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October 14th, 2008
America in Gridlock
[VIDEO] Ed Rendell: The Infrastructure Governor

Gov. Ed Rendell (D., PA) is an advocate for reforming infrastructure policy and practice in both his state and throughout the rest of America. He co-chairs Building America’s Future, a bipartisan effort to change the way infrastructure is discussed in American politics, with Gov. Arnold Schwarzenegger (R., CA) and Mayor Mike Bloomberg (I., NYC). In Pennsylvania, Gov. Rendell has proposed varying measures to improve the state’s infrastructure, which rates particularly poor in road and bridge quality, from tolling to privatizing public roads.


Part One ~ Pennsylvania Governor Ed Rendell Interview:

Why talk about infrastructure?

Gov. Rendell:

This is a battle for America’s future. Infrastructure in this country is important – how we deal with our infrastructure in the next two decades is as important to our competitiveness as how we deal with educating our children. They’re both things that are involved in the long term economic competitiveness of this country. Do we want to be a third rate nation or do we still want to be the greatest country in the world when it comes to economy and moving around?

The American infrastructure – our transportation system – was the envy of the world for decades and decades. Now, it’s laughable. You go over to Europe and meet with transportation secretaries of European states, and they make fun of us because we don’t have any rail transportation for passengers and even rail freight that’s so much better for the environment, that’s so much more economical… You’ve seen those commercials where they say the equivalent of one gallon of gasoline will move X amount of tons of rail freight, X amount of miles – it’s stunning. Yet, we’re spending a whole lot less on rail freight than we are on road transportation – we’re not spending smart. I saw in the newspaper now that they’re thinking of putting trucks on rail lines because it’s so much more economical. We’ve got to start becoming very smart in how we conserve and in how we spend, and that’s the way to deal with the infrastructure.

Ray Suarez:

So what has to change about the way people like you talk to the public about what’s at stake here?

Gov. Rendell:

Well, first of all, people have to start talking about infrastructure. Infrastructure is not very sexy – it’s not like the economy, it’s not like jobs, it’s not even like renewable energy. When I tell people that we’ll be able to get gasoline from a part of the tobacco plant in five years, people go, “Wow!” When I tell people that you can get energy from microwaving tires, they say, “Well, that’s incredible!” That stuff is sexy! Infrastructure isn’t sexy. But, we all need it, we all rely on it, our safety depends on it, and it’s time that people start talking about it.

Part Two ~ Pennsylvania Governor Ed Rendell Interview:

The benefits of infrastructure repair

Gov. Rendell:

The wonderful thing about infrastructure repair is that it’s the best economic stimulus we can have. No offense to President Bush and the Congress who fashioned the last economic stimulus program, but those rebate checks if you judge by retail sales in the various department stores it’s pretty clear that people got those checks and used it to pay off existing debt – didn’t create one new job in America, didn’t create one new order for any American business. But, infrastructure repair creates thousands of jobs. It has been estimated that as many as 47,000 jobs come from $1 billion of infrastructure spending. And they’re good jobs – they cannot be outsourced because the work has to be done right here, they have family sustaining wages – they’re construction type jobs – and even better than just the jobs, they’re orders for Pennsylvania businesses or American businesses.

Let me give you just one example. In the accelerated bridge repair program, of those 411 bridges in Pennsylvania, we will use the equivalent amount of concrete that is used in building 16,000 new homes. Last year in Pennsylvania, we only started 25,000 new homes because of the slump – 16,000 would be a 60 percent increase. So, just doing 411 bridges in terms of those concrete manufacturers is the same as increasing new home starts by 60 percent. Steal, you know we’re still a big steal state, there’s enough steal in rebuilding those 411 bridges to build four Eiffel Towers, one the largest steal structures in the world. An incredible amount of orders for Pennsylvania and U.S. businesses come from infrastructure.

Part Three ~ Pennsylvania Governor Ed Rendell Interview:

The Cost

Ray Suarez:

Do you have to spend a billion dollars today, because money wasn’t being spent in the 1970s and 80s on some of these things?

Gov. Rendell:

To some degrees, that’s so. But also because the federal government, in my judgment, has abdicated its responsibility over the course of a few years. When Dwight Eisenhower left the Presidency, the federal government was spending 11.5 percent of our non-military domestic budget on infrastructure. Today, we spend less than 2.5 percent. America spends about a half of a percent of its GDP – its gross national product – on infrastructure. European nations spend seven times that much, and China and India spend almost 20 times as much on infrastructure. So, it’s no secret that we’ve fallen way behind.

The Highway Trust Fund, which is the only thing that supports spending on transportation infrastructure, is anywhere from $3 billion to $8 billion in debt right now. No one has given any real thought to how we are going to cope with infrastructure problems.

The American Society of Civil Engineers says we got a $1.6 trillion infrastructure debt – meaning just to take what we have now and to repair it and to put it into good working condition would cost $1.6 trillion. That’s not considering, for example, the cost of building high-speed passenger rail, which we need desperately.

I just left a convention of aviation executives – they can’t cope because we fly too many short flights, 300 miles, 250 miles, 400 miles. If you go to Europe or Asia there’re no plane flights less than 500 hundred miles, that’s all done by high-speed rail.

Ray Suarez:

If you were to go on TV here or in Pittsburgh and say, “Come on folks, we‘ve got to do something…” We’re sized by these twin contradictory impulses – we don’t want to spend the money, but we want the stuff fixed or maintained or built…

Gov. Rendell:

It’s true. You know, I formed an organization with Mayor Bloomberg of New York and Governor Schwarzenegger of California – who have done great things on infrastructure in their own jurisdictions and who also really believe we have to have a national program – and Mayor Bloomberg always says, “There’s no free lunch,” and people have to understand that on infrastructure spending.

It’s interesting, people know about our bridges, they complain to me all the time, “When’s that bridge going to be fixed, we need a new bridge,” they know about the bridges, they know about the roads in Pennsylvania, they know about mass transit… But, in a recent poll, they didn’t want to pay for road and bridge repair by tolling I-80, which is an interstate that goes through Pennsylvania and it’s untolled now, they didn’t want to pay for it by leasing the Pennsylvania Turnpike, they didn’t want to pay for it by raising the state gas tax. So, think it through folks, you don’t want to pay for it by any of those methods – how do you want to pay for it? Now, in defense of the citizens, in the last decade and decade and a half, confidence in infrastructure spending has eroded because of the Bridges to Nowhere, because of the Big Digs – supposed to cost $1 billion, now what’s the latest tab for the Big Dig, $14 billion? I mean, things like that, where the earmarks have made it so clear that a lot of transportation spending depends on the strength and political power of your local congressman or senator, not the worth of the project. So, there is some skepticism about infrastructure spending that didn’t exist before and that’s why proposals like from Sen. Dodd and Sen. Hagel to set up an infrastructure bank with a board of directors of experts and academics, and their the ones who make the decisions on what gets spent based on cost-benefit analysis, based on need – they’re the ones that make the decisions, those are the good ideas to restore public credibility in infrastructure spending.

Part Four ~ Pennsylvania Governor Ed Rendell Interview:

The Pennsylvania example

Ray Suarez:

Let’s talk a little bit about the economic side of some of these ideas. Like making I-80 a toll road, like leasing the Turnpike. It takes away some of what people value about it – that it’s ours, that our money built it in the case of leasing the Turnpike, making I-80 a toll road is to take a free-flowing artery, or ideally free flowing artery, and put stop signs up on it…

Gov. Rendell:

Well, let’s take I-80 first. We built it with public money, no question about it, but we haven’t been able to maintain it or repair it with public money. And, now the Highway Trust Fund in Washington is broke – it’s anywhere from $4 billion to $8 billion in debt and there is no public money to maintain it. People don’t want to ride on an unsafe I-80 or an I-80 with gaping pot holes, you can bet on that. They expect us to maintain it. Well, maintaining it costs money.

We’re a cold weather state that has hot weather in the summer, there’re contractions and expansions, we get tons of pot holes, we have to do constant repairs – people don’t do it for free. The asphalt people don’t give us the asphalt for free, so somebody has to pay for it. And, people don’t want to see an increase in the state gas tax and neither do I, not at a time when fuel prices are so high.

So, tolling is a user fee. And I give the Turnpike Authority some credit, when they and I haven’t seen eye to eye on everything recently, but they’ve developed a great plan where the average Pennsylvania citizen who’s driving on I-80 to see his sister, they won’t get tolled at all. Because they’re going to have these Easy Pass pass-throughs, no toll booths, if you don’t have Easy Pass, then they’re going to take a picture of your license plate and they’re going to bill you later. And, the toll areas are going to be stretched out, so that there’s going to be about 50-60 miles in-between for the short hops made by Pennsylvania citizens. Now a lot of this freight will be paid for by people who use I-80 as a way to get through the state without using the Turnpike. So, I give them some credit for that.

In terms of leasing the Turnpike, people react emotionally – they can’t concentrate on the difference between lease and sale. People say, “Well, I don’t want to sell an asset, I don’t want to give away an asset,” and I said we’re not selling it, we’re not giving it away. We’re maintaining control over when tolls can be raised, we’re maintaining control when repairs have to happen – all the important things – we the state are going to maintain control. I give them the example, if you sell your house and the buyers decide after they move in to paint your beloved house fuchsia, you can’t stop them. But, if you lease your house to them – even if it is a twenty year lease – they want to try to paint the house fuchsia, they need your permission to do so. It’s the difference between a sale and a lease. But people react very emotionally. But, again, the recent poll showed people don’t want to toll I-80 to pay for transportation repairs, they don’t want to lease the Turnpike, they don’t want to pay more gas tax… Well, what to they want to do?

Ray Suarez:

Can you point to places in the country where that approach has worked? I know a Spanish company controls the Chicago Skyway between Indiana and South Chicago

Mayor Daley tells me it has worked. Mayor Daley tells me it has pumped additional money into the Chicago transportation infrastructure and the road is running about the same as in other places. Governor Daniels in Indiana, a conservative republican, did the same thing I think when an Australian company won the right on one of their toll roads… The Australian company put in capital repairs on the road that were 2.5 times what the state was requiring them to do because they wanted the road to be attractive to attract more customers. So, on the Turnpike, the leading bidder here was a combination of a Spanish and CitiBank, the oldest bank in America, they had a combined bid. And people said, “Well, we don’t want a Spanish company running our Turnpike,” and I said do you ever go to Disney World? “Yeah, sure, I take my kids or my grandkids there all the time.” I said do you fly into Orlando? “Oh, yeah, sure, all the time.” I said you got to stop flying in because the same Spanish company that wants to lease the Pennsylvania Turnpike, operates the Orlando airport, and they do a very good job.

Ray Suarez:

But if the numbers work for a private company to do these things, how come they don’t work for government to do them?

Gov. Rendell:

Because a lot of the private investors get tax benefits from investing in long term assets. When a government does a project we don’t get the tax benefits. They are willing to invest, hypothetically, $120 million when the government might be only willing to invest $100 million because they get tax benefits from that. Number one. And number two, private business doesn’t have all of the restrictions – they’ll run a leaner and tighter ship most often than government authorities will, most often, there are some exceptions to that.

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