Today federal highway funds come with requirements

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Unformatted text preview: f the infrastructure spending carried out by Washington would be more efficiently handled by devolving it to state and lo cal governments and the private sector. Notes on Government Infrastructure Many types of current government infrastructure used to be owned and financed by the private sector. Before the 20th 2 century, for example, more than 2,000 turnpike companies in America built more than 10,000 miles of toll roads. And up 22 | P a g e States CP BDL 3 until the mid-20th century, most urban rail and bus services were private. W ith respect to railroads, the federal government subsidized some of the companies building railroads to the West, but most U.S. rail mileage in the 19th century was in the East, and it was generally unsubsidized. The takeover of private infrastructure activities by governments in the United States and abroad in the 20th century caused many problems. Fortunately, most governmen ts have reversed course in recent decades and have started to hand back infrastructure to the private sector. Let's look at current data on infrastructure spending. Interest groups complain that governments in the United States aren't spending enough on infrastructure, and we often hear that U.S. roads and other assets are crumbling. However, Figure 2 shows that while federal, state, and local infrastructure spending in the United States has dipped a little in recen t decades, U.S. spending has closely track ed trends in other high-income nations. The figure shows gross fixed investment as a share of gross domestic product in the United States compared to the average of countries in the Organization for 4 Economic Cooperation and Development. In 2010, U.S. infrastructure spending by governments was 3.5 percent of GDP, which was a little higher than the OECD average of 3.3 percent. Let's take a closer look at just U.S. federal infrastructure spending using data from the Bureau of Economic Analysis.5 Figure 3 shows that federal nondefense infrastructure spending declined somewhat during the 1980s and 1990s, but started to rise again during the 2000s even before the recent "stimulus" spending. Spending in recent decades was generally above the levels of the 1950s, but below the high levels of the 1960s. The high federal infrastructure spending of the 1960s was unique. A large share of that spending was for building the Interstate Highway System, which is now complete. Also note that substantial federal infrastructure spending at that time was misallocated to dubious or harmful activities. For example, federal funding of urban redevelopment and high-rise public housing schemes often had damaging social and economic effects. Also, federal spending on water infrastructu re, such as dams, peaked in the mid-20th century, and a substantial part of that spending made little sense from an economic or an environmental perspective. Thus, the important thing about infrastructure is to focus on allocating funds efficiently, not to maximize the amount of government spending....
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This document was uploaded on 02/06/2014.

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