Worley Blog

THE HARD AND ELUSIVE ROAD AHEAD

Posted on: November 4th, 2020 by Clifford F. Lynch

 

As we approach this year’s Presidential election, as supply chain managers, once again we find ourselves concerned about much needed infrastructure improvement or lack thereof. In short, we are just about where we were years ago at this time. We were facing a contentious election, Congress was arguing about a Supreme Court nominee, and rumors of Russian interventions in our election were filling the political atmosphere.

This year again, Congress is attempting to push a Supreme Court nominee over the finish line, and rumors of foreign intervention are increasing. Added to that of course, is the Covid-19 virus and its influence on our lives – both personally and professionally. This year in particular, it will have a major effect on the election as concerned Americans are voting by mail in record numbers to avoid personal contact in voting lines. Tabulating all these is sure to be problematic. At the same time, Congress is in a stalemate over new relief measures for businesses and individuals, and the ability of sophisticated hackers to complicate our candidate choices and elections continues to improve.

Many say our Congress has become dysfunctional. While this may be to some extent true, we need to cut them a little slack, considering the environment in which they are attempting to operate. However, life must go on; so, what happened to the grand plans for infrastructure improvement?  During his last campaign, President Trump said, “I will be asking Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States – financed through public and private capital – creating millions of new jobs. Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our beautiful land.”

That promise was repeated almost verbatim in the 2017 State of the Union message, and finally in 2018, President Trump sent to Congress his long-awaited plan. While the $1 trillion figure held up, many were surprised to learn that $800 billion was to come from the states or private enterprise, rather than the Federal government. Although there was a small flurry of Congressional activity from time to time nothing came of the proposal until April of this year when infrastructure funds appeared in the federal budget. Even then, very little was new. This time, $800 billion would simply come for a reauthorization of the FAST Act highway legislation that expired in September. (The FAST (Fixing America’s Surface Transportation) Act was signed into law by President Obama in 2015, and funded surface transportation programs for fiscal years 2015-2020. Among other things, FAST authorized $226.3B for roads, bridges, bicycling, and walking improvements.) Senate Republicans balked as they were concerned about this additional to the national debt, but finally, just as the September 30 expiration date of the FAST Act approached, Congress acted, although they simply extended the FAST Act for one more year. They did however, make a sorely needed infusion of $13.6 billion from the general fund to the highway trust fund. This is a small percentage of what is needed, but certainly will help some.

As with every program that has been introduced, the problem remains how to fund the necessary improvements – estimated by the American Society of Civil Engineers at $2 trillion by 2025.  For years, the ongoing, logical solution would be to increase the gas tax which has remained the same since 1993, but this solution is even less popular now due to Covid-19 and other increased spending. To compound the problem further, because of Congress’ failure to act, over half the states have raised their fuel taxes since 2013. If by some miracle, the federal tax was increased, drivers in those states would be penalized for their states’ proactivity.

During all this, the House introduced a plan that was somewhat similar to that of the president, but it never progressed beyond that point. Candidate Joe Biden announced his plan in November, 2019. His is a $1.3 Trillion, 10-year spend that would secure the country’s infrastructure, move the U.S. to net-zero greenhouse gas emissions, and create millions of skilled trade, engineering, and construction jobs. The overall plan is not too unlike the Obama proposals; and as might be expected, calls for the creation of solid middle-class jobs whose holders “must have the option to join a union and collectively bargain.” Domestic production will be encouraged, and any federally funded projects would have to source materials from U. S. manufacturers and suppliers. As with the Obama proposals, it is difficult to tell whether the primary goal is to improve infrastructure or create jobs, although either one would be a worthwhile objective.

Depending on who is elected, the entire subject will no doubt be restudied, and old ideas recycled or new ones developed.  Whoever wins, recent spending by the government with probably more to come, will make it extremely difficult to find the funds needed. The road ahead still promises to be long and hard.