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How the U.S. Is Turning Into a Banana Republic

One casualty of Washington's focus on cutting federal spending is America's roads, bridges and mass-transit systems. As a result, our infrastructure is falling behind that of other nations, according to a new study by the Urban Land Institute:

The United States notably continues to lag its global competition -- laboring without a national infrastructure plan, lacking political consensus, and contending with severe federal, state, and local budget deficits that limit options....

Plans for transformational networks -- regional high-speed passenger rail, a new electric grid tied to energy-saving technologies, and state-of-the-art satellite air traffic control systems to replace obsolete radar stations -- will probably get delayed, pared back or shelved.

Other countries are taking the opposite tack -- and not just the buoyant emerging economies. For instance, the U.K. plans to invest $326 billion over the next five years on rail, renewable energy and broadband projects even as it moves to slash government spending. It remains to be seen exactly how the Brits will pay for all this, of course. But at least there's a commitment to the kind of large-scale national development that creates jobs and lays the groundwork for future growth.

Unsurprisingly, China blows everyone else away in terms of infrastructure spending. Its latest five-year plan earmarks $1 trillion for rail, water supply, electricity and highway construction. Key projects include completing the largest high-speed rail network in the world; creating a nationwide tolled highway system; expanding urban transit systems; modernizing harbor port terminals; and building new airports.

A mission for business
Why is the U.S. standing still (which when it comes to crumbling infrastructure means going backward)? People don't want to pay for it, either through higher taxes or fees. Congress refuses to raise the federal gasoline tax, notes the Institute, a Washington think tank. That levy has stayed at 18.4 cents a gallon since 1993.

Lawmakers also prevent states from adding tolls on interstate highways, which could generate revenue to build mass-transit alternatives and repair existing infrastructure.

One surprise in all this -- why isn't American business more alarmed by the country's decay? Deteriorating roads, mounting congestion and other problems resulting from outdated infrastructure raises operating costs and reduces productivity. Says the Institute:

A short-term focus on immediate shareholder returns and lowering corporate tax burdens apparently takes precedence over ensuring the country has adequate transport systems, energy networks and logistics facilities for businesses to compete effectively in the decades to come. At some point, more companies may realize that participating in rebuilding efforts and developing new systems could be a tremendous economic driver and profits generator.
Business leaders have taken a lot of grief in recent years. What better way to regain the public trust -- and do right by their companies and shareholders -- than to lead the push for America to renew itself?


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