Today Rep. Peter DeFazio (D-OR) responded to the newly released report from the American Society of Civil Engineers (ASCE) that assigned our national transportation infrastructure system a near-failing "D+' grade. Without increased investment, the report concluded that over the next seven years businesses would lose $1.2 trillion in sales and families would lose $611 billion due to transportation delays, blackouts and brownouts, and water main breaks. Our rapidly deteriorating infrastructure system would cost American families an average of $3100 a year in disposable personal income by 2020.
"Over the next seven years, we have a projected deficit of about $1.6 trillion in our infrastructure system if nothing changes. That's as much money as the unnecessary war in Iraq cost us. According to ASCE, if we don't address this investment gap in our infrastructure, by 2020 our economy will lose $1 trillion in business sales, $3.1 trillion in Gross Domestic Product, and 3.5 million jobs will be lost. If we want to maintain economic growth and international competitiveness, we are going to have to do a lot better than a near-failing "D+'," said DeFazio.
The ASCE report comes on the heels of a report from the Congressional Budget Office, which announced that the Highway Trust Fund (HTF) will face a small balance by the end of fiscal year 2014, and a --$7.1 billion shortfall in fiscal year 2015. Since the HTF cannot deficit spend, the impact of the shortfall would be dramatic and could be felt much sooner.
If the HTF reaches this shortfall, Congress would be forced to choose between borrowing money to continue this vital investment, finding new revenue to increase investment, or cutting off funding and jeopardizing millions of Americans jobs, our economic competitiveness, and safety.
"If we don't do something soon, the Highway Trust Fund will drop to near zero some time in 2014. Transportation investment will drop from today's $50 billion of annual investment, which is not sufficient to even deal with the deterioration of our system, let alone build out a more efficient 21st century system. That's hundreds of thousands of lost jobs. That's accelerated deterioration of the system. This prospect is unacceptable. We must find a long-term, sustainable solution," said DeFazio.
DeFazio has proposed an idea that would fully fund the HTF and allow significant transportation investment that would begin to address our critical needs. His plan calls for a "double indexation" of the gas tax to both to fleet fuel economy (CAFE standards) and construction cost inflation. By indexing the gas tax to these measures, the HTF would not lose value when construction costs rise or when new CAFE standards kick in that require new cars sold in America to be more fuel-efficient. Double indexation could generate up to an estimated $177 billion in additional revenue over the next ten years.
DeFazio's plan would also take advantage of the record low interest rates by securing short-term Treasury bonds paid back over 10-years using the revenue from the indexed portion of the gas tax. This would address the HTF's eminent exhaustion in 2015, put millions of people back to work, and quickly begin to meaningfully address our most urgent transportation infrastructure needs.
DeFazio pitched the idea at last week's caucus meeting between President Obama and House Democrats, and is in ongoing communications with the White House.