Infrastructure Maintenance: Spend A Little Now Or a Lot Later

April 19, 2012

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Minneapolis, MN, August 5, 2007 -- Cars and ro...

Minneapolis, MN, August 5, 2007 -- Cars and roadway litter the river where the I-35 bridge collapsed in Minneapolis. FEMA/Todd Swain (Photo credit: Wikipedia)

Despite the loads of debt talk in American politics recently there’s an interesting thing that’s been going on that a lot of people haven’t noticed: the yield on the 10 year Treasury Note (the main way the government borrows money) has been consistently low.  In fact, it’s been trending downward for months now, despite the debt fiasco from last year.  What does this mean in layman’s terms?  Other people can’t get enough of American debt.  Despite all our problems, people still see US debt as one of the safest things on the planet to invest in, and they’re willing to accept almost no return at all on it.  In fact since inflation is around 2.5% and the yield fluctuates between 2 and 3% investors could actually be losing a bit of money to hold American debt.

There’s another interesting trend that’s been going on longer and only occasionally gets press time when something REALLY bad happens.  That trend is failing infrastructure.  Remember back in 2007 there was quite the tragedy when the I-35 West bridge in Minneapolis, MN collapsed during rush hour.  Thirteen people were killed, a schoolbus of kids almost fell.  Millions were spent in the repair and close to a quarter of a billion dollars was spent on a replacement bridge.  A dozen people were directly put out of work because of the collapse, and possibly hundreds more had reduced hours or were laid off later from the aftermath.  The state of US infrastructure is just now starting to get so much press because so much of it is near the breaking point.  A simple search on “failing infrastructure” on Google News gives 1000 results.  Nearly 70,000 bridges in the US are considered “structurally deficient” at this time, meaning engineers have decided the need major repairs or all-out replacement.  That’s more bridges than there are McDonald’s restaurants.  It’s not just safety, either; Detroit, Orlando, San Diego, Dallas-Ft. Worth, Atlanta, and the big daddy, LA are all meccas of one thing:  Horrible Traffic.  Hundreds of man hours each year can be wasted by just a single person sitting in traffic.  Multiply that times the entire commuting work force.  Don’t care about traffic?  There’s sure to be an infrastructure problem to suit your interest.  The Power Grid needs major overhaul, and just about everything needs electrical power these days.  Cyber Security is also a huge deal these days, a very well-funded and clever organization could probably cause billions in damage and/or losses in just a few hours.

I’m sure some of you are wondering what the Treasury Note and infrastructure have to do with each other, right?  A lot of you see two problems, I see a solution.  If people can’t get enough of debt, let’s give ’em some of ours and use that money to fix what is more vital to our way of life than troops in Afghanistan or the next generation stealth fighter or whatever it is the military spends its trillions on.  As it stands right now America is an obese teenager with Birkenstocks held together with duct tape concerned about buying the latest Glock 9mm handgun.  Not unlike FDRs New Deal, infrastructure problems like these will put people back to work, which will get people spending, which will increase tax revenues, which will give the government more leeway on paying back debt.

I’m sure some of you are thinking it’s stupid to spend at this point in time, but let me put it to you this way:  What’s more fiscally responsible, spending X dollars now to replace something before it breaks, or spending X dollars plus Y lives in the future when that thing breaks, plus have the breakage cost millions more in lost business.  We’re going to pay for it either way, why not pay less before it breaks and ensure safety than wait for it to break and pay many times more?

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2 Comments (+add yours?)

  1. Martin Kelly
    Apr 19, 2012 @ 17:03:13

    I think I have been reading about political leaders planning major upgrades to infrastructure for the last 20 years. If you live in Pennsylvania, you will probably think that infrastructure is all that tax dollars are being spent on, since the turnpike has been under construction that entire time. The problem is that even when we have the political where with all to do the task “so shovel ready projects were not as shovel ready as we thought” as President Obama found out. We as a nation are sorely lacking in planning and executing projects without considerable political wrangling that prevents anything from happening.

    Your combination of infrastructure, bonds, electrical grid and cyber security. I completely agree with the bonds and infrastructure, but have to separate out the electrical grid. That grid is build and maintained by the electric corporations. Keeping that up to date is their responsibility, and should fund it themselves. Cyber security I realy do not know enough about to chime in.

    I do take issue with your redirection of funds from military to infrastructure. You will just cost jobs in one area to create jobs in another, and possibly affect our physical security. I know there is plenty of waste in defense, but there is also plenty of waste in the rest of the government, most of which do not provide jobs or security.

    Well written and thought provoking.


  2. Zarberg
    Apr 20, 2012 @ 10:16:34

    I appreciate the comments, Martin! NC is no stranger to ongoing road repairs, too. Seems like I-40 is continually ripped up and re-paved.


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