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9 billion cost 20 dulles greenway the greenway is a

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Unformatted text preview: If infrastructure funding flows to low-value activities, it doesn't aid economic growth, nor does it help industries such as manufacturing. Experience shows that Washington often does a poor job at allocating infrastructure spending, in part because its decisions are far removed from market-based demands and price signals. Most federal nondefense infrastructure spending today is for activities that are state, local, and private in nature. Federal budget data for fiscal 2011 show that nondefense infrastructure spending was about $162 billion, including both direct spending and aid to the states. 6 Some of that spending which was state, local, and private in nature included: $42.0 billion for highways, $16.8 billion for water and power projects, $14.3 billion for urban transit, $12.5 billion for community development, $12.5 billion for housing, and $3.5 billion for airports. Problems with Federal Infrastructure Investment There are calls today for more federal spending on infrastructure, but advocates seem to overlook the downsides of past federal efforts. Certainly, there have been federal infrastructure successes, but there has also been a history of pork barrel politics and bureaucratic bungling in federal investmen t spending. A substantial portion of federal infrastructure spending has gone to low-value and dubious activities. 23 | P a g e States CP BDL I've examined spending by the two oldest federal infrastructure agencies — the Army Corps of Engineers and the Bureau of Reclamation.7 While both of those agencies constructed some impressive projects, they have also been known for proceeding with uneconomic boondoggles, fudging the analyses of proposed projects, and spending on activities that serve private interests rather than the general public interest. (I am referring to the Civil Works part of the Corps here). Federal infrastructure projects have often suffered from large cost overruns. 8 Highway projects, energy projects, airport projects, and air traffic control projects have ended up co sting far more than originally promised. Cost overruns can happen on both public and private infrastructure projects, but the problem is exacerbated when multiple levels of government are involved in a project because there is less accountability. Boston's Big Dig — which exploded in cost to five times the original estimate — is a classic example of mismanagement in a federal-state project.9 Perhaps the biggest problem with federal involvement in infrastructure is that when Washington makes mistakes it replicates those mistakes across the nation. Federal efforts to build massive public housing projects in dozens of cities during the 20th century had very negative economic and social effects. Or consider the distortions caused by current federal subsidies for urban light-rail systems. These subsidies bias cities across the country to opt for light rail, yet rail systems are generally less efficient and flexible than bus systems, and they saddle cities with higher operating and maintenance costs down the road.1...
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This document was uploaded on 02/06/2014.

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