The austerity fervor that’s seized Washington ever since the 2010 elections has lead to a sudden, steep drop in spending on building things. The collapse in infrastructure spending is illustrated in this chart from investment research firm BCA Research:
After hovering around $300 billion per year from the middle of President George W. Bush’s tenure through 2010, government spending on building things not related to defense fell by about $60 billion in just a few years. The drop is a result of Republicans blocking President Obama’s efforts to invest in infrastructure that the country needs.
As the Financial Times’ Cardiff Garcia notes, the policy choices represented in the chart above aren’t compatible with a responsible effort to cut the country’s debt. Indeed, they’ll make things worse: “It’s also likely that much of the investment that has been forgone in the name of fiscal consolidation will have to be made eventually anyways — only it will be made when rates are higher, exacerbating the long-term fiscal outlook rather than improving it,” Garcia writes. In order to bring America’s infrastructure up to a reasonable level by 2020, Congress needs to be spending about $450 billion per year, according to the American Society of Civil Engineers.
Infrastructure spending levels are tied fairly directly to economic performance. Continued underfunding in this arena over the coming years will cost businesses a trillion dollars in lost sales and cost the economy 3.5 million jobs. Infrastructure spending enjoys overwhelming support from voters. Democrats want to create a national infrastructure bank, something that would require just a $10 billion up-front investment but would provide an ongoing, sustainable funding stream for infrastructure projects.