Guebert: Borrow for new ports or pay for old bulls
In fat times and lean alike, farmers and ranchers know they have to spend money to make money. A worn-out combine, like a worn-out bull, is too costly to keep — even if you have to borrow the money to replace it.
That’s the way it works with our nation, too. We need to continually invest in its operation, even if that requires borrowing, to make our future more certain.
When it comes to the nation’s infrastructure, however, we’ve spent 30 years borrowing time, not money. Now, according to a May 2016 report by the American Society of Civil Engineers, “The nation needs to spend $3.32 trillion (over the next decade) to keep its ports, highways, bridges, trains, water, and electric facilities up to date.”
“But,” it adds, we have “funded only $1.88 trillion of that.”
Worse, Reuters notes in its review of the report, “The shortfall rises to $5.18 trillion through 2040 without new funding commitments.”
I know, I know; the only topic more boring than unmet infrastructure needs is unmet in-laws. But not meeting either isn’t an option; it must be done and here’s why.
While our local, state, and federal officials have spent years cutting taxes and running up debt, the nation’s cracking, rusting, and rotting infrastructure cracks, rusts, and rots even more. Worse, the fixes our leaders refuse to fund now will cost the nation an estimated 2.5 million jobs and $4 trillion in economic activity over the next 10 years.
And that will be felt greater in rural America where public infrastructure is, literally, falling apart. Today, 61 million country-living Americans are more reliant on our nation’s less reliable bridges and roads for access to their jobs, education, healthcare and family than are their urban cousins.
Moreover, today’s country roads and bridges are far more dangerous than those in cities. According to The Road Improvement Program, a national, nonprofit transportation research group in Washington, D.C., “Rural roads have a traffic fatality rate that is nearly three times higher than all other roads.”
Right now, according to the engineers at ASCE, a massive “funding gap” exists between what the nation has budgeted to spend on infrastructure by 2020 and what it needs to spend. For example, in 2013 the group estimated the U.S. needed to spend $1.7 trillion by 2020 on just “road, bridges, and transit” to bring all into good repair.
Other needs, however, were almost as big: the electrical grid needed $736 billion; public schools, $391 billion; airports, $134 billion; “waterways, ports, dams, levees,” $131 billion; rail, $100 billion; and public parks and recreation, $238 billion.
What have we spent since those estimates were issued just three years ago? Little to nothing — but that’s nothing new.
This past February, the Center on Budget and Policy Priorities, a nonpartisan research institute, issued a lengthy, finger-pointing report that showed federal spending on infrastructure “has fallen by half — from 1 percent to 0.5 percent of GDP — over the last 35 years.”
That’s left state and local governments to pick up the slack and, for the most part, few have. “Total capital spending as a share of state GDP” — gross domestic product — “fell in all but five states … between 2002 and 2013,” noted the report.
Many states spent the last decade “cutting taxes and offering corporate subsidies in a misguided approach to boosting economic activity,” explains the report.
“Tax cuts will spur little to no economic growth and take money away,” it continues, from needed infrastructure rebuilding like “schools … and other public investments essential for the nation’s growth.”
So, it’s time — past time, really — to invest in our infrastructure and, luckily, it’s a fantastic time to borrow the money that we need to do it.
On Aug. 6, Nobel Prize-winning economist and New York Times columnist Paul Krugman wrote that the “federal government can borrow at incredibly low interest rates: 10-year, inflation-protected bonds yield just 0.09 percent.” Similarly, 30-year bonds, he noted, were “yielding 0.64 percent.”
So why not borrow to build our nation’s tomorrows instead of putting up with yesterday’s tired bull?
The Farm and Food File is published weekly through the U.S. and Canada. Source material and contact information are posted at www.farmandfoodfile.com.