U.S. Infrastructure Woes: A Roadblock To Growth

By Jason Lange

(Reuters) - Long famous for its top-notch highways and passion for cars, the United States is letting bridges rust as traffic chokes overburdened roads, threatening a pillar of its economic strength.

A prime example of this neglect is the Brent Spence Bridge over the Ohio River. It worked well when it opened in 1963. Now it handles twice the traffic it was designed to support. Gridlock often stretches for a mile beneath a thick haze of smog.

"As you're coming across the bridge into Cincinnati you can tell when traffic has slowed because you can see the cloud," said Margaret Drury, an engineer at United Parcel Service.

UPS (UPS.N) trucks avoid the bridge as much as possible but that adds time to its routes, pushing up costs, Drury said.

Two interstate highways come together at the river crossing, with a UPS distribution centre to the north and the company's global air shipping hub to the south.

The bottleneck is just one example of the decline of American infrastructure that is already hurting the economy. The trend shows little sign of being reversed.

The United States has fallen sharply in the World Economic Forum's ranking of national infrastructure systems. In the forum's 2007-2008 report, American infrastructure was ranked 6th best in the world.

The 2011-2012 report due in September will show America at No. 16, with South Korea overtaking the United States during the last year, according to a copy of the rankings obtained by Reuters.

The quality of American roads is about on par with those of Malaysia. They lag Hong Kong, whose infrastructure tops the overall list.


HEADWINDS

It's not just roads and bridges. The country's freight rail network and ports also strain to handle demand.

American miners can pay four times what their Australian counterparts do to get coal to port and loaded on a ship, said Jonathan Turnbull, a managing director at investment bank Lazard's infrastructure group in New York.

That makes it harder to compete in the lucrative Chinese market and highlights the long-term challenge America faces in boosting exports. The United States also lags Europe and many developing nations in measures of cellphone penetration.

"It's like we're trying to grow this country's economy in a headwind," said Turnbull.

Weak transport infrastructure alone will shave 0.2 percentage points off economic growth this year, said Steven Landau, a researcher in Boston at the Economic Development Research Group.

America spends roughly 2 percent of GDP on infrastructure, about half what it did 50 years ago, according to a U.S. government report from October. Europe spends around 5 percent and China 9 percent.

Because American spending is falling, the drag on growth will grow to 1.3 percentage points in 2020, Landau said.

Washington's new taste for fiscal austerity -- as well as the nation's rising health care and pension bills -- make it unlikely government will come to the rescue any time soon.


NO APPETITE

Lawmakers are currently discussing a bill to fund highway and rail spending over the next few years.

"It's hard. There's not an appetite to increase the funding," said a Senate aide. Some Republican lawmakers are aiming to cut transportation spending.

Even a proposed infrastructure bank that would marshal private money into big projects would amount to just a fraction of the funds needed to keep the economy humming, the aide said.

At the Ohio River, engineers are working on a project to build a new crossing that would replace the Brent Spence Bridge but don't have funding for construction, said Stefan Spinosa, an engineer with the Ohio Department of Transportation.

The bridge's emergency lanes were painted over in the 1980s to make more room for traffic. In June, a man fell to his death after he ran out of gas and was hit by a car while pushing his Camaro over the bridge.

President Barack Obama hopes an infrastructure push could create jobs and help him get re-elected next year.

"America used to have the best stuff -- best roads, best airports, best seaports," he said on Thursday. "We're slipping behind."



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Sylvie

Too much money spent on socialist welfare handouts (unearned entitlements) plus government waste. Too little left over to keep the economic machinery and infra-structure in good condition. The chickens are now coming home to roost, and the liberal turkeys that we elect still push for more.

August 17 2011 at 5:48 AM Report abuse rate up rate down Reply
Hello Bob

Until the United States gets its priorities right, our path to perdition will continue to be paved with wasted tax dollars and interest on Chinese owned US bonds. Dwight D. Eisenhower was so right to beware of the military/industrial complex. Sure General Dynamics, Locheed Martin, Grumman and their ilk provide employment to millions of workers, but of what use. For example, a cruise missle costs the government about 1,000,000 or so but after its first use it is of no value and the government has to send the enemy millions more to rebuild what we destroyed. Included in that misery is the fact that the government is paying a hefty premium over actual mill costs that goes into the pockets of non productive big shots. Many businesses have transitioned from unneeded production to something the nation truly needs and is worthwhile. Hundreds of billions if not trillions of dollars could be transitioned into life bettering, income producing ventures and we wouldn't have to kill or maim thousands of men or women to be successful.

August 17 2011 at 5:14 AM Report abuse +2 rate up rate down Reply
Steve

Well it's a good thing that Obama, the kooks at the EPA and the Dem's in Congress are driving the price of oil up and spending massive subsidies on worhtless technology like solar and wind (I know it's worthless because people aren't buying it...see that's how capitalism works), that will help keep cars off the road since we are losing jobs due to his inane policies and Pollyannish view of the world...and since we have less people driving evil gas powered cars to obviously jobs created by evil money hungry capitalists the infrastructure is being protected. See it all worked out...didn't it? Fire this clown in 2012

August 17 2011 at 2:27 AM Report abuse -3 rate up rate down Reply
wgbittner

Would you like to live where your tax dollars are building new infrastructure, schools, hospitals, roads, water and sewage plants, power plants....well move to Afghanistan, under the Obama socialist redistribution of wealth program we are doing it there and many more countries......Welcome to the United Socialist America.

August 17 2011 at 2:26 AM Report abuse -4 rate up rate down Reply
mamatiger919

This is the result of years of neglect and greed The Republicans are trying to turn this country into a third world nation. We cannot cut our way into a great nation. We can only build ourselves into a great nation. It takes money to rebuild the roads and bridges.

August 17 2011 at 2:08 AM Report abuse +1 rate up rate down Reply
jmgair

OH the irony ! This article clearly points out the downside of all of this infrastructure spending, you know the kind Obama wants to double down on. The only difference really is that the president just cannot see the obvious negative effects on growth. But do not worry America, Obama said today that he has THE PLAN for an economic fix, job growth, high wages for everyone, defecit lowering and prosper for many. Only thing is he will not reveal THE PLAN until after his vacation sometime in September ? What, is it so dynamically good that we just couldn't handle it till late September or are you just trying to see how your words effect the markets this week ??

August 17 2011 at 1:58 AM Report abuse -2 rate up rate down Reply
knezrad

The problem is that the infrastructural talent is NOT un-, nor underemployed, and it is not so easy to go from home construction to railway construction bridge repairs or highway building as the president's advisors seem to think.
However, I support the idea of an infrastructure bank, applicable to it and to payment for mass transit, funding to come from sales of the REVERSE of already extant signage on the highways of America. This signage would be on the BACK side of signs saying at the next exit are roads going to X city or Y town, or what amenities might be founnd there. To administer it states could use existing turnpike commissions, bridge commissions etc. for the manpower of vending and calculating revenues, and the need for ad companies to put up those concrete and metal excrescences off road will be much lessened. This would provide a revolving line of income not a momentary surge and pay for timely repairs. A sliding scale of fees allocation could be applied due to what percentage of Federal money is used for upkeep, from say a 65% to county, 25% to state, 5% to feds and 5% to whosever land the easement is across for a county road, to 65% Feds, 25% state, 5% county 5% owner under easement for Interstate highways. And private signage companies would be putting the stuff up just as now.
Sincerely, Daniel I. Radakovich

August 17 2011 at 1:21 AM Report abuse rate up rate down Reply
Let's go Riding

Vote for some more republicans, they are the ones that keep pulling money out of the highway funds. Just check and you'll see I'm right. Most won't, you'll just whine and bitch.

August 17 2011 at 12:41 AM Report abuse +2 rate up rate down Reply
switzarch

A 2011 version of WPA is required. Most of these projects are too large for an individual State to handle, ergo, the Fed. must help. Spend the money to do the work; those workers will then have money to spend and buy durable goods and to pay taxes, the places where they spend their money will have money to spend and produce those durable goods and money for taxes and the producers of durable goods will find an increased demand for their products and need additional workers and so on. It would ripple through the economy.

August 16 2011 at 11:19 PM Report abuse +4 rate up rate down Reply
DANIEL

One problem is our State governments have grown so addicted or dependent on federal money,they don't know how to fix things on there own. Remember The Roman Empire built great roads then could not maintain them,they were a republic also. Most Republics fail because of fiscal irresponsibility.

August 16 2011 at 10:13 PM Report abuse +1 rate up rate down Reply

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