US Desperately Needs $2 Trillion in Infrastructure Repairs

A recent study conducted by Ernst & Young for the Urban Land Institute shows the US badly needs $2 trillion in infrastructure rehabilitation for services and facilities — ranging from roads and bridges to sewers and dams — which are quickly reaching the end of their planned useful life.

In fact, US infrastructure is worn out and underfunded enough that planned investment for necessary improvements is lower than in several emerging economies including China, India, and Brazil.

According to The Washington Post:

“The report lends global perspective to an issue addressed last fall by a panel of 80 experts led by former transportation secretaries Norman Y. Mineta and Samuel K. Skinner. That group concluded that as much as $262 billion a year must be spent on U.S. highways, rail networks and air transportation systems.

“Congress has failed to approve the two major bills that allow for long-term funding and planning for aviation and transportation. The Federal Aviation Administration has been operating under a funding bill that expired in 2007 and has been extended 18 times. The surface transportation act, which provides the balance of federal transportation funding, expired in 2009 and has been extended seven times.

“As Congress debates how much should be spent and where to find the money, China has a plan to spend $1 trillion on high-speed rail, highways and other infrastructure in five years. India is nearing the end of a $500 billion investment phase that has seen major highway improvements, and plans to double that amount by 2017. Brazil plans to spend $900 billion on energy and transportation projects by 2014.

“The United States, the institute report concludes, needs to invest $2 trillion to rebuild roads, bridges, water lines, sewage systems and dams that are reaching the end of their planned life cycles.”

The US Congress is already embattled in an effort to reduce the national deficit through spending curbs, which suggests that state and local governments will be forced to bear the burden of expensive repairs. As they are also broke, they’d likely have to free up the needed funds by cutting standard services — much like Detroit has already slashed its basics such as garbage pickups and police patrols — and by increasing sales and property taxes.

In the coming years, the US is looking to become not only broke… but also broken.

You can read more of the details in The Washington Post’s coverage of the $2 trillion the US needs for infrastructure.


Rocky Vega,
The Daily Reckoning

The Daily Reckoning