How to strengthen the bipartisan infrastructure framework by controlling costs

How to strengthen the bipartisan infrastructure framework by controlling costs
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As lawmakers return to Washington this week, one of their top priorities will be crafting legislation based on the bipartisan infrastructure framework agreed to by President Biden and Senate negotiators last month. Although that agreement set top-line numbers for broad categories of spending, the details for how the money would be spent still need to be fleshed out. Congress should maximize the impact of this transformative investment by including provisions to reduce construction costs and direct funds towards the most beneficial projects.

The costs of building infrastructure in the United States are significantly higher than they are in other countries. New York is home to some of the world’s most expensive mass transit projects, sometimes costing several billion dollars per mile, while costs in other American cities also dwarf those of comparable projects internationally. Roads are no better: A recent tunnel in Seattle cost more than three times as much as a similar project in Paris and seven times as much as one in Madrid. If policymakers can bring the cost of each project down closer to international norms, they can build more infrastructure with the same pool of funds.

One possible way to reduce costs is by reforming environmental review and permitting procedures, such as those under the National Environmental Policy Act (NEPA), which can take years and generate expensive litigation. Consolidating permit authority and improving coordination between reviewing agencies, as Germany and Canada have done, could help cut average approval times to two years or less without undermining important social and environmental protections. Congress should also consider expanding categorical exclusions, which speed up approval for project categories pre-determined to have little environmental impact, to include public transit and other green infrastructure that can help the U.S. meet its emissions targets sooner.

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Another way to cut costs is by limiting the public’s ability to obstruct projects through dilatory legal challenges. Property owners opposing “unsightly” projects can force expensive delays and changes to construction plans that one recent study concluded were a major driver of cost increases since 1970. Modifying how and when citizens can participate in NEPA processes, such as by soliciting input earlier or requiring lawsuits to be filed within 90 days of federal permits being issued, could expedite reviews and reduce litigation. Although it is critical that low-income communities be given the tools to protect themselves from poorly designed projects that deepen inequality and worsen health outcomes, opportunities for affluent people to stymie projects that would advance environmental or equity goals should be curtailed. Policymakers could also consider using direct payments to compensate individuals who are negatively affected by projects, as Denmark and the U.K. did for renewable energy infrastructure. This may ultimately prove cheaper than the cost of litigation.

These measures are just a starting point. The many factors that distinguish our infrastructure processes from those of other developed countries, and their contributions to bloated costs, are not all well-understood. The U.S. Department of Transportation and its state partners should be tasked with collecting more data and working with their more-efficient counterparts overseas to incorporate the international community’s best practices. Policymakers should also relax or repeal tariffs and “Buy American” mandates that weaken our relationships with those countries while creating far more costs than jobs for Americans.

In addition to controlling costs, Congress should prioritize the projects that offer the greatest benefits, such as maintenance and repair efforts that are more cost-effective rather than building new structures. One way to do this is by expanding competitive grant programs such as RAISE (formerly called TIGER and BUILD), which employs benefit-cost analyses (BCAs) to help select the most beneficial projects, including multimodal projects not eligible for grants from less-flexible programs. RAISE’s popularity results in fierce competition that improves the quality of selected projects. Beyond simply expanding the program, policymakers could improve it by prioritizing BCAs more in the selection process, improving transparency to avoid the appearance of favoritism, raising the funding cap on awards to support larger projects of national importance and rewarding projects that use innovative technologies to improve productivity.

Finally, Congress should require state and local governments – many of which enjoy massive budget surpluses thanks to excessive COVID-19 aid from the federal government – to contribute some share of the funding for projects in their jurisdiction. Whereas local leaders would generally request as much federal spending for their constituents as possible if it came with no strings attached, matching grants can incentivize them to pursue only useful projects. Matching grants not only lead to better project prioritization; they can also expand the pool of funds available for infrastructure. For example, if state and local governments were required to shoulder 20 percent of a project’s costs, the $579 billion in new federal spending agreed to in the bipartisan infrastructure framework would leverage $145 billion in additional infrastructure spending from states and localities.

Some progressives are disappointed that the bipartisan infrastructure framework includes only a fraction of the new funding that President Biden initially proposed in his $2 trillion American Jobs Plan. But Washington policymakers can accomplish more with less by maximizing the impact each dollar of spending has through better cost controls and project prioritization. The near-doubling of federal infrastructure spending over the next eight years included in the bipartisan infrastructure framework offers enough money to build back better with transformative public investments — as long as it’s spent wisely.

Ben Ritz is the director of the Progressive Policy Institute’s Center for Funding America’s Future.