Renewal Options for U.S. Transportation Infrastructure

Abstract

The adequacy of U.S. transportation infrastructure has been on the agenda for decades. A coherent national effort has been largely absent since the interstate highway project of the Eisenhower presidency. Essentially all transportation infrastructure initiatives have been left to the state and local level, albeit with significant federal financing and – in the case of freight railways – to the private sector. Transportation infrastructure thus has to compete with other budget priorities and is politically easy to defer, resulting in creeping obsolescence of critical facilities. Reliance on public finance is associated with the difficulty of internalizing infrastructure’s positive externalities, allowing the sector to self-finance both construction and maintenance. This paper surveys these issues in each of the key transportation infrastructure subsectors, identifies the political economy of key pressure-points, and proposes a number of innovations that show promise in unlocking the potential contributions of transportation infrastructure to U.S. efficiency and growth.

Keywords: Infrastructure, transportation, municipal finance, positive externalities, regional planning, revenue capture, privatization, modes of transport

JEL Classification: H41, H44, H54, H72, H76, O22, R40