World leaders react to a historic shift in U.S. policy toward Cuba. Pakistan buries victims of a school massacre by the Taliban. And U.S. officials say North Korea is behind the hacking of Sony Pictures. A panel of journalists joins Diane for analysis of the week's top international news stories.
The crisis in Japan is prompting new questions about long simmering issues here at home, and among them, our country’s deteriorating infrastructure. For years our bridges, dams, water treatment systems and other critical infrastructure elements have been in dire need of maintenance and repair, but finding the money to address these needs has become increasingly difficult. Earlier this month a bipartisan group in the Senate offered a plan that, if enacted, would encourage private investors to take the lead on large scale transportation, water and energy projects. Please join us for an update on efforts to rebuild the nation’s crumbling infrastructure.
- Josh Mitchell staff writer,Dow Jones Newswires.
- Jack Basso director, program finance and management, American Association of State Highway and Transportation Official (AASHTO)
- Dan Flanagan chair, The Commission to Promote Investment in America's Infrastructure, 1993 consultant, project finance and infrastructure investment
- Stephen Flynn president, Center for National Policy, former senior fellow with the National Securities Studies Program at the Council on Foreign Relations and author of "America the Vulnerable" and "The Edge of Disaster."
MS. DIANE REHMThanks for joining for us. I'm Diane Rehm. Tens of thousands of bridges in this country are unsafe, dams need shoring up and many water systems are in need of repair. But budget shortfalls around the country mean less spending on infrastructure projects. Joining me to talk about our crumbling infrastructure and what we can do about it, Stephen Flynn is president of the Center for National Policy, Dan Flanagan is a consultant for private-public infrastructure projects, Jack Basso of the American Association of State Highway and Transportation Officials and Josh Mitchell of the Dow Jones Newswires.
MS. DIANE REHMI'm sure many of you have thoughts to offer. Join us on 800-433-8850. Send us your email to firstname.lastname@example.org. Feel free to join us on Twitter or Facebook. Good morning, gentlemen.
MR. STEPHEN FLYNNGood morning.
MR. DAN FLANAGANGood morning, Diane.
MR. JACK BASSOGood morning.
MR. JOSH MITCHELLGood morning.
REHMStephen Flynn, if I could start with you. It would seem that the crisis in Japan offers some important lessons. How do you see it?
FLYNNWell, it certainly does. It's, first and foremost, that infrastructure is fundamentally a safety issue as well as the equality of life. We also, in the case of Japan, have a relatively new infrastructure. It's post-Second World War. When we compare that to what's in the Northeast of this country or in the heartland, where America was ahead of the rest of the world in building infrastructure, that means we have a legacy of much older infrastructure and, therefore, more frail and also that, from time to time, we're going to have serious stress put on that infrastructure, whether it's by acts of God or acts of man. What we saw, of course, with the tsunami and earthquake was a very dramatic impact on a very advanced society -- the third largest economy of the world -- very high building standards, and yet it can be overwhelmed.
FLYNNAnd what we're also seeing, of course, is there's now a ripple effect across the entire global economy by what would have, maybe 50 years ago, been a local disaster is now very much an international disaster. But the broad challenge we have here in the U.S. -- I try to put it through this lens. When I -- I was born in 1960, and it was a time when great public works were a source of national pride -- putting the man on the moon, building new highways, glittery, new airports and so forth. When I look at the world through the lens of my daughter who is 15, when she was 6 years old, she saw her first sort of real important memory -- was the loss of the World Trade Center towers and the attacks on 9/11.
FLYNNWhen she was 8 years old, the lights went out in the Northeast because our power grid came down. When she was 10, a major city in this country -- New Orleans -- drowned, not because of a hurricane, but because of the failure of the flood control system. At 12, commuters on the way home from Minneapolis lost their lives because a bridge came down. And in this past year between Deepwater Horizon and the terrible disaster on San Bruno where gas lines failed -- I grew up when we were building infrastructure. This generation is watching it come down. And it's a moral issue, not just -- I would argue -- not just one of economics and safety.
REHMStephen Flynn, he's president of the Center for National Policy. He's also the author of the book titled, "America the Vulnerable" and "The Edge of Disaster." Dan Flanagan, what do you see as the most important infrastructure projects that need attention in this country now?
FLANAGANWell, there are quite a few examples.
FLANAGANSome lend themselves to what we call formula grant-type funding. But there are a number of projects that are revenue-based projects that, I think, are going to be very important in the future where -- whether it's water usage, water waste, toll roads, airport, what have you. I think the idea is to look at the Europeans and the Canadians and others who have long used project-financed disciplines. We're the only nation in the world that had a tax-exempt bond approach to infrastructure finance. And we need to bring more private capital into a variety of these projects.
FLANAGANThere's one program Jack is familiar with called TIFIA, the Transportation Infrastructure Finance and Innovation Act, that was passed in 1998 that came out of our commission report. And it's just interesting how they find really interesting projects, whether it's local rail, the Port of Miami Tunnel. We're talking about a request for proposals to come out shortly for the rebuilding of the Goethals Bridge up in Bayonne, N.J., as a public-private partnership. So I think one of the things we want to do is open up the system for revenue-based projects and new technology, et cetera.
REHMDan Flanagan is a consultant for private-public infrastructure projects. And turning to you, Jack Basso, as a country, how much do we spend on infrastructure and how much should we be spending?
BASSOWell, Diane, you asked a very good question. Let me split that into two parts. On the transportation infrastructure -- by that, I mean the highway network, the mass transit networks and the attendant freight activities that we have -- we're spending -- every level of government combined -- about $90 billion a year. The critical question is, how much should we have been spending? Two major commissions reported within the last two years that Congress convened. They said that we need to be spending $225 billion a year just on those activities -- highway and transit freight systems. If we add to that dams, if we add to that waterways and locks and dams, I don't have the perfect numbers for that, but they are mega-billions of dollars that we are not spending and don't have at current times.
REHMAnd is it because the money was never there? Or is it because the money was there and has been used for other things?
BASSOYeah, let me address that 'cause Steve hit it right on the head when he started out in the '60s when he was born and coming forward. I was a little older than that, to be honest, at that point. But, you know, we were dramatically investing. We created dedicated funds to pay, for example, for the interstate system. And we went forward -- '60s, '70s and into the '80s -- making massive investments and building out these systems. The reality is, starting in the middle '80s to the late '80s, we stopped increasing investment. And, in fact, today, just looking at what funds we have, which is about -- if you look at just the Highway Trust Fund -- we take in about $35 billion a year from various taxes and fees.
BASSOWe spend and have been spending for the last eight years about $45 billion. So we've gone broke, basically, in that period of time. We drained off any surplus that was there, and we haven't yet had the courage to face the reality we've got to make some changes and increase investment.
REHMJack Basso of the American Association of State Highway and Transportation Officials. Josh Mitchell, tell us about this proposed private-public partnership that we're hearing about.
MITCHELLWell, it would be what's called a national infrastructure bank. It would start off with $10 billion from the general fund or somewhere. Actually, the authors of this bill have said they want to find $10 billion in existing funds, use that, which would provide low-interest loans for projects that are toll roads or a water project where there would be rate payers who could return the investment. But the idea is to take projects that would have a revenue stream and use these low-cost loans to lure private investors to invest in these projects so that you could get the capital to get these projects started, knowing that there would be a revenue stream to pay the loans back.
REHMBut wouldn't that mean that only people who could afford to pay to ride on these roads or use these bridges, they would be the only ones who would be using them?
MITCHELLWell, I think this is the big issue in transportation. I think we haven't yet quite come to terms with -- we have this long list of needs, and we're going to have to pay for it. The Rockefeller Foundation came out with a study last month that asked people, what would you be willing to do to raise more money for infrastructure projects? And the last thing on the list -- there was 27 percent of those polled said that they would be in favor of raising the gas tax, which would actually be the easiest way to come up with more funding. The top part that -- the top answer on that list was most people wanted private investment.
MITCHELLBut, I think, when people think of private investment, they think it's just some private investor coming out of the sky and paying for these projects. But, really, the private investor is putting up the capital. But they're going to have to get a return on their investment, and that's going to require people to pay tolls, pay rates. Some -- in some cases, it might be sales tax. But, I think, the main point is, is that it's going to take money out of our pockets to repair infrastructure.
REHMBut, overall, what you're saying -- the simplest, most direct way to fund these projects would be a gasoline tax.
MITCHELLThe gas tax is what is currently the main source of funding for the Highway Trust Fund and...
REHMBut it's still not enough...
REHM...so you'd have to raise those taxes.
MITCHELLThe problem with the gas tax is that it hasn't raised -- it hasn't been raised since '93. It's 18.4 cents a gallon, so it hasn't even kept up with inflation. At the same time, Americans are driving less. And, at the same time, vehicles are becoming more fuel efficient, so we're using less gas in our vehicles. So that's a good thing in the sense that we do want to drive less, get off of oil, but it directly deprives investment in our roads. So the system itself is broken. The problem is, is that no one wants to raise the gas tax. It's sort of a concrete tax for an abstract idea.
REHMJosh Mitchell, he is a staff writer for Dow Jones Newswires. Short break here. And, when we come back, your calls, your comments. I look forward to hearing from you.
REHMAnd welcome back. We're talking about infrastructure problems in this country, certainly brought to light by what has happened in Japan. And there, of course, they've constructed everything they thought would withstand earthquakes, but not a tsunami of the rage that Japan has experienced. I have four people with me: Stephen Flynn of the Center for National Policy, Dan Flanagan with the private-public infrastructure projects, Jack Basso of the American Association of State Highway and Transportation Officials and Josh Mitchell, a staff writer for Dow Jones magazine. We have many, many callers waiting. We'll try to get to you as quickly as possible. Josh, I want to come back to you because, if you were to raise a gas tax, that would only be for roads, would it not?
MITCHELLYeah, and there is a plan out there that, I think, would -- I think under the president's budget -- I could be wrong -- would start to open up the trust fund to other uses such as rail. But as of right now, it's transit and highways.
BASSOYeah, it is transit and highways currently. But the president's proposal that just came out with the budget calls for going into all areas of transportation infrastructure -- high-speed rail for intercity passenger rail, for other systems, freights. So it's a massive expansion. The issue is, where is the money coming from?
REHMAnd what about bridges?
FLYNNWell, and beyond. I mean, one of the most critical infrastructures we have in this country is schools. And many Americans don't realize, but we actually have a earthquake line that's running right down the New Madrid fault that runs right from the Southwest through Missouri. Memphis sits atop it. The last big earthquake was the early 1800s, but it's overdue. And the estimate is about 60 percent of Memphis will fall down with an 8.0 earthquake, and the first likely to go are schools because they are so old. And, if our children are in those schools at the same time, obviously, that would be just absolutely horrific. This is part of the challenge, is we've taken our infrastructure for granted. This was the treasure, the ingenuity, the courage of our forebears that bequeathed us this legacy.
FLYNNAnd we're quipping over a few pennies on taxes when we don't understand this is the underpinnings of modernity. This is how we live a modern life, and we have to invest in it. But we don't have to invest in the way it was before. We have an opportunity here to better compete in the world, to have a safer, more environmentally sustainable by investing in our infrastructure. But we have to be creative. And I think -- you know, applaud the efforts by -- I think some of our legislators say, let's find different ways of thinking about how to finance. But it should be a point of nobody's contention that, as a most advanced economy in the world, we need to invest, continually invest, in our infrastructure if we're going to prosper going forward.
REHMDan Flanagan, you're worried about the idea of using tax money on gasoline or anything else because you're not sure where that money is going to go.
FLANAGANWell, it is about process and efficiency and opening up the system to competition and new ideas. It happened -- just as a case in point, the Dulles Greenway, many, many years ago -- Maggie Bryant was the founder of that, and we were neighbors out in Virginia. And she asked me to meet with a fellow by the name of Ralph Stanley, who was their executive director. And I said, Ralph, how are we going to pay for this? And he held up a fast track that you put in your windshield. And it's the first one I had ever seen in this country, and that was 1989. And I took that into Sen. Moynihan, and I said, Pat, this is the future, monthly billings, et cetera, et cetera. And that was a privately constructed toll road. And, I think, now, today, we see people's acceptance of that.
FLANAGANIn Los Angeles, by the way, Diane, in the middle of the recession, 1998, the residents of Los Angeles County overwhelmingly voted for what was called Measure R. Half of sales tax increased for infrastructure, but it was projects. They listed the projects that would be done, and the public was very, very supportive.
MITCHELLYeah, I was going to hit on that point. I think one of the reasons why it's so hard to increase the gas tax is because -- like I said before the break -- is that you're raising a concrete tax on an abstract idea. I think when people go to the pump, they think they're just paying more in taxes, and it goes off to Washington for -- so that Congress can have more money to play with. I think that if -- that people have shown they're willing to spend more on transportation if they can see where the dollars are going. If there's a specific project that they can say, this is where my money is going toward, they're more willing to be in favor of it.
FLYNNBut this is where the bank is so important. Mayor Villaraigosa of L.A., with this approval by the voters to raise the sales tax to pay for this, wanted to, as the recession was hitting, to get -- borrow money to speed up the projects. They know they have a revenue stream. They're committed to the sales tax long-term. But the federal government doesn't lend money. It just gives it away. And so the mechanism by which a state can actually borrow money to support a specific infrastructure project -- in this case, it's got voter support -- that process is still broken. Now, this alone won't fix all our nation's infrastructure issues, but it's so important to have a conversation about how we can be creative. And we have local leaders who are trying to do that. Washington needs to be a little more responsive, it seems to me.
REHMBut, Jack Basso, don't you have a problem with competition? I mean, the bridge builders, the bridge repairers, the highway pothole repairers. In Constitution Avenue -- we are reading here in Washington D.C. -- is going to undergo a massive repair. Now, how about competition for that money?
BASSOWell, I think you raised exactly the point, Diane. The competition is severe. One of the reasons the competition is severe is a shortage of money. As I described, we invest about 40 percent of what we need it to be. So, therefore, you have all of those pieces of competition in there. And the way money is distributed -- now, the bulk of it is distributed from the federal government -- for example, for highways or transit and those sorts of things -- through formulas that Congress generates and puts them into categories, like bridge or, you know, mass transit, New Start, that sort of thing.
BASSOOne point I'd come back to that Steve made that I want to make clear, the federal government actually does lend money. This TIFIA program that Dan Flanagan mentioned is a loan, loan guarantee standby line of credit program, but it's a limited program. Again, you'll always come back to the same point. Somebody actually has to have money to pay for this after it's done. And that's not a limiting factor, but it's a reality.
REHMAll right. We've got lots of callers with questions. Let's open the phones, 800-433-8850. First, to Louisville, Ky. Good morning, Kirk. You're on the air.
KIRKGood morning. Thanks very much. You know, with 40 percent of trips within two miles of most people, a simple inexpensive solution seems to me that we should focus more on biking and walking, especially with the expense that we're bearing with children with obesity and so forth. The stress on our health care system is an unintended expense of this infrastructure crumbling. We don't have good bike routes. We don't have safe routes to schools. We don't even have the ability to get around with our own two legs. And I just wonder if there isn't a much simpler solution, that is, bicycling and walking and investing in those infrastructures that would bring about less dependency on foreign oil, more dollars going to the local economies and a much richer way of life in general.
REHMAll right, Kirk. And what you'd have to do is rearrange exactly how you construct towns, cities, where people work, where people live. And, to some extent, that's being done, isn't it, Josh?
MITCHELLYes. And, in fact, there are some cases where some highway trust fund money is used for some of these projects although the vast majority are not. I think the issue is -- I'll just make this point and turn it over to Jack. But I think the main issue is, even just to get our roads up to standard, we have to spend a lot more money than we are. So we can talk about these other projects. But there is, really, this issue of how do we even maintain what our current infrastructure is?
BASSOYeah, just to comment on that. Actually, the biking programs are quite substantial in the federal highway program -- most people don't know that. But there are several billions of dollars spent by the states on bikeways and facilities of that nature. Now, the other part of the caller's point, though, about livable, sustainable communities -- something we'd actually want to address -- and it takes investment. But there is another factor here that I should bring out. America is very urban in the East and West Coast. In the heartland, in the middle, it's very rural. And, yes, biking is an important thing. But I'll tell you what. You have to actually have the necessary road networks to move freight through there and so forth.
REHMIndeed. Here's an email from Michael. He says, "In two recent visits to Vienna and Zurich, it's clear the USA is falling way behind Europe on infrastructure investments. The quality of the infrastructure appears so much better as well. With the USA being the richest nation, how is it that we no longer have the money to pay for improved infrastructures?" Dan.
FLANAGANWell, as I said earlier, Diane, Europe and Canada and Australia have long ago discovered the idea of project finance and penciling out these projects. And, oftentimes, they have an infrastructure bank -- or in Canada's case, they call it PPP Canada, Public-Private Partnerships Canada. Here in the United States, that's why I think that national infrastructure bank is so, so important. I've been talking about this for 20 years, and along with TIFIA. The idea here is we need to inspire people to get creative about doing these kinds of projects. And there are roughly 12 major infrastructure funds now that are domicile to the United States. There's probably another 50 overseas. Pension funds all over the country have allocated maybe up to 5 percent of their funding for infrastructure investment purposes.
FLANAGANSo we are really coming -- I think we're making great leaps in this whole idea of new approaches based on project finance as the Europeans have been doing. They built a bridge on Millau Valley for $500 million. It's the highest, single suspension bridge in the world -- $500 million. Out in San Francisco, we're still -- what was supposed to be a $750 million rebuild of the San Francisco Bay Bridge is now over $7 billion, and nobody is in charge.
FLYNNI just think your listener has made a very good point in terms of the comparative side. We spent roughly a fraction of our -- of a single percent of GDP on infrastructure. In China, the number is close to 8 percent of GDP. We have to compete in this world, and infrastructure was a tremendous asset we had become (unintelligible) economy we have.
REHMStephen Flynn, he is president of the Center for National Policy. And you're listening to "The Diane Rehm Show." Jack Basso.
BASSOYeah, just to add to that, I think Steve hit it right on the head. Our investment level, as compared to GDP, is a fraction of what it is in China and Europe.
REHMBut what are we going to do about all this, gentlemen? I mean, I'm hearing the problem. I'm hearing there is no money out there that is ready to be used, and yet these roads, these bridges are crumbling. Who's taking the first steps? How quickly are we moving? Josh.
MITCHELLWell, the White House has spoken a lot about, we need to invest in infrastructure. They've gone halfway. They've talked about, let's spend more money in infrastructure. The president's budget had a $556 billion six-year plan to invest in roads and highways and bridges. The problem is no one has said yet how to pay for it, so you're not going to find too much leadership right now in Washington. I think one impact of that is states now might have to step up and start raising their own funding, whether it's through bond issues, whether it's through raising their...
REHMBut the states are broke, too.
MITCHELLWell, we might -- they might have to raise the state gas tax, so they wouldn't necessarily be adding on debt. But they might raise the state gas tax so that people are paying more in their states to have more transportation funding that way. But there might be less of a federal role now and more of states having to do their own things to come up with this money.
BASSOYeah, to that point, the states actually are stepping up. This is an interesting phenomenon. We have at least eight states that have raised their fuel taxes -- State of Washington by a massive amount, 13 cents a gallon, State of North Dakota for oil transportation. Now, they're stepping up to the plate. The problem is, you're right, Diane. They're broke right at the moment, but they recognize how critical this is. And the state of Maryland over here is, right now, discussing very seriously raising the transportation gas taxes for projects for the future.
REHMLong overdue. Steve Flynn.
FLYNNI think one of the key reasons why we're incapacitated is we have no grand vision about where we want to go and where we want to be. We simply think about it as maintaining something we've inherited...
FLYNN...instead of really -- we need to have a national focus or a contest or whatever it is that we can -- what does the future look like? The infrastructure we have today won't work for the kind of economy and quality of life we want for tomorrow. But we have to maintain that legacy infrastructure while we advance the vision of what the new infrastructure is. If we have a conversation that gives people a sense of vision and (word?) investment (word?) and the benefits for our environment, for our quality of life, for our safety, our competitiveness, I think people will be willing to invest. That's...
REHMAll right. To Cleveland, Ohio. Good morning, Andrew.
ANDREWGood morning, Diane. Good morning, everybody.
ANDREWMy concern is that the infrastructure argument seems to be kind of tipping into the same neighborhood as the alternative energy arguments. You know, after growing up in the '70s and '80s, it was always, you know, everybody is saying we need alternative energy. We need wind. We need solar. And then every group in captivity would come out with a very highly polished statement as to why those were inefficient, why this didn't work, and, you know, it would get shelled or back-burnered and, you know, just keeps coming up every few years. I'm feeling like the infrastructure isn't quite in that quagmire yet, but it -- the arguments for it are kind of sticking one foot in it.
REHMIt's aiming in that direction, Stephen?
FLYNNThere's little question that -- I think there are three problems. One, Americans don't have a sense that we know how to do this anymore. They've lost confidence about the how to do it. That is very expensive, and we don't do it very well. They don't think we can afford to pay it anymore. And they fundamentally think that the process of doing it is corrupt. And so they're not willing to see dollars going toward it. So those are huge barriers that I think are feeding this, but they're -- each are over -- it can be overcome by a broad vision on how we're going, really talking and be innovative about how to finance it and highlighting both the cost and risk of ignoring our infrastructure and the opportunity -- and that's the key for our competitiveness, safety and going forth.
REHMIs the $7 billion for the San Francisco Bay Bridge -- is that an example of...
FLYNNAbsolutely. We -- there's a regulatory morass that's involved with -- you have kind of projects where, for instance, in the port of Los Angeles...
REHMAnd the Big Dig in Boston.
FLYNNThe Big Dig is here at -- well, we can't do those right.
REHMStephen Flynn of the Center for National Policy. We've got to find a way out of this mess. And, hopefully, with the ideas you hear today, we'll take one step forward. Stay with us.
REHMAnd welcome back. We're talking about infrastructure in this country -- bridges, dams, roads, everything that has not been done to correct the flaws that are ultimately ending in a situation such as the one we had in Minneapolis when the I-35 bridge collapsed. Here's an email from Scott, who says, "I'd like to know how the current gas tax is being used. How is it that we are not able to make the repairs and construction that it was promised for?" Josh?
MITCHELLWell, I had said this, but I think it needs to really be hit home. The gas tax hasn't been raised since '93, so it hasn't camped up with inflation. The purchasing power is, I think, half of what it was. And so you also have Americans that are driving less and cars that are more fuel efficient. And, by the way, that's going to get much worse because there's a new mandate for fuel efficiency to go up by 35.5 miles a gallon by 2015 or 2016. So this is going to be an issue that gets worse and worse. What we've done...
REHMBut, you know, it's great that the mileage expectation is going up.
REHMBut the question is, should the taxes on gasoline go up along with it?
MITCHELLIn the short term, that would be the easiest way to raise more funding, but there is this issue of, what is our national goal? If we want to get off oil, if we want to drive less, we ultimately have to make sure our policies are working in conjunction with each other. One point about the gas tax, what we've done in the past few years is Congress has had to borrow from the general funds to shore up the Highway Trust Fund because the gas tax just hasn't been able to meet our needs. But, right now, House -- the Republicans that just took control of the House have said they don't want to do that anymore. They don't want to add anymore debt when it comes to the Highway Trust Fund. And so there's going to be a crisis upon us in the next two years.
MITCHELLThe Highway Trust Fund is solvent for another two years, but then after that, funding is going to fall off the cliff. So this is a question we are going to have to confront.
BASSOYeah, and I think, following up on Josh's point, two things. One, that is, the crisis -- let me give you an idea. Two years from now, we'll be investing about 20 percent of what we do in highways today from a federal level 'cause that's all the trust fund can pay for that year. Beyond that, the investment will stay down by about 25 percent for the subsequent three or four years. So we're taking the Titanic sinking and rearranging the deck chairs. We'll do something about that. On the question of gas tax, we clearly, with the goals we have, for example, for environmental conditions and so forth, we need to find a new system. And there are systems like collecting on vehicle mile use versus gas tax that will come online in time, so...
REHMHere's an interesting call in Fort Worth, Texas. Good morning, Susan. You're on the air.
SUSANGood morning. Well, I'll tell you how our wonderful governor down here in Texas has handled some of this, is he's -- a lot of toll roads and some road building. But, even though there was some American Texas companies involved, these were awarded to a company from Spain. And I know they've done this in other states -- this same company -- but they have, like, a 60-year lease on this. And -- which means that nobody is going to benefit. In 60 years, it's going to have to be redone again. I don't understand what that -- why?
FLYNNWell, it's -- again, governors are trying to figure out how to bankroll the transportation needs...
FLYNN…Texas' growing population, particularly in the Houston area. So this is an effort to get there. The challenge here is that we need to figure out how we invest in infrastructure in a sustainable way. And that includes maintenance of it going forward, and that's being incorporated in the requirements. In many cases, that is, that the responsibility of the leaser is also to maintain the infrastructure.
REHMExactly. To Leah in Miami, Fla. Good morning, you're on the air.
LEAHHi. Good morning. My comment is that normally I'm pretty wary of the idea of privatizing something. But, in this case, you know, as a bicycle advocate and as someone who lives in a very car-centric city, I do wonder if our transportation infrastructure is tacitly subsidizing the use of motor vehicles, which is, in my opinion, a private decision and only one form of many types of transportation. Thank you. That's my comment.
MITCHELLI'm not sure what exactly the question is.
REHMWell, she's saying that what we're doing -- go ahead, Steve.
FLYNNWell, I think it's -- there is a issue about passenger vehicles. One thing to remember is the extent to which freight moves on our roads as well. And let me give a concrete example. The George Washington Bridge, which is the major Hudson River crossing between New Jersey and New York City, moves 330,000 vehicles a day, which is the busiest in the world. But 35,000 of those are trucks, who do such important things as -- I mean, that only has one day of food. Basically, the surrounding area comes in like locusts and consumes it. And, every night, this major artery, which is coming across the George Washington Bridge, is a fleet of trucks that go in and have to resupply that city.
REHMOne day of food.
FLYNNOne day. We're talking an 80-year-old bridge, a suspension bridge where the cables have never been replaced. And it's not like you can put another bridge up in a hurry. So maintaining assets like that -- now, that's maintained by the Port Authority of New York and New Jersey with a toll. But the reality is that's part of our challenge, so it's not just a passenger versus vehicles versus bicycles. What makes our economy work is the movement of things like freight...
FLYNN...especially in urban areas.
REHMOkay. But let me ask you this. Is the toll money that's collected sufficient to maintain that bridge so it's 100 percent safe?
FLYNNIt is not right now. I mean...
FLYNN...the bridge is safe. Well, basically, the Port Authority of New York and New Jersey is unique entity. It has been self-sustaining based on its tolls and fees for its whole history back to the 1920s, with help during the Great Depression. But, today, mainly with the loss of the World Trade Center site, which the Port Authority owns -- the loss of those rents has put a $5 billion hole in the Port Authority's budget. And it, now, can no longer keep pace with this aging infrastructure unless there's another revenue stream. But this is a global city that the entire country depends upon. Infrastructure was key to making that way, and we can't afford as a country to have it fall apart.
FLYNNSo that's the message we ought to keep coming back to, but we also need to build it differently for the kinds of needs that are out there. We can do that. We just have to be willing to do it.
REHMLet me give you this email from Tee, who says, "I'm concerned if we allow our public roads to become privatized that the average citizen will be tolled to death. It may be politically easier to let private companies get control of public infrastructure and maintain it on a for-profit basis, but it will ultimately cost us more, not less. And the burden will fall harder on those who can least afford it." Dan Flanagan.
FLANAGANWell, two points, I think. One is most of the new roads that are being built today are really congestion breakers. They're in urban areas, and there's a lot of good reasons for that to happen, to have that new road built. And it's been very clear that many of these are in the suburbs and whatnot. And the suburban voters, if you will, they're willing to pay for that service, if you will. And so, when you have the formula money that Josh has been talking about, in my opinion, that allows more of that grant money, if you would, as it were to go to the inner city or the rural areas where they would never be able to find a revenue stream.
FLANAGANSo I do think we have a mix and match here where we want to put our revenues, choices where there is a willingness to pay. And -- but then you have to have efficiencies in the system, project finance, long-term concessions with the maintenance requirements and so forth.
REHMYou know, I'm old enough to know that it used to be the government was in charge of maintaining schools. The government was in charge of maintaining playgrounds. The government was in charge of maintaining roads, highways. What's happened, Jack Basso?
BASSOWell, I think what's -- particularly in transportation, infrastructure, that's absolutely true, Diane. If you look at Europe, though, many years ago, they started the process of public-private partnerships to develop their major toll networks. They build to a different standard. They build to a much more long-term standard of payment and so forth and invest more in it. In this country, we've had a tradition of 99 percent of the infrastructure being public. Today -- and to the question that came up about private entities coming in -- they aren't just turned loose on these facilities. They have very rigorous standards they have to meet. They have confines on how much they can charge for those tolls. Those leases are not just given away -- believe me -- and that's a very important point.
REHMBut, on the other hand, we really do have the example of the Big Dig in Boston and the over cost and the failures and the repairs that have had to be made, even since it was built.
FLANAGANWell, that was not a public-private partnership.
FLANAGANThat was strictly a 100 percent government program, if you will. And I think Jack's right on point. When a proposal goes out, it's competitively bid. And the Europeans have been very effective here in United States because they have a history of doing those. Hopefully, American firms are going to move forward now and become more aggressive in bidding on these kind of projects.
REHMDo you think they will?
FLYNNWell, I think they can. It's amazing. The expertise for building the world's best infrastructure is still located here in the U.S. and also often in the U.K. You can go in to major architectural engineering firms, offices in New York City, and you'll see global projects in China or in Singapore, in Europe. We know how to do this. But we are so incapacitated, ourselves here in the United States, that many of these firms are not doing it here. It's just too costly, disruptive and a pain in the neck.
REHMAll right. To Margit (sp?) in Durham, N.C. Good morning. You're on the air.
MARGITHello. This is Margit. I'm European American. And as someone said before, that he went to Zurich and Vienna, that infrastructure is a lot better in Europe. I completely concur with that. One of the reasons, I think, is that in Europe, as we all know, we pay a lot more taxes than they do here. But we do it happily. I never had any problems in paying my taxes because I could see what we got in return.
MARGITWe got good bridges. We got good tunnels, the (unintelligible) tunnel, good -- great bridges, a whole good infrastructure and, of course, the high-speed rail. The high-speed rail, especially in Spain at this moment, you can get from Barcelona to Madrid in, like, two-and-a-half hours -- under three hours, which by car, it would take eight. And by plane, the effect of flying time would be two, but everything else on top of that would take you a lot more. Because the high-speed rail train there goes, like, 350 K per hour. When they're talking here about high-speed rail, from what I have heard here in the Triangle is it won't go over 75, 150 K per hour if...
REHMMargit, I thank you for your call and those words of experience. You're listening to "The Diane Rehm Show." Is there something to what Margit says about, because Europeans see the good results of paying their taxes, they are happy to pay their taxes? Josh.
MITCHELLYeah, I want to make several points to what she said. Yes. I think that the lack of progress on this issue in the United States reflects a lack of confidence in how Washington is spending its money with earmarks when it comes to transportation. I think, also, when it comes to high-speed rail, it needs to be said, this administration -- the Obama administration has talked a lot about high-speed rail. It set aside funding for high-speed rail.
REHMTried and then Florida said, no, thank you.
MITCHELLRight. Right. Well, there's a little -- the issues are different here in the United States than in Europe. High-speed rail would probably only really work in certain areas of the country -- the Northeast, maybe in California. You have to keep in mind that oil prices and gas prices are a lot lower here than in Europe. So, therefore, rail is going to have to compete against airfare, against driving, and so -- and you also have to build it in population centers where it would make sense for people to actually take the train. So Florida, there was, you know, some skepticism of that project, and there were some concerns about what the ultimate cost would be.
REHMAll right. Jack, what's going to get us off the dime here?
BASSOI think the only thing that'll get us off the dime is when we can convince the public that we will actually be good stewards of their assets and deliver what they're asking for. We know, for example, in California, local option sales taxes Dan mentioned -- these are voted in -- what, it's 87 percent or so, Dan, on the re-up on those things because people know exactly what they're getting and why. And on the gas tax question, I ask in talks I give around the country, what do you think you pay in federal gas tax if you drive 12,000 miles a year? I get answers like $2,000, $3,000. It's $160 a year you pay for everything we're putting down out here. That's a message somehow we've got to communicate much better than what we're doing and connect it to a result that the public wants.
FLANAGANWell, I'd like to come back to Measure R in Los Angeles. The challenge there was that the public had been very positive because they saw the projects being listed. But the political leadership and the MTA felt that if they didn't deliver on these projects in an expedited manner, there would be this loss of confidence once again. So they launched what's called, 30 years, get it done in 10, and are using the public-private partnership method to do that. In other words, build it now, time value of money, and we'll be paying for it over the 30, 40 years of this new sales tax that everyone agreed to.
FLANAGANSo there's this confidence that was built into the system, that we better build this properly and quickly so that the public will feel that their money is being well spent. I'd love to see Americans start looking at these projects and say, now, that was the best of class project. They really got that right. Let's do more of those.
FLYNNI just want to bring us back full circle where we started with the case of Japan and that is part of what needs to mobilize us is that there's a huge cost in human terms, in economic terms of neglecting our infrastructure. Natural disasters will happen. Man-made disasters will happen. We have got to get this right.
REHMAnd do you think we will?
FLYNNIt takes presidential leadership. The president, I think, has weighted on this. This needs to be, though, the focus of 2012, one of the top priorities of the next election cycle.
REHMStephen Flynn of the Center for National Policy. He's author of "America the Vulnerable" and "The Edge of Disaster." Dan Flanagan is with the private-public infrastructure projects. Jack Basso is with the American Association of State Highway and Transportation Officials. Josh Mitchell is a staff writer for Dow Jones Newswires. Thank you all so much.
REHMAnd thanks for listening. I'm Diane Rehm.
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