The Opportunity Of Investing In America's infrastructure
CONTRIBUTOR
America has a big opportunity that could create millions of jobs and accelerate GDP growth. It is investing in rebuilding the countries infrastucvutree which has been crumbling for years. Today’s infrastructure is not only inefficient it costs us more than $200 billion a year in emergency costs. Here is a brief list of the problems/opportunities
HIGHWAYS, BRIDGES & WATERWAYSThe collapse of the I-35 Bridge in Minnesota and the I-5 Bridge in the State of Washington are subtle reminders of our highway and bridge problems. According to the Federal Highway Administration’s Bridge Inventory, 146,633 out of 604,474 bridges in the United States are structurally deficient or functionally obsolete, amounting to a whopping 24.3 percent of all bridges in the country.The American Society of Engineers (ASCE) published a study that makes the point that underinvestment of the system will cost the households and businesses $130 billion per year in emergency repairs, vehicle operating costs, travel delays
WATER & SEWER SYSTEMS
Despite how critical drinking water and sanitation are for public health, many of these underground systems have reached or exceeded their operational life and need to be repaired or replaced. According to the Center for American Progress, there are 240,000 water main breaks per year, and “as much as 20 to 25% of the treated water that enter the distribution system is lost due to leakage.”
After clean water is used by consumers and businesses it must be cleaned and treated as wastewater in 14,780 waste water treatment plants and discharged through 800,000 miles of sewer pipes. The capacity of this system has been exceeded and “every year there are 75,000 over flows in the U.S., discharging approximately 900 billion gallons of untreated sewage into lakes, rivers, and streams.” A report by the American Water Works Association estimates it will take $1 trillion dollars to repair or replace the drinking water system over 25 years. Drinking water emergency repairs – $3 billion per year.
THE U.S. ELECTRICAL GRID
Just about everyone knows that the U.S. has an electrical grid problem because of the media coverage of blackouts that seem to happen with regularity. But the reasons for the blackouts are complicated and the solutions are expensive. The primary problem is that electrical demand has exceeded the building of transmission lines by 25% per year, and the demand is expected to double over the next 20 years.
Another problem is the original design. Large sections of the grid are tied together by electrical inter locks to protect the equipment. If one part of the system breaks or is overloaded, it will begin shutting itself down to protect the rest of the grid. This is called a “cascading failure” because it progresses through the system like dominoes falling. A good example was the 2003 North East blackout which shut down electricity to 10 million people in Ontario and 45 million people in the U.S. (most of the N.E. region of the U.S.)
The answer is to upgrade and replace the old analog grid with a digital “smart and self healing grid” by building microprocessors would be build into every switch, circuit breaker, transformer, and other components. The power outages are costing us $49 billion a year
At a time when state, county, and cities are cutting their budgets; the EPA is issuing fines, which does not help the problems. The only answer for the moment is for state, county and city governments to raise user fees and service rates during a time when the middle class is still struggling to get traction coming out of the Great Recession.
The cost of doing nothing is around $272 billion a year in unbudgeted emergency costs. The total cost to upgrade all of our infrastructure was estimated at $3 trillion in 2012 and $3.6 trillion in 2013, so every year we do nothing the total cost increases.
Repairing or replacing our infrastructure has the greatest multiplier effect, the most job creation, and the most economic impact compared to other types of spending. According to Moody’s every dollar we spend on infrastructure boosts GDP by $1.59.
When the economy went off the cliff in January 2008, the hardliners in both the U.S. and Europe promoted “austerity “as the solution. It was assumed that if we cut back on our debts somehow the economy would begin growing our way out of the Great Recession. The hardliners won out and countries began to cut their budgets, businesses laid off workers, and consumers reduced both their debts and consumption. As the economy returned to low growth, businesses did not hire, banks did not loan, unemployment exceeded 7%, and there was a huge reduction in consumption (which is 70% of our economy).The austerity approach simply prolonged the recession and money for infrastructure problems was low on the list of priorities.
I don’t think we are ever going to get out of the lingering effects of the recession by cutting spending, accepting 2% GDP growth, and accepting job creation of 150,000 jobs per month. We are going to have to grow our way out of this problem if we are to get back the 6 million manufacturing jobs lost since 2000.
Investing in infrastructure is not just another government expense, it is a public investment with an excellent payback like the interstate highway investment in the 1950s. Dan Dimmicco, Chairman Emeritus of Nucor, says, “I know that Americans are worried about the national debt. I know they worry about government waste. But infrastructure is not waste. In the context of competing globally, the supposed costs are quickly overshadowed by the benefits. The investment is going to pay off not just 5 to 19 years from now, but 30 or 40 years from now as well.”
The following charts shows that an investment of $415 billion could create more than 10 million jobs.
America has a big opportunity that could create millions of jobs and accelerate GDP growth. It is investing in rebuilding the countries infrastucvutree which has been crumbling for years. Today’s infrastructure is not only inefficient it costs us more than $200 billion a year in emergency costs. Here is a brief list of the problems/opportunities
HIGHWAYS, BRIDGES & WATERWAYSThe collapse of the I-35 Bridge in Minnesota and the I-5 Bridge in the State of Washington are subtle reminders of our highway and bridge problems. According to the Federal Highway Administration’s Bridge Inventory, 146,633 out of 604,474 bridges in the United States are structurally deficient or functionally obsolete, amounting to a whopping 24.3 percent of all bridges in the country.The American Society of Engineers (ASCE) published a study that makes the point that underinvestment of the system will cost the households and businesses $130 billion per year in emergency repairs, vehicle operating costs, travel delays
WATER & SEWER SYSTEMS
Despite how critical drinking water and sanitation are for public health, many of these underground systems have reached or exceeded their operational life and need to be repaired or replaced. According to the Center for American Progress, there are 240,000 water main breaks per year, and “as much as 20 to 25% of the treated water that enter the distribution system is lost due to leakage.”
After clean water is used by consumers and businesses it must be cleaned and treated as wastewater in 14,780 waste water treatment plants and discharged through 800,000 miles of sewer pipes. The capacity of this system has been exceeded and “every year there are 75,000 over flows in the U.S., discharging approximately 900 billion gallons of untreated sewage into lakes, rivers, and streams.” A report by the American Water Works Association estimates it will take $1 trillion dollars to repair or replace the drinking water system over 25 years. Drinking water emergency repairs – $3 billion per year.
THE U.S. ELECTRICAL GRID
Just about everyone knows that the U.S. has an electrical grid problem because of the media coverage of blackouts that seem to happen with regularity. But the reasons for the blackouts are complicated and the solutions are expensive. The primary problem is that electrical demand has exceeded the building of transmission lines by 25% per year, and the demand is expected to double over the next 20 years.
Another problem is the original design. Large sections of the grid are tied together by electrical inter locks to protect the equipment. If one part of the system breaks or is overloaded, it will begin shutting itself down to protect the rest of the grid. This is called a “cascading failure” because it progresses through the system like dominoes falling. A good example was the 2003 North East blackout which shut down electricity to 10 million people in Ontario and 45 million people in the U.S. (most of the N.E. region of the U.S.)
The answer is to upgrade and replace the old analog grid with a digital “smart and self healing grid” by building microprocessors would be build into every switch, circuit breaker, transformer, and other components. The power outages are costing us $49 billion a year
At a time when state, county, and cities are cutting their budgets; the EPA is issuing fines, which does not help the problems. The only answer for the moment is for state, county and city governments to raise user fees and service rates during a time when the middle class is still struggling to get traction coming out of the Great Recession.
The cost of doing nothing is around $272 billion a year in unbudgeted emergency costs. The total cost to upgrade all of our infrastructure was estimated at $3 trillion in 2012 and $3.6 trillion in 2013, so every year we do nothing the total cost increases.
Repairing or replacing our infrastructure has the greatest multiplier effect, the most job creation, and the most economic impact compared to other types of spending. According to Moody’s every dollar we spend on infrastructure boosts GDP by $1.59.
When the economy went off the cliff in January 2008, the hardliners in both the U.S. and Europe promoted “austerity “as the solution. It was assumed that if we cut back on our debts somehow the economy would begin growing our way out of the Great Recession. The hardliners won out and countries began to cut their budgets, businesses laid off workers, and consumers reduced both their debts and consumption. As the economy returned to low growth, businesses did not hire, banks did not loan, unemployment exceeded 7%, and there was a huge reduction in consumption (which is 70% of our economy).The austerity approach simply prolonged the recession and money for infrastructure problems was low on the list of priorities.
I don’t think we are ever going to get out of the lingering effects of the recession by cutting spending, accepting 2% GDP growth, and accepting job creation of 150,000 jobs per month. We are going to have to grow our way out of this problem if we are to get back the 6 million manufacturing jobs lost since 2000.
Investing in infrastructure is not just another government expense, it is a public investment with an excellent payback like the interstate highway investment in the 1950s. Dan Dimmicco, Chairman Emeritus of Nucor, says, “I know that Americans are worried about the national debt. I know they worry about government waste. But infrastructure is not waste. In the context of competing globally, the supposed costs are quickly overshadowed by the benefits. The investment is going to pay off not just 5 to 19 years from now, but 30 or 40 years from now as well.”
The following charts shows that an investment of $415 billion could create more than 10 million jobs.
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