent by the Department of Homeland Security, needs evaluation by people with appropriate credentials.
Part Two: Expansion beyond the Progressive Caucus New Deal Plan
The National Bank for Infrastructure and Manufacturing proposes to fund additional programs in concert with cities, states, and arms of the federal government. We need to not only bring existing infrastructure up to levels required minimally by the ASCE, which will require at least $4.6 trillion (see their 2017 Report Card), but much beyond that. We need to build a 21st century infrastructure program, a new “platform” for infrastructure, analogous to that built by Franklin Roosevelt from 1933 to 1945, and briefly under John Kennedy.
There are three interconnected areas that should be developed, all of which overlap the subjects already touched upon in this report: 1. Modern National High Speed Rail System 2. Modern Power System, connected to the Rail System 3. Modern Water Infrastructure, which will also intersect the Power requirements.
1. Modern High Speed Rail. China has already built 12,000 miles of high speed rail, and contrary to naysayers, that system has attracted a mass ridership and is becoming commercially viable. Japan and Europe also have large-scale high speed rail systems. The United States has none.
High speed rail service travels 200 mph, and yields enormous benefits: 1) It will utilize electric power, thus dramatically cutting back misuse of fossil fuels; 2) it will dramatically cut the wear and tear on our highways by truck traffic; 3) it will increase “connectivity” within and between geographic areas, expanding urban areas and building whole new cities; 4) it will require a massive increase in machine tool production; and 5) will utilize higher technologies overall, with the use of magnetic levitation (MagLev) initiating a revolution in transit and power.
The overall impact will be to increase the productivity of the economy, which has been stagnating at near zero for nearly a decade. On the simplest level, high speed rail is two to three times faster than conventional rail or truck/auto transportation, so the savings and productivity benefits will be tremendous. It will also raise wage levels across the board.
The aim should be for the United States to launch a “Mission Orientation to Build High Speed Rail,” a national campaign similar to what we did with the Transcontinental Railroads in the 1860s. Construction of High Speed Rail will demand new levels of electric power, and we can address the power crisis at the same time that we address the transportation deficit. Immediately, the United States should begin by building high speed rail in the corridors that are most congested, where the new system will do immediate good. We should then branch out and build 26,000 miles of rail to connect the key urban areas, as well as going into areas not served by air or other services.
We also must build north-south long-distance rail corridors in the western half of the Continent, and this will bring into consideration rail to Alaska and the Bering Strait Crossing. Finally, we can build out the system to 42,000 miles of rail and phase in Magnetic Levitation, as Japan, China and other nations are already doing. The 42,000 mile route carries 65% of our freight and 70% of our passengers. This is bold, but bold is what is required.
A national system could begin with the following routes:
California High Speed Rail–Los Angeles to San Francisco. The California High Speed Rail Project is already underway. It likely could cost $100 billion, give or take. It is projected to create 20,000 construction jobs annually for 5 years, and 67,000 jobs annually for another 15 years. But, according to current estimates, it will indirectly generate 400,000 permanent positions.
Midwest High Speed Rail–Chicago, Champaign, St. Louis, Indianapolis. The projected cost is $20-$50 billion. It would create as many as 150,000 jobs during construction and 10,000 permanent jobs.
Texas Central–Dallas to Houston. The cost is estimated at approximately $10 billion.
New York Gateway. This is a rail, bridge, tunnel combination program, which would connect and transform the New Jersey, the New York City, and Connecticut metro area. The cost is minimally $15 billion in Federal investment. This is currently being funded at a low level by Congress, which voted to put $900 million into the project on September 10.
Northeast Corridor–Washington, D.C., Philadelphia, New York, Boston. This is the most densely populated, highly trafficked area in the nation. High Speed Rail would cut the time of the Boston to New York trip, currently 3.5 hours, to 1.5 hours. According to an Amtrak study (Amtrak Vision for the Northeast Corridor.pdf), the cost will be at least $150 billion. It is projected to create at least 40,000 new jobs per year over 25 years; and 7,000 permanent jobs to operate the system. This plan could also build the Magnetically Levitated train from Baltimore to Washington DC. The cost will be approximately $10 billion. The Japan Bank of International Co-operation has already offered to pay $5 billion to the project while Congress has appropriated $27.8 million to study it. (GGWash.org)
Some projections say that high speed rail could create 1 million permanent jobs irrespective of the many more needed to build the lines. By comparison, the U.S. national freight system manages over 140,000 miles of track and employs 180,000 people full time. The best estimates for time and cost are 15-25 years (but that could change) and at least $500 billion. But this cost is a fraction of the increased productivity gains and the new income that would be generated to the economy. Even the most conservative analysis says that for every $1 billion invested in this kind of infrastructure, 12,000-20,000 new jobs are created, and $1.7 billion in income is generated.
2. Power–Additional sources
High Speed Rail will require a dramatic change in U.S. energy production. The system, as is already the case in Europe and Asia, must be all electric. Current U.S. rail is less than 1% electric. The locomotives will be diesel-electric. New power plants will have to be constructed, along with new transmission lines. 50,000 additional megawatts of power are needed to generate 383 trillion kilowatt hours of electricity per year. That would power the entire 42,000 mile system, but could obviously be phased in over time.
What should be the source of all the additional power needed? Initially, all of the sources available: natural gas, coal, oil, solar, wind, and nuclear. But there are additional considerations.
One study of nuclear energy’s potential envisions the use of fourth generation nuclear plants, high temperature gas cooled reactors (HGTRs), which are now being developed for commercial use. The advantage here is that the reactors are modular, and new units can be added to a cluster as power needs grow. Their carbon footprint is negligible. Sixty to seventy plants would be required to meet the total need.) The plants have high energy density; hence, unlike windmills for example, they do not require larger amounts of construction, extra transmission lines (from remote wind corridors), and land. Their use would be a good opportunity to move beyond basic fossil fuels, which can be better utilized in other capacities than power generation.
So far, studies of solar energy show it to be problematic, as solar facilities don’t function without sunlight, which is not continuous, and also needs large coverage areas to generate power. They thus require backup systems from sources that can produce power 24-hours a day. Solar energy’s power density is very low relative even to natural gas or coal, much less to nuclear. Ironically, in the recent hurricanes, the only plants that generated power continuously were the nuclear ones. These plants were decades old, not the newer plants that are better constructed to withstand all weather events.
Whatever power systems or combination of power systems are ultimately employed, they can be used to both generate power for the electric train system, and also the nearby population centers. If one plans properly, and adds in roads, bridges, etc, then this program will create whole new modern cities in its wake.
Precisely this kind of aggressive visionary program of rail and power expansion built the new cities and the nation in all its most prosperous phases: 1820-1840, under the Second Bank of the United States; 1860-1875, under the Lincoln National Banking System; and 1933-1955, under the Franklin Roosevelt Reconstruction Finance Corporation (national bank equivalent) era.
3. Water Projects
The United States also needs a new water grid, in concert with the power projects, to address the massive water management and supply problems we face. In addition to the water requirements cited by the NDJ, the following areas should be added:
Certain regions of the nation periodically face flooding on a large scale. Tennessee Valley Authority model projects, which harnessed rivers that used to devastate the TVA’s seven-state region, have been on the books for years and never built. These include flood programs for North and South Carolina and contiguous areas, to end the horrible flooding seen over the past several years. There are also Mississippi River/Missouri River projects that must be built to contain the flooding in the upper
Mississippi River region. The threat of coastal flooding was underlined in bold face this summer with the Texas, Florida, and Puerto Rico/Virgin Island disasters. And these crises follow the still unresolved mess created by Super Storm Sandy in New York, New Jersey, and the Atlantic Coast.
Houston. The Governor’s Commission to Rebuild Texas is asking for $61 billion, of which $20 billion is to rebuild housing, and at least $35 billion is for storm-protection infrastructure on the Gulf Coast. Included in the request is money to build an Ike Dike coastal barrier, coastal infrastructure, and “hardening” of the Houston Ship Channel. These and other projects should have been built prior to the storm. In 1968 the Texas State Water Development Board drafted plans for inter-basin transfer canals and eight new reservoirs behind the Gulf Coast cities. This was never built, with the obvious consequences now presenting themselves.
Florida. The city of Jacksonville is now preparing a multi- billion dollar request to meet the needs of the constant threat of flooding there, as the city is at virtual sea level.
Puerto Rico. This involves a much larger commitment to rebuild a comprehensive system of all infrastructure, from power to water control, to energy production, etc. On November 13, 2017, Puerto Rico Governor Ricardo Rosello called for the Congress to fund $94.4 billion to cover the initial costs of repair and reconstruction, but said that this figure would need to be augmented.
Sea Barriers. The city of New York has studied construction of sea barriers, like those in Holland and recently built in New Orleans. Ironically, the major study was done in 2009 before Hurricane Sandy demolished the region. The cost ranges from $10-17 billion. Sea barriers should be built now in the New York/New Jersey/Connecticut region.
They also should be built now in cities that are known targets for hurricanes and other “natural” water disasters. Those cities include, just for starters: Houston, Galveston, Mobile, Biloxi, Miami, Ft Lauderdale, Jacksonville, Savannah, Charleston, Wilmington, and other key areas. The cost per barrier will vary, but total cost will be upwards of $150 billion, a small price to pay.
Municipal Water Projects
An honest comprehensive study should be undertaken to see what the real needs of the nation are to replace pipes, drains, and water mains, among other items, to pre-empt a new “Flint” disaster. It is well known that many of the nation’s cities have water systems that are toxic, leaking, and prone to breakage–catastrophes waiting to happen. This will be an expensive, long-term undertaking, but critical to national health and well-being.
Levees and Dams
As the Houston situation and Oroville Dam crisis indicated, the massive network of dams and levees that are the front line of defense against flooding, must given the same attention as municipal water systems. The ASCE report has a detailed report of the urgent needs of this area and those recommendations should be acted on with the utmost urgency.
Water Desalination and Transportation
Beyond immediate crises, the nation faces a fresh water/drought situation in the Southwest and much of the Great American Desert states. This will require two related types of projects.
First, we need to build a comprehensive network of desalination plants, especially in California and the arid southwest (Arizona, New Mexico, Texas, etc). Desalination is used around the world but not enough in the United States. San Diego just completed a new Carlsbad Desalination plant, which will address 10% of the water needs of the city. The nation must build a large number of plants, of various types, natural gas, nuclear, and others, to address the water crisis. Californians should not be fighting among themselves, let alone with other neighboring states for water. The Pacific Ocean lies ready for utilization.
The second project is more long term, and it involves bringing fresh water into the western United States, and contiguous areas of Mexico and Canada, as spelled out in the 1960’s Congressional legislation called the North American Water and Power Alliance. This 15-year-plus undertaking would transport fresh water from the upper regions of Canada and Alaska into the generally arid regions of the Great American Desert and the Southwest. As spelled out in the U.S. Senate legislation, four hundred connected projects would bring in excess run off water into the now dry regions. The project would cost in the range of $200 billion to $500 billion and would include water, road, rail and other integrated infrastructure programs. Studies undertaken over the decades conclude that the program would not only pay for itself, but actually increase the US GDP. (Parsons Company Studies)
4. Science Driver Programs
Franklin Roosevelt’s World War II economic mobilization utilized the industrial development policies promoted by the Congress and the national banking policies of the Reconstruction Finance Corporation. The RFC also funded the great scientific breakthroughs of that period, including the development of synthetic rubber, advanced machine tools, aluminum, radar, antibiotics, nuclear technology, and many other new products. A similar science driver program in the current period is needed to point the nation forward to the next generation of industrial output. It can encompass at least two crucial areas of development.
The first is the massive expansion of the space program, which is really nothing more than infrastructure going upward rather than across the surface of the earth. The United States has lived off the great breakthroughs of the Kennedy Space program for twenty years; for every dollar invested into the space program, $14, through the application of new technologies, were generated for the domestic economy.
Another promising avenue of scientific development is the harnessing of nuclear fusion power. There has been a deliberate underfunding of this science for over thirty years. The promise of fusion and related areas of achievement would radically alter existence not only in the United States but on the planet. The natural resources needed for fusion, either simple seawater or the helium 3 isotope, exist in abundance both on the planet and nearby on the moon. It is time to ramp up this area of research to guide the country into an increase in productive output, lifespan, and scientific breakthrough that would put us on the path to relatively limitless potential development.
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