As the President made clear in his State of the Union address, we must ensure that the U.S. has the fastest, most reliable ways to move people, goods, and information to maintain our competitive edge. Yesterday, Vice President Biden and Secretary LaHood visited a rail yard in Philadelphia to highlight one aspect of the President’s plan – connecting 80 percent of American households to high-speed rail in the next 25 years.
Part of that commitment is to invest in infrastructure to create jobs today and out-compete the world tomorrow. Well-targeted infrastructure investments create both immediate and long-term economic benefits. Those benefits accrue not only where the infrastructure is located but also to communities all across the country.
When the Port of Seattle improves its connection with local freight railroads, it creates construction jobs for local workers – but the project’s benefits extend far across the heartland. By making it cheaper to transport cargo, this improvement will allow cattle ranchers in rural Montana to ship their beef to new markets across the world. Consumers who purchase imported goods and American businesses that are expanding their exports enjoy lower prices and improved access to new markets and goods.
Likewise, when New York City upgrades its subway system by adding new rail cars, millions of New Yorkers will get to work faster, increasing their productivity and quality of life by decreasing the amount of time lost to commuting. More subway capacity means less congested streets, less time spent stuck in traffic, faster deliveries of goods to city stores, and less smog in the air. However, the decision to increase capacity in New York also means that the far-away Kawasaki plant in Lincoln, Nebraska that manufactures the subway cars will increase production, putting Nebraskans to work.
Finally, upgrading our air traffic control system through NextGen technology will not only benefit those who fly commercially but allow companies such as UPS and FedEx to ship goods more efficiently. As a result, individuals and businesses all across the country will save in lower shipping costs.
Just as towns across the country sprung up along the early rail lines of the 19th century, 21st century businesses will thrive in places with better access to effective transportation – whether runways, rails, or roads. In a global economy, where businesses are making investment choices between countries, we will compete for the world’s investments based in part on the quality of our infrastructure.
While we need to increase our overall level of infrastructure investment, we must also reform the ways in which we invest. Not all infrastructure investments are good investments, and too often we have seen transportation projects exemplify the worst of Washington – the bridges to nowhere that rightly make American taxpayers cringe. The President’s Budget recognizes this and will make some difficult choices, proposing significant spending cuts, including to some programs we would preserve in better times. However, it is not enough to spend less. Government must also spend wisely.
That’s why the President’s plan will reform our current system to promote merit-based investment by creating a National Infrastructure Bank, which will select projects on the basis of rigorous analysis. The National Infrastructure Bank will also draw private capital to invest in American infrastructure so that we can better leverage scarce taxpayer dollars. We will support projects that produce significant returns on our investment, allow Americans more choices in their modes of transportation, and improve the interconnectedness of our existing transportation networks to maximize the value of our current infrastructure.
Investing in infrastructure today will also put Americans back to work. Treasury Department analysis shows that the unemployment rate among the workers building our infrastructure stands at more than 15 percent – more than one and a half times the national average. Eighty percent of jobs created by investing in infrastructure will likely be created in three occupations –construction, manufacturing, and retail trade – which are among the hardest hit from the recession. Nine out of 10 jobs created in these three sectors pay middle-class wages.
In the coming years, we must be fiscally responsible as we work to strengthen economic growth and improve competitiveness. Our strategy is designed to make crucial investments in infrastructure while bringing our deficits down to sustainable levels. These targeted infrastructure investments are a necessary component of creating the middle-class jobs we need now and strengthening our foundation for future economic growth.
Tim Geithner is Secretary of the Treasury.