Why Does America’s Infrastructure Cost So Much to Build?

The US chronically underinvests in infrastructure, to the point where even a country as poor as China enjoys a better train system, better airports, better highways and bridges, and more extensive urban subways.

Part of the reason is that taxes in the US are low, so public infrastructure spending gets squeezed.  Comparing the US to the 34 OECD countries and using OECD data (the OECD is a “club” of the main rich countries of the world, along with a few upper middle income countries such as Chile, Mexico, and Turkey), US overall taxes were only 24.1% of GDP in 2009, the most recent year with data published for all OECD members.  This was only seven-tenths of the average for all OECD members of 33.8%.  Taxes in Denmark were the highest, at 48.1%, or double the US level, and living standards in Denmark are excellent with the Danish economy doing well.  It is hard to see how one can assert, as the Republicans repeatedly do, that even slightly higher taxes than the US has now will bring economic ruin.  The only OECD members collecting less in taxes than the US are Chile and Mexico.  That is part of the reason why infrastructure in the US, which was at one time excellent, is now closer to what one finds in Chile and Mexico than what one finds in Europe.

But in addition to spending less, I was struck by two articles in the local section of today’s Washington Post which illustrate the problem of costs.  First, an article on the American Legion Bridge, which carries the northern portion of the Capital Beltway (Interstate 495) over the Potomac River, noted that the bridge opened in December 1962, and cost $2.8 million to build.  This was not a small project.  It opened with six lanes of Interstate Highway, and 48,000 vehicles a day used it in 1965.  Yet it cost only $2.8 million.  This would be equivalent to $21.3 million in today’s prices, using the general CPI index for inflation.

A second article noted that the Klingle Valley Park (a portion of Rock Creek Park, which follows a stream valley leading into Rock Creek) might reopen in a few years.  An old road ran through this park, but the road was closed following a storm twenty-one years ago when portions caved in.  The article was on a recent court decision that dismissed a case by a group wishing to build a new road through that park.  This may now clear the way to proceed with re-opening the park with a hiking – biking trail, which the DC Council approved in 2008, which would follow the route of the old road.  Personally, I strongly support this.

The park is only three-quarters of a mile long.  One would think that building a paved trail (where most portions of the concrete base of the old road still exist) should not cost much. But along with work on new storm sewers to follow this short right-of-way and with some general environmental work, the cost is now estimated at $8 million to $11 million.

Why is it that one could build a major bridge carrying six lanes of Interstate Highway over the Potomac River in 1962 for $21.3 million in today’s dollars, but a hiking-biking trail three-quarters of a mile long, together with some storm sewer and environmental work, will cost fully half as much?  I do not know the answer, but one sees such high prices in all of the major recent infrastructure projects.  Consideration has to be given to how we can build these projects less expensively, or America will remain short of the infrastructure a modern economy requires.