INFRASTRUCTURE CRUMBLES BECAUSE THE INCENTIVES ARE TO BUILD UNSUSTAINABLE PROJECTS.

That's been a Cold Spring Shops argument, probably informed by reading a lot of Strong Towns stuff, for the past few years.  It's also an argument that Our Political Masters seem bent on ignoring.  It's not just the subsidizing of car ownership, particularly in the form of taxpayer supported "free" parking and the roads that move the commuters around, either.  Although National Review's Dominic Pino has a few Passenger Rail projects in mind in his objection to the current Federal shopping lists, he's on point with a general principle: "When the federal government is just throwing money at the states for projects they don’t really need, there’s not going to be any urgency to spend the money in a way that benefits taxpayers."

There, dear reader, is the first reason the infrastructure crumbles.  The usual complaint is that Members of Congress and state and local politicians love the photo-ops when the new projects get started, but nobody is interested in helping turn on the maintenance machines.  The deeper problem, as we shall see, is that the initial grants don't bring in train the resources to maintain the projects, whether those resources come from subsequent operating support or the farebox or toll booth.  It's not, as National Review contributors Joel Kotkin and Wendell Cox suggest, simply that the Franklin Roosevelt and Eisenhower administrations put money up for inclusive infrastructure, while the current Democrat plans are giveaways to the cities. "The New Deal, whatever one thinks of it, was about improving the material quality of life for most Americans, such as by spreading the benefits of homeownership to an ever-broader part of the population. In contrast, the Biden plan focuses on permanent redistribution through ever more entitlements and dependency — something Roosevelt opposed. It is likely to reduce our competitiveness by boosting energy and regulatory costs as well as taxes."  Those greenbelt communities with their tract houses, and the Levittowns that followed, relied on public provision of water mains, sanitary and storm sewers, and roads that were never placed on a financially sound basis, and the property tax revolts that began in the late 1970s were the first symptom of unsoundness.

It's only gotten worse since.

In the private sector (utilities and railroads) or with public-private partnerships, investors put in equity and cover the majority of the up-front investment via debt (e.g., revenue bonds). Economists and financial analysts explain that for long-lived infrastructure, financing makes good sense. By raising the capital upfront, the project gets built now and its benefits are enjoyed by those who pay as they use it over its long life.

In the various infrastructure bills being hashed out in Congress, the money is borrowed or printed upfront, but revenue bonds tend to be in bad order: for rail projects because those don't generate revenue, and for highways the usual suspects will bring up the likes of the Illinois Tollway, which is still collecting tolls despite retiring its revenue bonds a long time ago. It's impolite to point out that the tollways are now in pretty good shape, in part because the supposedly "free" highways are getting pounded by semis avoiding the tolls.

The second reason the infrastructure crumbles is that the same people who pretend the national government can provide the roads for free often object that any sort of user fee for those roads is a regressive tax.

President Joe Biden, in keeping with his pledge to not raise taxes on anyone making under $400,000 a year, has rejected the idea of paying for his $2.3 trillion American Jobs Plan with user fees, including a federal gas tax hike. He's instead proposing a corporate tax hike—something Republicans' infrastructure proposal explicitly rejects.

Progressive Democrats also don't like the idea, which they say falls too heavily on the poor and middle class.

"Republicans' insistence that middle-class families and local communities foot the bill for everything from roads to water to broadband, while mega-corporations not pay a penny more in taxes isn't acceptable," said Sen. Ron Wyden (D–Ore.) in an April response to the GOP's infrastructure bill.

Even if there were a consensus of making motorists and transit riders pay for the infrastructure they use, there are still the knock-on questions of what types of user fees might be applied and how much infrastructure they'd actually buy.

That's a strange situation in itself. The so-called progressives don't object to the transit authorities collecting fares, even though it's likely that transit riding correlates negatively with income; nor do they make a stronger case that the local roads are only "free" transportation for people who have to own an automobile to participate, which might be a larger hardship to a poor person than the five to ten bucks a day riding what rapid transit there is, while the so-called libertarians, too often they're socialists when it comes to public spending on roads, who object to the revenue deficiencies on the buses, trolleys, and trains are strangely silent about the greater revenue deficiencies that manifest themselves as potholes mud season after mud season.  It would be funny if it were not sad.

Republicans tend to be open to funding infrastructure by charging “user fees” (such as tolls and mileage charges) to those who benefit from it, but Democrats would prefer to hammer the rich, and ^*Biden worries about whether user fees would count as a violation of his no-tax-hikes-unless-you-make-$400,000 pledge. Is it a “tax” if you pay to use something the government built?

Put another way, those bumper stickers reading "This vehicle pays $14,110 a year in road taxes" probably don't mention the service price of the capital that would be unproductive absent the roads to beat up!

It all came to a head on Milwaukee talk radio yesterday afternoon.  That Bus Rapid Transit Line got hammered for creating a socialist-style shortage of lanes for motorists on Wisconsin Avenue, as well as for the wishful thinking that people will drive to a park-and-ride lot or ride one of the crosstown buses just to save a few minutes on the Lakefront-to-County Grounds segment of the ride.  And note: "The Federal Transit Administration is supposed to pick up most of the tab for the project."  Same problem: no revenue bonds, no provision in the Federal budget to cover the operating losses, although perhaps some influential Member of Congress will get a bailout into some future continuing resolution.

Then, there's that downtown streetcar.  A federal grant paid for its installation, and the city authorities are now obligated to operate it for the design life of the project or pay Washington the money back.  That changes the sunk-cost thinking at City Hall.

[C]alls to temporarily shut down the streetcar were rejected when the [public works] Commissioner issued a memo saying it would cost almost as much to stop running The Hop as it would to run it practically empty. That's because the city pays a private vendor a fixed contracted amount to operate the streetcar each year, plus utilities and insurance, and [Commissioner Jeffrey] Polenske argued there would be additional costs to retrain employees and get the system ready to start running again once the shutdown was over. In the end, he estimated the city would save no more than $150,000 to $500,000 by suspending service. Worse yet, he wrote, a shutdown could put millions of dollars in federal grants used to build the system at risk.

"There really isn't a shutdown option," he told council members."

In addition, there are people in Milwaukee hoping to use the downtown streetcar as a base for expanding the service.  Put another way, they're now using public money to attempt to replace a much older urban transportation service that a prior expenditure of public money, on boulevards and expressways, destroyed.

Then there's the expressway that occupies land previously used by the previous version of the Rapid Transit Line.  One section of it is still in its as-built form, as of sixty years ago, and that's been well-and-truly pounded by all those free riders.  But widening it is a false economy.  " It’s time to stop pretending roads pay for themselves and be more fiscally responsible for sustaining and improving what we already have in our cities."  The current lieutenant governor, a Democrat from Milwaukee, objects to widening that stretch, even if the money gets in whatever bundle of pork ultimately comes from Washington.  They're not, yet, talking seriously about turning the interstates into toll roads, or raising the gasoline tax.  Sometimes you have to trade one injustice, a regressive tax, for another, the cheaper housing is often near the expressways.