By Nancy Spannaus
Nov. 19, 2019—Are some Democrats actually ready to put the vital issue of infrastructure on Congress’s agenda again? Such a welcome change might be in the offing, thanks to the initiative of Oregon Democrat and Chairman of the House Transportation and Infrastructure Committee Peter DeFazio.
Rep. DeFazio chaired a hearing of his committee on Nov. 14, where he and subcommittee chairman Daniel Lipinski described some of the shocking details about the state of the U.S. rail network, especially Amtrak and city transit. Later in the day, according to news reports, DeFazio addressed the House Democratic Caucus on a major new infrastructure plan that he intends to introduce. According to a Roll Call article, DeFazio said his plan would be comprehensive and build on early discussions with President Trump. It would cover roads, bridge, highways, transit, wastewater, harbor and airports.
DeFazio admits, however, that he has not figured out how to pay for his ambitious plan. The option of a Hamiltonian National Infrastructure Bank has not yet been taken up by a Congressman.
How Long Can It Be Ignored?
The perilous state of the nation’s infrastructure is “old news,” but it becomes more ominous by the day. The DeFazio/Lipinski opening statements primarily reviewed the dangerous set of new budget cuts being proposed by the Trump Administration. Indeed, Trump economic advisor Larry Kudlow, speaking to a meeting of the North American Infrastructure Leadership Forum on Oct. 25, bluntly stated that the Administration’s policy is to accelerate the process of non-support.
Asked about monies available for financing the nation’s multi-trillion dollar infrastructure needs, Kudlow said, “I would like to say we had it, we’d give it to you,” he said. “But we don’t have it and I wouldn’t give it to you anyway—you can raise the money privately.”
A more anti-Hamiltonian policy could hardly be stated.
In his opening statement, Chairman DeFazio took on the idea of the nation’s rail infrastructure being “cost-neutral” – i.e., paying for itself through user fees. Nations with the most advanced rail infrastructure – he cited China and Germany – don’t adhere to this idea, and neither should we, he said. Thus Chairman DeFazio is in line with the American System tradition of substantial Federal government financial support for building and upgrading national infrastructure on a scale that could never be financed by strictly private investment, much less user fees. His opening statement gives the flavor of the current policy underway in the face of Congressional dereliction of duty:
Unfortunately, we have never provided the significant capital investments necessary to allow us to enjoy the flourishing passenger rail system that so many other countries value. Instead we are left with a mess of Civil War-era bridges and tunnels that Amtrak inherited when they assumed passenger rail service from railroads on the brink of bankruptcy in the 1970s, and a network that looks about the same as it did nearly five decades ago.
Over the last two years, Amtrak has made a lot of changes to adhere to this concept of being cost-neutral. All to the detriment of customers and employees. They have eliminated the traditional dining service that Amtrak was known for on overnight routes east of the Mississippi. They’ve closed a call center in California that employed nearly 500 employees and assisted customers with reservations and travel adjustment. Only to contract much of this work out in Florida. Amtrak eliminated stations agents at 15 different stations across the county. They reduced the discount for seniors and announced plans to drastically reduce the number of Amtrak police officers who help keep passengers and communities safe. Amtrak has also nearly eliminated all charter services or special trains and has significantly scaled back opportunities for private cars to travel on Amtrak trains.
Of course, none of these “cost-savings” will result in the funds to upgrade the national passenger rail system, which is not only inefficient, but confronted with virtually inevitable dramatic breakdowns, as in the New York-New Jersey tunnel-bridge system. Despite bipartisan political pressure and local funds pledged, the Gateway Project to replace the collapsing early 20th century infrastructure in that region continues to be stalled.
When the United States Built Railroads
To those who continue to whine that “we can’t afford” to invest in modern high-speed rail and urban transit, a brief reference to history is in order. (Much more can be found on other articles on this blog, in particular, A Railroad to Bind the Nation and America’s Stunning Growth Under the Second National Bank.)
The principle is simple and based on the way in which Alexander Hamilton established U.S. credit with the Bank of the United States. Hamilton took the tens of millions of dollars in virtually non-performing U.S. government debt (take note of today’s abysmal interest rates, in this connection) and effectively turned it into credit for the national bank. Those monies were then available for investment in the real economy, and that investment did occur, most dramatically with the Second National Bank of the United States. It was during Nicholas Biddle’s tenure as president of the Second National Bank that the construction of the U.S. rail network took off, dramatically improving the productivity of the nation as the efficiency of the circulation of goods and people took a leap up.
Abraham Lincoln used a similar principle when he authorized the use of U.S. government bonds to fund the construction of the Transcontinental Railroad. That artery, in combination with the Lincoln Administration’s banking, educational, agricultural, and trade policies, also led to a major boost in the productivity of the national economy. (Recall DeFazio’s reference to Civil War-era infrastructure.)
Of course, this productivity was not measured in the short term, or even in the particular project underway. The contribution to productivity was seen in the decades that followed, through an overall upgrade of the labor, technology, and connectivity aspects of the national economy.
More could be said about the productive investment in infrastructure, especially about the Franklin Roosevelt Administration era, which represented another major period of infrastructure investment that revolutionized our productivity. For that, I recommend this blog’s series on the World War II mobilization.
In addition to delving into this history yourselves, you might recommend it to your Congressman. It seems the Congress (not to mention the Administration) is desperately in need of an education on how to solve our infrastructure crisis.
Tags: Alexander Hamilton, Amtrak, infrastructure, Larry Kudlow, Nancy Spannaus, National Infrastructure Bank, Peter DeFazio