Divided by a common deficit

In the week George Osborne announced the creation of the National Infrastructure Commission and just two weeks after we debated how best to address long-term infrastructure decisions in the UK, I attended a Carnegie Endowment for International Peace forum on American Job Creation and Infrastructure in Washington DC, with a high-powered cast list including Vice-President Joe Biden, Senator Elizabeth Warren and Chicago Mayor Rahm Emanuel. The similarities – and differences – between the US and UK debates were very enlightening. UK–US divergence The first big difference was the sheer scale of numbers in the US. Infrastructure gaps of trillions of dollars were being bandied around – spending of 2% of GNP versus a requirement of 8%. But of course, when the US talks about infrastructure it is effectively talking of infrastructure for a continent, not a country. Perhaps because of the scale of the figures, the debate was also framed in grandiloquent terms – the US could not be a 21^st century economy with 20^th century infrastructure (Emanuel); this was an issue of national security; this was the route to revive the American middle class (Biden). There was also a very expansive definition of infrastructure – not just transport and energy, but also broadband, putting air conditioning into schools and what in the UK we call “green infrastructure” – parks and recreation. But the other big difference was the way infrastructure played out through the polarised lens of US politics. The audience voted for “political dysfunction” and “hyperpartisanship” as the principal reasons behind inaction at the federal level. And there was talk of an unholy alliance in Congress between the “freedom caucus” of anti-‘big government’ Tea Party Republicans and what some termed “congestion caucus” Democrats. In the US, infrastructure at federal level has in the past decade has become a left/right issue in the way that it is not in the UK – with George Osborne being prepared not only to borrow Ed Balls’ idea of an Infrastructure Commission but also to put a Labour peer (Lord Adonis) in charge of it. Indeed, the organisers of the seminar found it hard even to get Republicans to attend (all their keynotes were Democrats). The most notable contrast between the US and UK was the division between the different levels of government in terms of infrastructure spending. At the moment, the Federal (national) government accounts for about one quarter of infrastructure spend in the US, with the rest the responsibility of local and state governments. Tiers of government The seminar began with Emanuel detailing all that he had done, in his six-year tenure as Mayor of Chicago, to make the city an attractive place to do business – and he saw infrastructure as a prime source of competitive advantage. He was a poster boy for the notion of a powerful elected mayor, able to broker deals and made clear that he took a pragmatic view on mixing public and private money. He had a simple appeal to the layers of government – state and federal above him – to let him make the tough political choices and defend them locally, but not to make his life more difficult. He pointed in particular to cuts in the Transport Infrastructure and Innovation Financing Act (TIFIA) credit assistance programme and the very restrictive terms of access to Railroad Rehabilitation and Financing (RRIF), which had prevented anyone but Amtrak accessing the money Congress had voted into it. One of the few Republicans there, former Mayor of Mesa, Arizona, Scott Smith, showed that he had also managed to make the oldest electoral population in the US (with a median voter age of 72) support bond issues for infrastructure. So city-level seemed to be the place where it was easiest to create consensus, through activist mayors. Above city-level, the picture was increasing inaction at the higher levels of government. Some states had raised the gas (petrol) tax, but at Federal level it had remained frozen in cash terms for the last 22 years, leading to growing imbalances in the Highways Trust Fund. The Congressional representatives held out hope for a possible deal to make the numbers add up through a combination of gas tax increases and international tax repatriation, with revenues split between roads and tax cuts. Meanwhile, the separation of powers between the Executive and the Legislature meant that Vice President Biden could only cheerlead for the Administration’s Grow America Act  –and appeal to both sides to pass it. Looking abroad for solutions? The seminar’s aim was to come up with solutions. Those seemed to be in relatively short supply, though intriguingly there was interest in what other countries were doing – both Canada and even the UK (though no-one mentioned the possibility of leveraging Chinese cash!). One repeated theme was the way in which the Federal budget makes no distinction between capital and revenue spending.  Another was the fact that the US needed to move beyond a “fact-free political debate” – which our work identified as also an issue for the UK. To an outside observer, it seemed that the mindboggling scale of thinking about infrastructure at federal level was part of the problem. Relatively little infrastructure needs to be planned at federal level, so it was far from clear that a US version of the UK National Infrastructure Plan would really help. While Congress remains so badly polarised, the way forward for appears to be for as much infrastructure development as possible to be taken forward by lower tiers of government – cities, states and consortia of states. The federal role then is to enable – and to keep out of the way.