May 2008
This paper is an adaptation of Current and Future Investment in Infrastructure, the statement of Peter R. Orszag, Director of the Congressional Budget Office, before the Committee on the Budget and the Committee on Transportation and Infrastructure of the U.S. House of Representatives (May 8, 2008).
Additional detailed data on spending for infrastructure by the federal government and by state and local governments can be found in a supplement to this document, available at CBO’s Web site.
Numbers in the text and tables may not add up to totals because of rounding.
Preface
The condition and adequacy of the nation’s physical infrastructure—including its surface, air, and water transportation networks; its energy, water, and telecommunications utilities; and its dams and schools—are important for the vitality of the economy and for public health and safety. Yet calls for increased federal investment in infrastructure must be carefully analyzed and weighed against other spending priorities.
At the request of the Chairman of the House Committee on the Budget, the Congressional Budget Office (CBO) has prepared this paper, which draws heavily from testimony presented May 8, 2008, before a joint hearing of that committee and the House Committee on Transportation and Infrastructure. This paper provides data on current investments, reviews future investments as proposed or analyzed by various entities, and discusses issues and options related to the federal role in helping the nation meet demands for infrastructure services. In keeping with CBO’s mandate to provide objective, impartial analysis, this paper makes no recommendations.
A data supplement, consisting of tables that detail public infrastructure spending by the federal government and by state and local governments from 1956 to 2007, is available at CBO’s Web site. That supplement updates data in a supplement to Trends in Public Spending on Transportation and Infrastructure, 1956–2004, a CBO paper published in August 2007.
Perry Beider (who coordinated the writing), Scott Dennis, Nathan Musick, and Sarah Puro were the primary authors; Nabeel Alsalam, Kim Cawley, Sheila Campbell, Jeffrey Holland, Jacob Kuipers, David Newman, MarDestinee Perez, and David Torregrosa made important contributions; Nathan Musick provided the Web appendix; Robert Dennis and Thomas Woodward provided useful suggestions and assistance; and Joseph Kile and David Moore supervised the research.
Angela McCollough prepared early drafts of the testimony. Kate Kelly edited the manuscript, which Maureen Costantino prepared for publication. Loretta Lettner proofread the paper. Lenny Skutnik produced the printed copies, Linda Schimmel coordinated the print distribution, and Simone Thomas prepared the electronic versions.
Contents
Current Spending on Infrastructure
Potential for Additional Investment in Infrastructure
Utilities and Other Types of Infrastructure
Economic Returns on Public Spending for Infrastructure
Options for Meeting Demand for Infrastructure Services
Improve the Cost-Effectiveness of Tax Expenditures
Reduce the Cost of Providing Infrastructure
Financing Infrastructure Through a Special-Purpose Entity
Options in Designing a Special-Purpose Entity
Comparing Special-Purpose Entities and Other Methods for Financing Infrastructure
Proposals for Capital Budgeting
Appendix A: Spending for Research and Development and for Education
Appendix B: Overview of the Highway Trust Fund
1. Capital Spending on Infrastructure in 2004, by Category
2. Annual Spending on U.S. Transportation Infrastructure
B-1. Actual and Projected Highway Trust Fund Receipts, 1998 to 2018
1. Public Capital Spending on Transportation and Water Infrastructure, 1956 to 2004
2. Federal Capital Spending on Transportation and Water Infrastructure, 1956 to 2007
A-1. U.S. R&D Spending as a percentage of GDP, 1953 to 2006
A-2. Expenditures by Educational Institutions as a Percentage of GDP, 1949 to 2005
B-1. Actual and Projected Highway Account Receipts, Outlays, and Balances or Shortfalls, 1998 to 2018
1. Management of Federal Buildings and Facilities
2. The European Investment Bank
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