What Will Biden's Infrastructure Plan End Up Costing? History Provides Some Unsettling Answers

Here at Cato we’ve written many times about the record of big infrastructure projects and “megaprojects”:

• Cost overruns are rampant.
• “Here is a rule of thumb to remember when you hear about a proposed government project: If a politician says that it will cost $1, it will end up costing $2 or more.”
• “Contractors were essentially rewarded for delays and overruns with added cash and guaranteed profits.”
• “The ongoing saga of California’s high‐​speed bullet train may end up being as classic a story of Democratic politicians’ hubris as the Solyndra debacle.”
• “Linda Bilmes, coauthor with Nobel laureate Joseph Stiglitz of The Three Trillion Dollar War: The True Cost of the Iraq Conflict, analyzes the massive problems in three somewhat smaller government projects — the Iraqi reconstruction effort, Hurricane Katrina reconstruction, and the Big Dig artery construction in Boston — and finds that ‘in any organization that starts to increase spending very rapidly there are risks of waste, fraud and inefficiency.’ ”
• “In fact, as megaprojects expert Bent Flyvbjerg explains in the following article, these grandiose projects operate by an iron law: over budget, over time, over and over again.”

And now we welcome the New York Times to the beat with its impressive Monday story titled “Years of Delays, Billions in Overruns: The Dismal History of Big Infrastructure.” Ralph Vartabedian, who covered the “bullet train” fiasco for years at the Los Angeles Times, lays out problems across the country with big infrastructure projects, from a Honolulu transit line to the Long Island Railroad. Read the whole thing, but you can start here:

Honolulu’s tribulations are far from a lone cautionary tale. To the contrary, they signal the kind of cost overruns, engineering challenges and political obstacles that have made it all but impossible to complete a major, multibillion‐​dollar infrastructure project in the United States on budget and on schedule over the past decade.…

When California voters approved a bond in 2008 for a high‐​speed rail system from Los Angeles to San Francisco, the project was supposed to cost $33 billion and be completed by 2020. The job is now projected to finish in 2033 for $100 billion, though those estimates are dated and there is an $80 billion funding gap.…

Mr. Schofer said many projects are justified by estimating that future benefits will exceed costs, but when the costs go up astronomically, no one recalculates the ratio.

In a candid admission of how the political world operates, Willie Brown, the former mayor of San Francisco, once dismissed cost overruns on a transportation hub intended for the bullet train.

“In the world of civic projects, the first budget is really just a down payment,” he wrote in a guest newspaper column in 2013. “If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging a hole and make it so big there’s no alternative to coming up with the money to fill it in.”

And this is, I suppose, no surprise:

U.S. Transportation Department officials declined to comment for this article.

It’s an excellent article. My only complaint is, as Cliff Asness and I both pointed out on Twitter, it would have been more useful to members of Congress and the public if it had been published during the many months that Congress was debating the Biden administration’s $1.2 trillion infrastructure plan. Maybe members of Congress should ponder it now as they consider another, even bigger — $1.75 trillion? $4.9 trillion? — “Build Back Better” infrastructure+more plan.