Obama's Infrastructure Dream
Ever since the global financial crisis hit, discussions about the construction of infrastructure in the U.S. have been non-stop. Recently Obama made an impassioned speech in which he stressed the importance of infrastructure in attracting foreign investment and revitalizing the U.S. economy. He stated that the U.S. government encourages both the investment of private capital and the use of methods such as bond issuing by local governments to finance this construction.
The antiquity of U.S. infrastructure is a universally accepted fact. One point of view is that, at a time when the economy is sluggish and the costs of manpower and materials are low, large-scale construction of infrastructure would most certainly pull the economy out of recession, thereby saving the world economy.
Indeed, the highway system of the U.S. is a relic of the ‘50s, when Eisenhower was president, and the U.S. has basically not constructed any important infrastructure since the ‘70s. The U.S. railway system was once the world's best, but it is now ranked 18th in world economy forums. The U.S. air transport system is now ranked 30th in the world, behind Malaysia and Panama.*
This obsolete infrastructure has brought about massive losses. A research institute estimated that in 2010 traffic jams caused losses of around $101 billion. The dilapidated state of road infrastructure caused additional damages to American cars at a cost of as high as $97 billion annually. The water supply system is another example. Data shows that the U.S. water supply system loses 7 billion gallons of water a day due to leakage. A recent report by a research institute suggests that the U.S. must invest an extra $1.1 trillion in infrastructure before 2020 or face a horrific economic recession.
Contrasting with America's aging infrastructure is its rapidly growing population. In 1950, the population of the U.S. was approximately 150 million. Now it is more than 300 million and is expected to reach 400 million by 2030. Whether by repairing the existing infrastructure or rebuilding from scratch, the U.S. has reached the point where it must solve the problem.
Obama has been emphasizing the importance of infrastructure construction ever since he entered the White House. Data from the White House shows that, since Obama's inauguration in early 2009, the U.S. has repaired and renewed more than 560,000 kilometers of road, 9,656 kilometers of railroad and 20,000 bridges, but the mission of renewing America's aged infrastructure is still a difficult one.*
What annoys Obama is that, although the "Infrastructure Dream" has met with approval from many scholars, it has been making little progress in Congress, where there is a conflict of interest. In the near-$800 billion stimulus plan of 2009, no more than $10 billion were allocated for the construction of infrastructure.** In 2011, the Obama administration's Jobs Act, which proposed a sum of $60 billion to be allocated for infrastructure, was vetoed by the Senate. In the proposal, $50 billion was to be used for the construction and maintenance of infrastructure, while the remaining $10 billion was to be used to set up an infrastructure bank, providing funds for important projects.
This time, Obama has once again proposed that Congress allocate $10 billion to set up an infrastructure bank and has started to encourage the involvement of private capital. Obama optimistically estimates that the bank can obtain up to $200 billion of private capital to contribute to the construction of infrastructure.
But, facing uncooperative Republicans in Congress, Obama's wish to realize the U.S.’ "Infrastructure Dream" is not easy at all.
*Editor’s Note: These numbers could not be verified.
**Editor’s Note: The American Recovery and Reinvestment Act of 2009 allotted $105.3 billion total to infrastructure investment, not all of which was to be put toward new construction projects. It is not clear which portion of the bill the author is referencing here.
The antiquity of U.S. infrastructure is a universally accepted fact. One point of view is that, at a time when the economy is sluggish and the costs of manpower and materials are low, large-scale construction of infrastructure would most certainly pull the economy out of recession, thereby saving the world economy.
Indeed, the highway system of the U.S. is a relic of the ‘50s, when Eisenhower was president, and the U.S. has basically not constructed any important infrastructure since the ‘70s. The U.S. railway system was once the world's best, but it is now ranked 18th in world economy forums. The U.S. air transport system is now ranked 30th in the world, behind Malaysia and Panama.*
This obsolete infrastructure has brought about massive losses. A research institute estimated that in 2010 traffic jams caused losses of around $101 billion. The dilapidated state of road infrastructure caused additional damages to American cars at a cost of as high as $97 billion annually. The water supply system is another example. Data shows that the U.S. water supply system loses 7 billion gallons of water a day due to leakage. A recent report by a research institute suggests that the U.S. must invest an extra $1.1 trillion in infrastructure before 2020 or face a horrific economic recession.
Contrasting with America's aging infrastructure is its rapidly growing population. In 1950, the population of the U.S. was approximately 150 million. Now it is more than 300 million and is expected to reach 400 million by 2030. Whether by repairing the existing infrastructure or rebuilding from scratch, the U.S. has reached the point where it must solve the problem.
Obama has been emphasizing the importance of infrastructure construction ever since he entered the White House. Data from the White House shows that, since Obama's inauguration in early 2009, the U.S. has repaired and renewed more than 560,000 kilometers of road, 9,656 kilometers of railroad and 20,000 bridges, but the mission of renewing America's aged infrastructure is still a difficult one.*
What annoys Obama is that, although the "Infrastructure Dream" has met with approval from many scholars, it has been making little progress in Congress, where there is a conflict of interest. In the near-$800 billion stimulus plan of 2009, no more than $10 billion were allocated for the construction of infrastructure.** In 2011, the Obama administration's Jobs Act, which proposed a sum of $60 billion to be allocated for infrastructure, was vetoed by the Senate. In the proposal, $50 billion was to be used for the construction and maintenance of infrastructure, while the remaining $10 billion was to be used to set up an infrastructure bank, providing funds for important projects.
This time, Obama has once again proposed that Congress allocate $10 billion to set up an infrastructure bank and has started to encourage the involvement of private capital. Obama optimistically estimates that the bank can obtain up to $200 billion of private capital to contribute to the construction of infrastructure.
But, facing uncooperative Republicans in Congress, Obama's wish to realize the U.S.’ "Infrastructure Dream" is not easy at all.
*Editor’s Note: These numbers could not be verified.
**Editor’s Note: The American Recovery and Reinvestment Act of 2009 allotted $105.3 billion total to infrastructure investment, not all of which was to be put toward new construction projects. It is not clear which portion of the bill the author is referencing here.