More On: infrastructure bill
Explained: The True Costs of Biden's Infrastructure Bill
Countless Billions to be Spent
The fundamental lesson of the infrastructure bill is that the government should not support marketable services such as transportation and broadband because it is too likely to be controlled by vested interests while ignoring actual issues.
The one positive aspect of Congress's recently enacted infrastructure measure is that it excludes funding for high-speed rail. Unfortunately, it included much too much funding for Amtrak, public transportation, and rural broadband.
The infrastructure bill is actually two laws in one: first, it reauthorizes existing federal highway and transit expenditure, and then it authorizes additional spending on roads, transit, Amtrak, electric cars, airports, ports, clean water, renewable energy, and broadband. This entirely new spending is almost entirely unnecessary as the infrastructure crisis was mostly fabricated in order to get Congress do what it always does, which is throw money at problems that are perceived to exist, whether they are real or not.
About half of the transportation dollars in the bill are dedicated to Amtrak and urban transit, modes of transportation that carry less than 1 percent of passenger travel and no freight. While the other half appears to be dedicated to highways, much of that will be spent on projects that will reduce, not maintain or increase, roadway capacities.
All of this is predicated on the assumption that autos are evil, and that the government's primary purpose should be to wean Americans off of automobiles and into different types of government-owned public transit. Even if you believe that automobiles are a major contributor to global climate change, many states and cities have made enormous efforts to get people to reduce their driving since 1970, and all of them have failed.
States are already lining up to get some of the $66 billion that the bill included for Amtrak. But even if the bill had spent twice that on Amtrak, it wouldn't have significantly increase passenger train ridership. In most of the markets where Amtrak wants to expand service, airlines and/or bus companies already provide excellent service at fares that Amtrak won't be able to match even with all of its subsidies.
Senate Republicans were able to decrease the amount of additional investment for urban transit from Biden's requested $80 billion to roughly half of that amount. However, it is still far too much, especially because the renewal portion of the package includes more than $70 billion for public transportation.
The truth is that public transportation and intercity passenger trains are antiquated technology that are only kept alive by massive taxpayer subsidies. I personally love passenger trains, but I don't think they should be subsidized any more than Tom Hanks, who collects manual typewriters, thinks taxpayers should subsidize a manual typewriter industry. If we end the subsidies, transit will survive in New York City and a few passenger trains might survive on especially scenic routes, but elsewhere no one would particularly notice their absence.
The bill also includes $65 billion for rural broadband based on overestimates of how many people lacked access to high-speed internet. According to the White House, which originally proposed this spending, "more than 30 million Americans live in areas where there is no broadband infrastructure." But according to the Federal Communications Commission, only 21 million Americans "lacked access to fixed terrestrial" broadband in 2019, and all of those Americans had access to satellite broadband if they wanted it. The main beneficiaries of this $65 billion will be broadband companies and high-income exurbanites.
All of this spending is on top of the three coronavirus relief bills passed by Congress in April and December, 2020, and March 2021, which included more than $116 billion for transportation. Some 59 percent of the transportation dollars in those bills, or $69 billion, was dedicated to transit systems that had lost more than half of their riders due to the pandemic. In retrospect, considering the supply-chain problems we are experiencing today, that money should have been spent on freight transportation instead.
Although the infrastructure plan includes $17 billion for ports, the majority of it will be too little, too late to address today's supply-chain issues. The fundamental lesson of this law is that the government should not support marketable services like transportation and broadband because it is too likely to be controlled by vested interests while ignoring actual issues.
There are still those who believe Congress should fund a high-speed rail network, but recent news about China's high-speed rail systems provide another lesson about government failure. China has twice as many miles of high-speed rail lines as the rest of the world combined. To build those lines, China State Railways and provincial governments have gone trillions of dollars in debt. Some of China's high-speed rail lines earn less in ticket revenues than the cost of the electricity used to power those lines, and the system as a whole is losing $44 million per day.
To help pay for the lines, China State Railways has boosted freight prices 11 times, making rail freight twice as expensive as truck freight (compared with less than one-fourth as much in the United States). As a result, the proportion of freight transported by rail has decreased from 50% in 2005, when China began developing high-speed rail, to 17% in 2016, and likely much lower now.
Some experts, including Beijing Jiaotong University Professor Zhao Jian, believe that China's high-speed rail program will lead to a debt crisis far worse than the Evergrande crisis (which was manufactured by the government to punish wealthy housing developers). Americans can count ourselves fortunate that we at least dodged this bullet train.
