February 2018 Vol. 73 No. 2
Editor's Log
The Infrastructure Marshall Plan
Robert Carpenter | Editor-in-Chief
This issue includes our highly anticipated Municipal Sewer and Water Survey. The exclusive survey, conducted last fall by Underground Construction magazine, provides an amazing window into the mindset and funding plans of U.S. sewer/water infrastructure personnel.
What stood out head and shoulders above all other issues was the desperate plea for immediate investment in the sewer, water and stormwater markets. While not necessarily surprising, after a weaker-than-expected 2017 spending year, city personnel are especially concerned about their neglected piping resources.
To some degree, the boondoggle of Flint, MI, has popped the entire underground sewer/water infrastructure condition onto the national stage. But is it enough to push through proper funding plans? Or will the national consciousness fade, letting Congress and state/local officials move on to their next fight that is most likely more visible and potentially politically significant?
Following World War II, most of Europe was in tatters. While the human price for Adolph Hitler’s insanity brought the world to tears, the cities were reduced to rubble and the countryside was pot marked with shell holes and destruction.
As the countries of Western Europe stumbled along the road to rebuilding, in 1948 the United States stepped up with the Marshall Plan (nicknamed for its architect, Secretary of State George Marshall). It amounted to an economic development and investment plan for Western Europe (Eastern Bloc countries, cowering under Soviet Union pressure, declined to participate). Over five years, the modern-day equivalent of $140 billion helped Western Europe accelerate its recovery to heights greater than pre-war levels. In short, unprecedented economic prosperity returned to Western Europe. There were some strings attached, but largely practical.
Back to the present, Congress recently passed a revised tax plan that restructures the tax code and includes favorable business tax reforms. Part of that includes a revision of the repatriation tax rates, making it at last economically feasible to bring home foreign money stashed in tax havens around the world by many of America’s largest companies. The treasure trove of corporate profits, estimated at $2.6 trillion, sat in foreign bank accounts – just waiting for a tax break before the money could be moved home.
Apple’s CEO Tim Cook made the incredible commitment to invest $350 billion over five years into the United States economy. That will bring home about $252 billion from its overseas accounts. The investment includes paying an estimated $38 billion in repatriation taxes over five years.
Washington bureaucrats may already have a long list of possibilities for that tax money, and who knows how many other corporations will follow Apple’s lead. But here’s a novel thought. How about dedicating those funds directly to infrastructure?
The funds are essentially “found money.” While that amount of money would by no means solve all the country’s infrastructure problems, it could provide a critical jump-start. Assuming the underground infrastructure receives its fair share, think of what municipalities can do with an extra $8 – $10 billion per year for five years?
That’s only the beginning. A sustained investment would still be needed. Congress would have five years to negotiate some kind of reasonable annual investment for infrastructure.That high level of investment would right many tilting – even sinking – municipal ships. The catch is there would be reasonable conditions in accepting the repatriation tax money. Primarily, I would suggest cities can no longer allow deficit spending all just to keep user fees low. Cities must maintain user fee rates in line with true operational costs and inflation. For many cities, that would mean major fee increases spread over five years, but the long-term results would prevent falling back in poor habits and making beggars out of cities’ sewer and water departments.
As I’ve advocated before, I would also suggest an immediate tax on bottled water. By 2020, the global bottled water industry is projected to reach $280 billion in sales, with the United States comprising the largest portion of that market. That would be one way to further generate money both now and after repatriation dollars are spent..
Obviously, I’m not an economist nor, thankfully, professional politician. I suspect there are many flaws in my logic. But let’s at least get the conversation started. We live in an increasingly complicated society. What used to be routine infrastructure issues have now fallen into political conundrums. Continued investment must be established for America to have a chance at reinventing maintenance and funding protocols that would lead to a healthy infrastructure and a healthy country.
Call it a modern-day Marshal Plan, designed to breathe life back into the underground infrastructure.
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