Big Infrastructure Questions Await the Newly Elected
During the political campaign, candidates repeatedly promised to tackle the challenge of enhancing America's infrastructure. After all, they reminded voters, much existing infrastructure is dysfunctional, and developing new infrastructure can produce jobs, help address energy needs and stimulate an increasingly dismal economy.
But what should the nation's priorities be, and how should infrastructure projects be implemented and financed?
Congress and President-elect Barack Obama, taking office in January, will finally have to answer this difficult question. However, given the sad state of the economy, Speaker of the House Nancy Pelosi (D-Calif.) doesn't want to wait until next year. She has proposed convening a lame-duck session of the House later this month to consider new spending to immediately boost the economy, including billions of dollars for infrastructure.
No one can deny that time is of the essence in dealing with the economy. But it is also time to recognize the difference between fast-acting stimulus spending -- subsistence aid for the poor, unemployment benefits, tax credits and rebates -- and spending to build or rebuild infrastructure.
Funding infrastructure is a long-term investment, not quick-fix spending.
In accounting, investing in infrastructure, like investing in a building, is deemed a capital expense because money spent for labor and materials yields something durable, useful and often financially productive.
For example, constructing an addition to your house is a long-term capital investment, while monthly utility-bill payments are not.
Like real estate owners, governments must treat capital and non-capital expenditures differently in budgeting. Equally important, prudent capital spending must be based on long-range capital project plans.
Thus, in a rush to fix the economy, Pelosi and the House risk embarking on new infrastructure spending without long-range, comprehensive planning.
What might a comprehensive, nationwide infrastructure plan encompass?
· Transportation systems, including road networks, rail networks, airways and seaways.