U.S. Infrastructure Woes: A Roadblock To Growth
By Jason Lange
(Reuters) - Long famous for its top-notch highways and passion for cars, the United States is letting bridges rust as traffic chokes overburdened roads, threatening a pillar of its economic strength.
A prime example of this neglect is the Brent Spence Bridge over the Ohio River. It worked well when it opened in 1963. Now it handles twice the traffic it was designed to support. Gridlock often stretches for a mile beneath a thick haze of smog.
"As you're coming across the bridge into Cincinnati you can tell when traffic has slowed because you can see the cloud," said Margaret Drury, an engineer at United Parcel Service.
UPS (UPS.N) trucks avoid the bridge as much as possible but that adds time to its routes, pushing up costs, Drury said.
Two interstate highways come together at the river crossing, with a UPS distribution centre to the north and the company's global air shipping hub to the south.
The bottleneck is just one example of the decline of American infrastructure that is already hurting the economy. The trend shows little sign of being reversed.
The United States has fallen sharply in the World Economic Forum's ranking of national infrastructure systems. In the forum's 2007-2008 report, American infrastructure was ranked 6th best in the world.
The 2011-2012 report due in September will show America at No. 16, with South Korea overtaking the United States during the last year, according to a copy of the rankings obtained by Reuters.
The quality of American roads is about on par with those of Malaysia. They lag Hong Kong, whose infrastructure tops the overall list.
It's not just roads and bridges. The country's freight rail network and ports also strain to handle demand.
American miners can pay four times what their Australian counterparts do to get coal to port and loaded on a ship, said Jonathan Turnbull, a managing director at investment bank Lazard's infrastructure group in New York.
That makes it harder to compete in the lucrative Chinese market and highlights the long-term challenge America faces in boosting exports. The United States also lags Europe and many developing nations in measures of cellphone penetration.
"It's like we're trying to grow this country's economy in a headwind," said Turnbull.
Weak transport infrastructure alone will shave 0.2 percentage points off economic growth this year, said Steven Landau, a researcher in Boston at the Economic Development Research Group.
America spends roughly 2 percent of GDP on infrastructure, about half what it did 50 years ago, according to a U.S. government report from October. Europe spends around 5 percent and China 9 percent.
Because American spending is falling, the drag on growth will grow to 1.3 percentage points in 2020, Landau said.
Washington's new taste for fiscal austerity -- as well as the nation's rising health care and pension bills -- make it unlikely government will come to the rescue any time soon.
Lawmakers are currently discussing a bill to fund highway and rail spending over the next few years.
"It's hard. There's not an appetite to increase the funding," said a Senate aide. Some Republican lawmakers are aiming to cut transportation spending.
Even a proposed infrastructure bank that would marshal private money into big projects would amount to just a fraction of the funds needed to keep the economy humming, the aide said.
At the Ohio River, engineers are working on a project to build a new crossing that would replace the Brent Spence Bridge but don't have funding for construction, said Stefan Spinosa, an engineer with the Ohio Department of Transportation.
The bridge's emergency lanes were painted over in the 1980s to make more room for traffic. In June, a man fell to his death after he ran out of gas and was hit by a car while pushing his Camaro over the bridge.
President Barack Obama hopes an infrastructure push could create jobs and help him get re-elected next year.
"America used to have the best stuff -- best roads, best airports, best seaports," he said on Thursday. "We're slipping behind."