The Future of American Infrastructure

The Future of American Infrastructure

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Heidi Crebo-Rediker, adjunct senior fellow specializing in infrastructure policy and other topics at CFR, and chief executive officer of International Capital Strategies, discusses the future of infrastructure in the United States in light of the budget challenges facing state and local governments due to COVID-19. This session is part of CFR’s State and Local Officials Webinar series.

Learn more about CFR’s State and Local Officials Initiative.

Speaker

Heidi Crebo-Rediker

Adjunct Senior Fellow, Council on Foreign Relations; Chief Executive Officer, International Capital Strategies

Presider

Irina A. Faskianos

Vice President, National Program and Outreach, Council on Foreign Relations

FASKIANOS: Good afternoon, all. Good morning to some of you. Welcome to the Council on Foreign Relations State and Local Officials Webinar. I’m Irina Faskianos, vice president for the National Program and Outreach here at CFR.

We’re delighted to have participants from forty-three states joining us for today’s discussion which, again, is on the record. As you know, CFR is an independent and nonpartisan membership organization, think tank, and publisher focusing on U.S. foreign policy. Through our state and local officials initiative we serve as a resource on international issues affecting the priorities and agendas of state and local officials and governments, and by providing analysis on a wide range of policy topics. We also publish Foreign Affairs magazine. We want to thank you all for joining us today during this challenging time. We recognize that many of you are on the frontlines of responding to COVID-19 in your communities, so thank you for all that you are doing.

We are pleased to have Heidi Crebo-Rediker with us. We shared her full bio prior to the call, so I’m just going to give you a few highlights. Heidi Crebo-Rediker is an adjunct senior fellow at the Council on Foreign Relations. She specializes in international political economy, U.S. economic competitiveness, infrastructure policy, and women in the global economy. She is also chief executive officer of International Capital Strategies, a boutique advisory firm. She served as the State Department’s first chief economist under then-Secretary of State Hillary Clinton and provided advice and analysis on foreign policy issues with economic and financial components. And she previously served as chief of international finance and economics for the Senate Committee on Foreign Relations, following nearly two decades in Europe as a senior investment banker.

So, Heidi, thanks very much for being with us today. It would be great if you could begin with an overview of the status of infrastructure in the United States and trends you expect to see given the budget challenges that state and local governments are facing as a result of COVID-19.

CREBO-REDIKER: So, first of all, thank you so much for the invitation to speak today, and thank you, everybody, for joining us. Again, we all appreciate everything that you’re doing and that you’re giving us your time and attention. And I’m particularly grateful that you tuned in for this particular subject. I have long been an advocate for increased investment in infrastructure, particularly federal investment in infrastructure. I believe very strongly that robust, reliable, and long-term federal funding is a very integral component of our infrastructure in the U.S. And I don’t think it’s about spending the most. I think it’s investment. So I’ll talk more about investment than spending, even though in D.C. people tend to talk about spending as if it’s a huge cost, without the upside that you get from an investment.

I think it’s important when we think about federal that it’s meant to complement and support state and local governments, that it’s complementary to what you’re already doing. I’m a huge fan of streamlining red tape across federal, state, and local, and harmonizing different regulatory procedural processes across federal, state, and local, because I think that is one of the—one of the keys to unlocking greater investments in infrastructure. And I also believe very strongly that, this is sort of longstanding pre-COVID, that we have multifaceted challenges in how we approach infrastructure investment. And so all the solutions that we talk about need to be as well. They also need to be creative and use all the tools at our disposal.

So just in terms of background, I think we were already in a pretty dire state when it comes to how much we’re actually investing pre-COVID-19. And the lack of investment has been—you know, has been a drag on our growth, it’s been a drag on our productivity, our competitiveness. And it puts our citizens at risk, you know, going across structurally deficient bridges or drinking unsafe water. I mean, it’s been that way for many years. And you know this, obviously, because that’s why you’re joining us on this call today. When I talk about infrastructure, just for a definitional, I look pretty broadly at things that move people, goods, energy, water, information, data—sort of in a twenty-first century sense. So not just—not just the traditional roads and bridges.

And I do think that it is—it’s important and has been important for us to consider not only the growth in jobs element to why it’s important to invest in infrastructure, but the competitiveness issue, the public safety issues around safe infrastructure, climate resilience. But going back to the jobs and growth, it’s never really been more important right now to think about jobs and growth, and the opportunity that a large, particularly federal, support for state and local governments investment in infrastructure could actually do. So I do look at this as an important component of how we can end up revitalizing our economy right now.

We actually have Governor Cuomo in town today talking at the White House with President Trump about using infrastructure investment to revitalize the U.S. economy. So it’s really coming to the top of mind right now. And I think it’s going to be increasingly on the top of people’s minds, because if you look at the unemployment situation right now, we have—you know, we obviously are facing the biggest challenge that we’ve faced for, you know, on record back to World War II and to the Great Depression, in terms of numbers and percentages. So even, you know, the White House estimates are that we could go up—end up with a number more than 20 percent across the country before we’re over the worst of this. April’s unemployment rate was 14.7 percent. And the White House thinks that we could still be over 10 percent come November.

So we could see, even with furloughed workers coming back, if we have the economy coming back on track, we’re going to have very stubborn residual unemployment issues that we have to face. In terms of our immediate response to COVID-19, the spending that we’ve been doing is exactly the right thing, as the Fed has been doing, to support the economy—exactly the right thing. It’s the biggest economic shock in modern times. And the fire fighting in terms of emergency safety nets and protecting people, and jobs, and businesses is front and foremost.

But also part of that is the triage around state and local government support for infrastructure investment because, as you know, state and local governments are taking a huge hit, and will need to prioritize moving forward. They’re responsible for schools, and public services, and paying for police, and firefighters. And so, you know, what will likely happen is that infrastructure will get cut. It’s always been a shared responsibility between the federal government and state and municipal governments. It’s always—you know, the roughly 25 percent federal component to the 75 (percent) state and local, mostly state and local raised through the muni market, and on the federal side you have the Highway Trust Fund.

In this time, when we are thinking about moving from triage to massive support for recovery, it’s important that the federal government, I think, step up and provide much more significant than the 25 percent that we’re thinking about right now. You’ve got state budgets that are completely constrained. We have a need for support for larger projects that are of regional and national significance, that are hard for single states to pay for in the first place. And I think we have a lot of very specific infrastructure challenges that are coming out of—on the other side of the COVID-19 pandemic.

So looking at the jobs and growth scenario, I do think while the challenge is going to be massive we already have good metrics for looking at if you spend—if you’re investing smart, you can get a big return. So just on the jobs and growth side, we have, you know, a lot of good reports out there, that roughly they all averaged around 1.3 billion (dollars) in investment in infrastructure gets you a 2 billion (dollars) in growth on the other side, and around thirty thousand jobs. So we sort of—we have enough history, we know from the IMF, from rating agencies, from different groups who’ve looked at the numbers and evaluated what the payback is. We know that a dollar in is going to result in far more than a dollar on the other side.

And we are at a point in time where we have very low interest rates. So I was a big fan of using cheap debt for long-term borrowing for infrastructure on the federal level before we cut to effectively zero. So I think not only will—is that an opportunity to use low-interest rates right now to borrow in size and at low rates, but also if you look at the other side of this, if we are going to borrow significantly, the only way to really put ourselves in a position to pay back that debt longer term is through growth. And so if you’re taking that—if you’re taking that money that you’re borrowing and investing it in something that’s going to give you a really positive return, that is one of those—that’s one of the ways that you actually get yourself out of the problem of supporting this crisis through the issuance of so much debt.

In terms of the crisis response, I do think we’re going to see some larger package post-firefighting come out, regardless of—you know, we’re in the context of an election, obviously. But I do think that this is going to be something that has to—it really has to happen. It’s sort of a no-brainer. And the message I would say right now is to plan now, because one thing that we learned from the last—from the great financial crisis—is that if you’re looking for “shovel-ready projects,” quote/unquote, and you are looking for a pipeline, and that pipeline doesn’t exist, you know, ready to go, then it makes it much, much longer term in terms of the amount of time it takes to get projects, good projects, up and running. So I guess my message would be to plan now.

The other is, as you’re planning for looking at how a federal package to help for infrastructure would be—you know, would be allocated and invested, I think we have to reimagine some of the ways we invest in infrastructure in the past. So it’s not just that you’re losing jobs in the construction industry, but in order to get people back to work again you’ve got to fix mass transit. I mean, you can’t—you can’t get people back to work if they’re not feeling safe getting on the bus, getting on the train, getting on the subway. So until we actually think about how we make mass transit safe—which is going to take investment—then, you know, it’s going to be very hard to actually get the whole of the economy back in a year, again.

Do we know if we’re going to see more cars on the road? More car use? Less car use? More air travel? Less air travel? It’s a really big question because a lot of your governments actually have funding models that depend on fuel and truck taxes. You know, you’ve already seen a downturn in these income tax, payroll tax. Everything’s really down because economic activity has been so far down the past several months. We’ve really never seen a hard stop to an economy the way that we’ve just had. So it’s going to hit state and local governments really dramatically.

And, you know, that’s also true on the—you know, on the—on the federal side. So we have the Highway Trust Fund that relies almost exclusively on the gas tax. Well, that’s been a broken model for a long time. So we have—you know, we have to think about how we’re going to invest in infrastructure and look beyond the gas tax. We have—you know, we’ve always had issues with that because we had fuel efficiency kicking in, we have electric cars, we have, you know, different ways that people are thinking about using cars. And so the—you know, the formulas that we’re used to using, I think, both at the state and the federal level, have to be—have to be revisited. So funding models, how do you pay for it?

And the last big thing is I think broadband is front and center. We’ve had sort of the biggest shift in our economy, given COVID-19. We’ve seen everyone start to—you know, everybody’s kids are home doing Zoom school or, you know, trying to keep up with schools—you know, school systems being shut down. And you have to remember that there are twenty million Americans right now who don’t have access to high speed internet and broadband. So we’ve had a digital divide for a while. But if you end up making this shift to virtual work, to virtual schooling, to virtual medicine—which we mind have residual on the back of this—then we really, really need to make sure that we have—that all Americans can access, you know, reasonably priced high-speed internet. And if we don’t have that, then I really worry that we’re going to have a much greater divide come out of this—out of this crisis.

The federal—I know that there are a lot of discussions going on right now about how much to provide for broadband in any legislative movement in the next—the next time we—in the next bill that’s being discussed. And maybe even doing a much larger, more substantial broadband package. Infrastructure is a very popular issue. Both sides of the aisle at the top line. Always the devil is in the details. But I think when it comes to broadband and watching how everybody had to really move to an online world, it’s really—you know, we’ll either—we’ll either make that leap and help people, or we’ll exacerbate an existing problem and then there’ll be far more people left behind.

So I guess I would leave it at that. My recommendation to the federal side has always, you know, go big, go bold. This is going—there’s going to be the right time for a recovery bill that’s going to be very—that should be very heavily weighted on infrastructure. But for state and local governments, if you would assume regardless of who wins we’re going to have to get ourselves out of this, infrastructure is clearly a no-brainer in terms of where the emphasis should go. And in your—you know, in your sense, where you sit, plan beats no plan. So plan for where—you know, where your most important needs are for infrastructure, and figure out where that federal piece could actually play a catalytic role in the immediate term.

FASKIANOS: Heidi, that was great. Thank you so much. Let’s go now to the group for your questions and comments. Again, I want to encourage you to share your experiences, as this is a forum for best practices as well. And please identify yourself so Heidi knows what state and your position. It will help contextualize her answers to you all.

So let’s open up and see.

(Gives queuing instructions.)

And we already have four up. Martha Robertson, we will start with you.

Q: Thank you so much, Irina. Thank you, Heidi.

This is—I couldn’t agree more with, well, everything you said. But first I want to put in a little commercial. With forty-three states on the phone here, I hope everybody is encouraging every one of their citizens and employees to call their congressional and senators’ offices. Everybody is affected by the crash in income for state and local governments. And Heidi everything you said is great, but when we’re furloughing and laying off—you know, we’re laying off 16 percent of our people. I’m a county legislator in Tompkins County, which is Ithaca, New York. So we’re laying off, you know, hundreds of people with the city and the county.

And so we really can’t—literally can’t afford to do the right things. And we seem to not be able to move the needle on state and local aid. It’s beyond me. What do you suggest? I mean, as I said, I think everybody needs to be an advocate and gets folks in all the states, not just New York or California, but all the states to call their legislators’ offices. There really needs to be a groundswell. Is there anything in particular that you think can change that conversation?

CREBO-REDIKER: So I—you’re preaching to the choir. So I completely—I hear you, in terms of, you know, frustration, because you’re not—you know, all the states and local governments are in a similar position right now. And New York in particular. I would do two pronged. I would so the individual calls to Capitol Hill. But I would also, you know, speak with one voice as well and make sure that it is—you know, it’s not—it’s not just—it’s not one state playing off another, that it is a unified request to Congress and to the White House, that this is—that state and local governments really need to be able to provide the services and the jobs that are critical right now, during this national crisis that we’re in. I would do both. I would do individual offices and I would do, you know, through any kind of a united platform that you have.

Q: Thank you very much. If I could just ask, does childcare fit into your—(laughs)—definition of infrastructure?

CREBO-REDIKER: So childcare—I am—I am a passionate supporter of providing—of support for providing childcare. I wouldn’t—I don’t put it in my infrastructure bucket. I put it in an essential bucket, but I don’t put it in the infrastructure bucket. But it’s—if you don’t have support for childcare you don’t get, you know, 50 percent of the workforce back to work again. Somebody’s got to—somebody’s got to stay at home and raise—and raise—and raise kids, if they’re not going to school.

Q: Thank you very much.

FASKIANOS: Thank you, Martha.

Let’s go to Shahid Shafi.

Q: Thank you very much, Heidi and Irina. I serve on the city council of Southlake in Texas. It’s a small suburban town in Dallas area.

Two questions. Number one: You know, we are expecting a 20 percent decline in our revenues this year, in FY ’20, primarily related to a decline in sales tax and permit fees of various sorts. And in FY ’21 we are probably expecting a larger decline—well, that depends on the property tax valuation at that time. So at this time there’s very little appetite locally to—for any new debt, for the city to incur any new debt. So how—if you can address that with us. We know—I know fully that the interest rates are at historic lows. It’s a good time to borrow. But still our ability to pay it back it back is an important concern to us.

And my second question is about—you talk about broadband. Do you mean 5G infrastructure? And if that is the investment you’re talking about what is the role of private entities that are going to profit from those 5G infrastructure? What is their role in putting up this money?

CREBO-REDIKER: So in terms of the first question, obviously states need to balance their budgets. And the idea is not for states to put themselves in a greater financial disadvantage moving forward because they borrowed in order to compensate for losses in revenue during this pandemic. That’s one of the reasons why I do think that it’s—this is not just an opportunity but it’s an imperative for the federal government to use its balance sheet and, you know, near zero rates to support state and local governments. This is a shock that’s come, that has not—it’s not any one state’s fault. It has been—it’s a global issue. It’s been a global shock.

The Fed has stepped up and is playing, you know, a very important role in supporting many aspects of the economy, including buying certain types of municipal debt. But, you know, that’s—I do think that there is a much greater opportunity for the Federal Reserve to borrow in order to fund a fiscal plan that would come out of Congress that would support specific types of investment in states, and support for—you know, which is coming, and we’ve seen in recent packages, coming out of the Hill.

But I just—I think the emphasis has to be a much greater one on making sure that we don’t lose—we don’t lose states’ viability and ability to make sure that teachers, and firefighters, and police are able to keep their—you know, keep their jobs, that government services can still be provided. You know, and the first thing to go is going to be, as we started with, infrastructure projects right now. So I think that there’s a goal for the federal government to play using its balance sheet to help states and local governments that are—that are trying to do the right thing.

On the second question, on broadband—(background noise)—sorry. I live in a city. That’s a sign of the times in the background, unfortunately. So yeah, I mean, we have a—you know, these are—these are obviously—broadband is obviously—you know, our telecommunications system is a privately—it’s a private part of our infrastructure framework. And I do think that the—you know, the FCC should really look at what COVID-19 has taught us about how Americans are using broadband to learn, to work, to interact with medical professionals, and figure out in any kind of major broadband legislation, to make sure that it’s—that it’s—you know, that it’s done.

I’m not deeply familiar with how the FCC is going to be working on this, but in terms of the high-level imperative, yes, we do need broadband. Yes, it is a focus of Congress. And, yes, the private sector will play—will play a part. But I do think that accessible and reasonably priced access to broadband is going to be key. If you have broadband in your area, that’s great. But if you can’t afford it, then you’re as much at a disadvantage as you were if you didn’t have broadband in your area at all.

Q: Thank you very much.

FASKIANOS: Thank you.

Let’s go to Shayne Thomas. And you need to—we need to unmute you, or—

Q: OK, my mute—

FASKIANOS: There we go. You’re—

Q: OK, great. Thanks.

Shayne Thomas. I’m president of the Board of Commissioners in Seneca County, a rural county in Ohio.

And my question is on infrastructure as it relates to active transportation, and how you see that being a part of the overall infrastructure play. One thing we’ve noticed from this whole pandemic is that people need to take a lot more responsibility for their own health. And so some of the comorbidities that are out there, you know, we need to help people address those. I also noticed that as people started working from home, and being furloughed, and—they were spending more time outside walking, walking their dogs, walking their families, dusting off their bikes. And so if we are going through an inflection in our economy where it’s adapting, would it follow that we need to invest in our active transportation network—bike lanes, bike paths, sidewalks—as well? And if you think that’s possible or probable, is there a funding paradigm that works? You know, obviously folks aren’t that aggressive in using gas tax money to work on bike paths. And there’s not necessarily a direct link to the gas tax money. So looking for some comments there. Thank you.

CREBO-REDIKER: So I think, you know, we have to use a lot of imagination right now and see, you know, how even other countries around the world are responding after they are coming out of the most—the height—the height of their own cycle of the pandemic right now, and see what—you know, how people are behaving. Because I agree that looking at bike paths—and just anecdotally, bike sales are up, and people are out more. They’re walking more. They’re doing what they can to avoid—you know, avoid being in close spaces with other people. And until we get to a—you know, a point where we’re not concerned about our health in a group setting, then I think we have to think about what the alternatives are.

I mean, getting mass transit right is going to be key, especially because that is how—a good deal of people of people take the bus, or the subway, or the train to get to—to get to work. So looking—figuring out mass transit is going to be part of it. But also looking at the reaction, what are people doing right now? Because infrastructure is primarily funded and paid for at the state and local level, and a lot of decisions—like whether you take—whether you go for bike lanes, or if it makes sense, and what that investment should be, it is—it is a matter of figuring out what—you know, what the community wants to do. So if it’s a community that’s conductive to using bikes, then I would imagine that the support for making an investment in bike lanes is going to be much—is going to be much higher, especially on the back of COVID. So I agree with you. But I think in the larger context we need to actually be thinking: How are people going to behave, and how are we going to invest differently based on behavior?

Q: Thank you.

FASKIANOS: Thank you.

Let’s go to Mary Dye.

STAFF: Please accept the unmute prompt on your screen.

FASKIANOS: Thank you, Maureen.

Q: Hey.

STAFF: There you go.

Q: This is Mary Dye. I’m from the 9th Legislative District in eastern Washington. I live very rurally, so I hope you appreciate my internet and capacities. (Laughs.)

 So I would support some help—I’ve done some rural broadband work. And I would support the idea of doing an open-access dark fiber network that’s constructed by a public entity, whether it’s a court district or whether it’s an economic development council, that can receive the funding and partner with a private company that would be the macro-level operator, and then lease capacity on that fiber, so that many small ISPs and internet service providers can provide the services to rural. Because that would get us the opportunity to receive the same quality at the same prices as the more urban areas, by laddering the system into place using public-private partnerships and dark fiber being owned by the public entity. And that would help us a lot. And I don’t know if anyone is contemplating that model, but it’s working really well in Washington state to get very affordable and high-speed internet. Unfortunately for me, I’m still one of the ones that’s left behind.

Then the second—and my signal comes on, your internet connection is unstable. My second thing is that I was wondering where the infrastructure package is in Congress now. Is it being written in the committees? Is it a place where we can have some input into the language? And what would you suggest?

CREBO-REDIKER: So first, on the—on your proposal on broadband access and rural access, and one of—the good news is that there is a—there are a lot of representatives in Congress who are very focused on making sure that there is equity between what urban centers get and rural gets in terms of infrastructure investment, in my experience. And focusing on—focusing on rural broadband is key. You have—so the most recent numbers that I have from Pew Research is you have about 79 percent with home broadband in suburban. You have about 75 (percent) in urban. And rural is about 63 (percent). So those—you’re going to have to come up with creative ways for the private sector to engage in rural communities where you won’t have the same kind of revenue streams as you would in suburban and urban areas. But I think that this is the time for creativity, and making it work so that you do have—you do capture that rural population in particular.

In terms of what the—I mean, the next big piece of legislation that was due to—due to expire on September 30th is the Highway Trust Fund, which is the main vehicle for the federal contribution to highway spending and also public transportation. There’s an act that was passed through committee, through the environment and public works committee in the Senate. It’s called America’s Transportation and Infrastructure Act. And it basically laid the—at least the Senate’s view on how they were going to think about replacing the FAST Act, which was the one that—the previous act that funded—that funded the Highway Trust Fund.

Now is the time to—now is the time to weigh in. And if you—you know, if you’re in touch with your—you know, your legislators in Washington, this is—this is the big conversation. They were going to have to do a transportation infrastructure bill anyway. They were going to have to figure out how they were going to pay for, which is always a big question, how they were going to pay for that infrastructure bill. And this is—this is—you know, there are hearings going—there have been hearings going on about this topic. And it’s something where there’s a lot of bipartisan support for getting this done.

Now, it might—it could very well be kicked down the road because—not only because the focus is on the firefighting part of COVID-19 and support for, you know, unemployment, and small business, and many other important facets of making sure that the economy doesn’t go off a cliff. But this will have to be done at some point anyway. So I would absolutely encourage you to reach out in the context of even the Highway Trust Fund legislation. And I do think that that will be the vehicle for something that is larger, possibly post-election, in terms of providing a base for infrastructure form the federal side. So weigh in now with good ideas.

Q: Thank you.

FASKIANOS: Thank you for that.

Let’s go now to Ann McDonough.

Q: Yes, hello. Thank you so much. My first meeting, and happy to join.

I am a Dubuque County supervisor. And I’m Dubuque, Iowa. Our county’s a hundred thousand people. Sixty percent live in a more urban area, 40 percent in a more rural area. And I wanted to address with you kind of a green infrastructure concept, because when you’re talking about firefighting and recovering from COVID-19, I’m talking about firefighting and recovering from erosion and water pollution, and the need for clean water. So I know that my gas tax is probably going to be off my revenue by 20 percent. That is massive, because I’m not building new roads. I’m not building great highways to anywhere. What I’m trying to do is repair and maintain what the continual flooding is taking away.

And with the rain events that we have, getting—you know, Iowa’s known for, good or bad, our hog confinement. And so we have gravel roads taking us places that are so soft in the springtime that these massive trucks get stuck. So we really need to have somebody helping us advocate for these issues about water and about clean water. We’re working on projects that are hopefully going to alleviate the need for a new water treatment facility right here in Dubuque, Iowa. But we’re doing that with looking at hydrology studies, some engineering to see how we can put in things upstream to affect clean water. So any thoughts about—I just can’t have a conversation that doesn’t include green infrastructure.

CREBO-REDIKER: So I think that that is—that needs to be top of the agenda. And if we are investing more in—more in infrastructure and willing to do, you know, a substantial federal package for infrastructure investment, it has to include, whether you call it green, or climate resilience, or—you know, whatever the label is, it’s got to solve the problems that are there twenty-first-century problems that we’re actually facing right now. And that is in—you know, an increase in severe weather events, an increase in flooding. We have—you know, the rebuilding of the infrastructure, if we have the funds and the political wherewithal to do so should not be to just rebuild the same thing all over again. If you have—if you know that there are—there are significant risks to resiliency of the same infrastructure, in the same place, in the same way, and built the same. It’s common sense, but it also is—it’s not a wise investment to not invest in resilience if you’re going to be putting money into infrastructure. So I could not agree more.

FASKIANOS: Let’s go to Jay Rising.

Q: Hi. I’m Jay Rising with the state of Michigan.

A lot of people on the call may have heard about our significant infrastructure failure last week, with the rain that caused the failure of a privately owned dam in the—serving the city of Midland, Michigan. So I’d like to have your thoughts on the role of privately owned and operated infrastructure as part of the solution to infrastructure development.

CREBO-REDIKER: So I have—you know, I’ve been a strong supporter of engaging responsibility private sector investments and money into infrastructure, just because the sums that are required to upgrade the infrastructure that we need to upgrade, they’re in the stratosphere. And so I am—you know, there are a lot of caveats to that. I think the last study that I saw that looked at the component of transportation infrastructure invested by the private sector in the U.S., it was in the low single digits. That doesn’t compare well with other advanced economies around the world. But we have a number of challenges in actually—in actually making sure that the—you know, that the engagement with the private sector in our infrastructure is the best use of taxpayer funds, because you usually need to have some support of taxpayer funds in order to make that work.

We have a philosophical challenge, in that we tend to see certain types of infrastructure as very much a private sector, like, commercial rail and, you know, pipelines, telecommunications, very much in the private hands. And we’re very comfortable with that. Roads and tolling, bridges, airports, water not so much. But you know, other comparable countries around the world have a different philosophical approach. So you know, a good—a good proportion of the U.K.’s water is in private hands, and all three major airports in London are privately owned. And, you know, you have—so there’s a philosophical problem. There’s also, I think, a knowledge problem, in that some states are very, very good. They have their own PPP inhouse shops where they have—they’re very accustomed to using best practices and negotiating and realizing that it’s a risk sharing as much as a way to catalyze private investment. It’s not—that the private investment’s not the silver bullet.

And other states don’t. They’re just not—they don’t have the legislation in place, they are not ramped up to actually negotiate with, you know, groups of private investors that might not necessarily have the public good in the front of them. They’re looking for commercially viable projects. And so it’s a balance. Not all projects are commercially viable. So, you know, you have—you can play around and be extremely creative in using, you know, multimodal types of infrastructure projects, particularly large ones, or grouping together projects, like Pennsylvania did with its bridges and packaging, so that you can actually attract private investment. There’s a lot of room for creativity.

And I think that we have to—you know, we have to think how to better utilize private funds. But I also think it’s important that you engage the public in the conversations. You need to have the public onboard. And they need to understand the risks and rewards of using a private source versus the state, you know, raising money through municipal bond markets to fund in a traditional way. But I do think that we need to bring that number from, I think the last time I saw it was around 2 percent of transportation in the U.S. was actually—you know, had private—had a private component. And so I think that number should be greater, but I also think that we need to make sure that we are set up in our state and local governments to be able to negotiate on behalf of the public interest. And the best—you know, for the best of the public interest.

Q: Thank you.

CREBO-REDIKER: I can’t hear, Irina, if you’re talking.

FASKIANOS: Oh, sorry. Yes. I did not unmute myself.

Let’s go to Ed Kleckner next, and then to Mary Anne Butters.

Q: Hi. Good afternoon, Irina and Heidi.

Heidi, I’d like your thoughts on three infrastructure solutions, if you think they’re viable. First one has to do with our local county and community needs for building a local infrastructure hub. You made mention that we need to invest in projects that are shovel ready. Every county has a five year—and most communities—have a five-year plan for projects that are ready to go. We’re hurting for money because of the loss of tax, you know, sales tax, et cetera. And if we could just get the Congress to add some additional money to the existing program for funding—you know, assisting with funding these projects, that would not only alleviate some of the stress on the counties for their reduced revenues, but it would also employ lots of people who are both public employees and private contractors. So it would help the economy, as well as relieve the stress on the county budgets.

And then the other idea is that regarding broadband, you know, I think everyone’s been noticing that our internet has been downloading things a little bit slower. This is the canary in the coal mine. We need to be impressing on our Congress and the FCC that now is the time to make these investments so when we get past COVID and we get back to normal operating we have the time to build out our system so that when we do end up in that situation where we can’t function properly, we will be prepared for it.

The third thing is, regarding mass transit, and airline—airports in particular. We have a lot of people driving to airports every day. They have to pay almost as much for their parking as they do for their airline ticket. And at the same time, they’re congesting our roadways, they’re burning up more gas, and gas costs money. Our air would be cleaner, our congestion would be less on the roads, and we would have less payment for parking if we would just build out some rail lines that feed into the airports so that people in the major urban areas of the regional airport could take the rail line directly into the airport. And it would be much more convenient, it would cost citizens less money, it would be better for our air and clean water. What do you think?

CREBO-REDIKER: Thank you. And I just want to add, you are with the Calumet Board—County Board of Supervisors in Chilton—

Q: Oh, I’m sorry. I’m a county board supervisor. I’m in northeastern Wisconsin. We’re a mixture of urban and rural because we’re near the Fox cities. And the rest of the southern part of the economy is rural.

FASKIANOS: Thank you.

CREBO-REDIKER: So your first question sort of about support now for state and local who are—you know, who are hurting, I think that has to be part of the firefighting exercise. It has been, to some extent, but I think it needs to be, to a much greater extent. So I completely agree with you. In terms of broadband and invest now so that when we’re on the other side of this we’re in a better—a better position, I can’t think of anything in a 21st century economy that is more important. If you are going to, you know, bring down the cost of education for people who—you know, across the board, in doing skill building—there are so many different ways that you can actually use online learning.

We might actually be in a new paradigm on the other side of this. You’re already seeing companies say that they are going to, you know, move workers to work from home status moving forward. Those are usually, you know, more high-paying jobs that you can actually do from home. And if you want to, you know, make sure that people have access to those jobs, so that they can move into them if they don’t have the ability to really work in a 21st century economy, then they will not benefit from any of those new—those job opportunities to work remotely.

So I couldn’t—I couldn’t agree more. I do think we’re going to be in a new paradigm on the other side of this where we rethink—we rethink, in particular, working from home, learning from home, and telemedicine, and how we can make all of those cheaper by investing and making sure that we have, you know, reliable and reasonably priced access to broadband. And I think it’s not out of our—it’s not beyond our capability to do that.

And on airports and rail lines from cities, so what I—you know, in my past I spent many, many years working in Europe, and watched in many European cities, including the one that I was living in, London, build up the Heathrow Express while I was living there. And I thought, you know, the complaint in the U.S. is that we have a lot of permitting, and we can’t go through public areas, and we can’t, you know, disrupt—you know, we can’t disrupt the—a lot of different reasons why we give ourselves the excuse of not being able to provide rapid rail transit to airports.

And I just look at the major cities of the world that are, you know, in advanced economies who have done it. And they have the same—you know, the same constraints around private property issues and regulatory issues that they figured out. And I have never understood why we haven’t been able to figure that out. I just—it’s just—you know, it’s beyond me why we don’t have something that is—that is comparable to what most of the major economies in the world have with their metropolitan centers and their—and their major airports.

So, you know, I don’t know how we get past that. There are certainly—you know, there’s certainly many initiatives to try and get, you know, rail services into airports from metropolitan centers. Washington, D.C.’s a good example. It’s been—in the decade-plus that I’ve been living here, it’s been an ongoing project. I think New York has something similar, going out to—Irina, you can correct me if it’s JFK or LaGuardia, where they’ve been working on a rail project to go out to serve the airports for a while. So it’s a puzzle to me. I think it should be easy—it should be much easier to do, and we just haven’t gotten our heads around it.

FASKIANOS: Well, hopefully the pandemic will help us reimagine a lot of things and get some of these problems or these—address some of these challenges.

Q: I’m funding a group of students in Bolivia to get a university education. One of my recent graduates is working on a rail line for the city of Cochabamba, Bolivia. This is a third-world country and they’re building a rail line. And we can’t even get that done with our legislature here in Wisconsin. So it’s an embarrassment to us.

FASKIANOS: Let’s go to Lawrence Chiulli.

Q: Good afternoon, everyone. I hope everyone’s well. Lawrence Chiulli, head of emergency management and code enforcement, village of Port Chester, New York.

I have a comment and something that probably will draw up some issues. I was in the epicenter right near New Rochelle. I have a density of forty-five thousand—well, let’s say thirty thousand. but the police chief and I had figured there was about forty-five thousand in 2.2 square miles, which makes my community as dense as the Bronx. The COVID thing has been a real issue. And what I’m seeing coming forward with the budgets that are coming through with the local governments is cuts are going to be going to personnel who were in the epicenter of saving lives, whether it was properly guidance with the businesses that were essentially open with social distancing, whether it was flyers and information to the multifamily residences, whether it was educating the community on what we had to do to stay safe. I’m not going to comment on my opinions on how this was run in different levels, but we’re learning from it because no one really had the answers going in.

But where my statements come in, where I see the problems is laying off personnel that risked their lives, some of which actually contracted the virus and went back to work, OK, and because of budget problems could lose their jobs, OK? Where I’m seeing the problem is, with the bill, is that we need to stay focused, like we do with disasters. I’m used to doing storms, which would be like Superstorm Sandy, or any other storms we do. And, you know, it’s about getting power back on, getting the stuff rebuilt, getting infrastructure rebuilt. But this is the same. It’s just not being treated the same way. FEMA should be coming in with disaster relief, treating it just like a storm. And I don’t think that we should be overloading this bill package, at the least the initial one, to incorporate everything else but what it should be taking care of, which would be the disaster relief from this pandemic.

Now, I’ll leave it up to you for comment. Thank you.

CREBO-REDIKER: So I think—I did say that I agree with that in terms of what we should be doing right now. The immediate response is exactly what you described, which is making sure that there’s support, there’s safety nets for people, there are jobs that are—that are supported, there are businesses—small businesses that are supported, there are health care professionals and health care facilities—this is the—that’s the firefighting that needs to happen right now. And I think that’s where the bulk of the focus has been and will be. I do—I do think it’s important if we’re going to get the economy back that there is money that goes to particularly forms of mass transit that allow people to get to and from their jobs, as the economy starts to reopen again.

I think if we don’t figure out how to get people back and forth safely that you’re not going to have people go back and forth. And if they do, they’re going to risk—they’re going to risk their health doing it. I do think that now is the time to plan. If you’re in state and local government, it’s a time to plan for down the line. And I do think that it’s probable that in a package that is a larger infrastructure package that it would be linked to the renewal of the Highway Trust Fund, which was something that Congress has been working on for a very, very long time anyway, and expanding that. And in the case that that happens, or there is a separate large infrastructure package that we can get political support for that state and local governments be ready with a plan and, you know, how to actually implement, as opposed to be surprised if you do have some kind of larger amount of support from the federal government, you know, on the other—on the other side of the firefighting.

So I do completely agree with you, right now it’s the time to make sure that we support the employment of the—of people who are facing job losses right now, and support the health of people who are still getting—who are still suffering from sickness, and looking at hospital bills. We need to support health care workers. That is—that is the immediate firefighting response. But I do think some part of the triage is necessary to make sure that we do have public—we do have an infrastructure investment still going in to make sure that that transportation that we need for people to get back to work is actually functional and safe.

FASKIANOS: Thank you. I know we’re at the end of our time, but I just want to try to squeeze in Mary Anne Butters. And my apologies to everybody—all the questions we couldn’t get to.

Q: Hi, I’m Mary Anne Butters. I’m a Wayne County, Indiana commissioner. And I so hope that that federal aid will be forthcoming, but the problem when that 80/20 percent math comes forward, the federal standards for construction are so extremely high that coming up with that 20 percent match is difficult when the federal standards require you to have, like, a thirty-two-foot deck on a bridge on a road that’s only twenty-four feet wide. (Laughs.) In other words, that 20 percent match is ruinously expensive.

I’m wondering if perhaps that the engineering standards might be relaxed somewhat because I really have heard from those who have their ear to the ground in the Senate that the Senate is really going to fund those firefighters putting out the COVID fire, but the infrastructure money is really going to help us grow our way out of this fiscal disaster. But without some value engineering to relax those federal standards, we won’t be able to afford that 20 percent match, because the standards are so extremely high. They’re Cadillac standards, and all we can afford is a used Chevy.

CREBO-REDIKER: So I am not a specialist in the—in the standards of what’s required for the federal—for the federal match. I do know that there has been bipartisan support over the years for streamlining both at the—you know, especially at the federal level. If it was very easy to do, it would have been done years ago. It’s a work in progress. The FAST Act, which was part of—which was the last—the last funding of the Highway Trust Fund came with a lot of mandates for the Department of Transportation to look to streamline the rules and regulations, and to try and basically make it—make it easier to have infrastructure funded through the Department of Transportation.

I don’t know where that stands right now. I know it’s sort of—it is a challenge for—everyone that I talk to is—you know, talks about the incredible amount of both red tape and the high hurdles. So I think you’re not the only one who’s flagging this issue. The only good news is I do believe there’s bipartisan support for streamlining and making it as—you know, easier for funds to be—to go to state and local governments. But I don’t know any of the specific details of which ones—which ones are being contemplated right now.

Q: Thank you.

FASKIANOS: Thank you very much.

And with that, we are out of time. I am sorry we couldn’t get to the—all the questions. But we will keep convening. So Heidi Crebo-Rediker, thank you very much for being with us today and for your analysis, and to all of you for your comments and your questions. We will send a link to the audio, video, and transcript of this webinar to you all soon. We’ll also be sending out the link from last week’s call with Laurie Garrett. Again, as a reminder, go to CFR.org, ThinkGlobalHealth.org, and ForeignAffairs.com for the latest analysis on COVID-19 as well as on a whole host of other regions and topics. And we will be convening again on Friday June 5 with Dr. Leana Wen from 3:30-4:30 p.m. Again, covering COVID-19. So keep a lookout for that invitation. We want to support the work you’re doing. Please send us an email at—to stateandlocal@cfr.org with any suggestions or comments.

I hope you’re all staying safe. And thank you, again, Heidi.

CREBO-REDIKER: Thanks a lot for having me. Thanks for joining.

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