Infrastructure deficit threatens booming U.S. economy, U.S. Chamber CEO warns

The United States needs a major upgrade to its infrastructure—roads, bridges, ports, electrical grids and broadband--to keep up with its newly booming economy.

“We cannot build a 21st century economy on 20th century infrastructure—if  it’s that good,” U.S. Chamber of Commerce President and CEO Thomas J. Donohue said. “This year can and must be the year of major infrastructure investment. We have the political will, the bipartisan support—and we certainly have the need. Now it’s time for action.”

Donohue called for a “forward-looking infrastructure” program, adding: “We must pay our way our way into the future. We need to rebuild our roads and bridges for changes to come, including driverless cars.”

But how do we pay for it? That’s a problem that has dogged the debate for ages. The Chamber has been pushing for what it calls “modest increases” in the fuel tax—18.4 cents on gasoline, 24.4 cents on diesel, unchanged since 1993—to help pay a modernization program.

The Chamber was scheduled to propose what Donohue called “very constructive ideas and proposals” at an infrastructure summit on Jan. 18.

Recently Ed Mortimer, the Chamber’s executive director of Transportation Infrastructure, said the nation had a $2 trillion “infrastructure debt” of needs to be addressed. In response, the Trump administration has offered up $200 billion and is basically asking states and localities to pick up the rest of the tab.

Mortimer recently told the PBS News Hour that the Chamber considers the $200 billion “a floor and not a ceiling” in the amount the federal government will chip in to rebuild infrastructure.

“We’re going to help jumpstart the conversation between private and public sector leaders,” Donohue said. Donohue made his remarks at his annual “State of American Business” address on Jan. 10 at the Chamber’s headquarters across the street from the White House.

“The state of American business is strong and positioned to grow stronger still,” Donohue said. “Barring unforeseen circumstances, we expect stronger growth this year and well into 2019.”

Trucking executives predicting a boffo year for their industry largely backed Donohue’s economic views.

“Overall economic fundamentals are the big thing,” Darren Hawkins, president and COO of YRC Worldwide, told LM, saying U.S. industrial production is at its strongest level since 2008. “U.S. manufacturing  added 189,000 jobs in 2017. That industrial sector is a big driver for LTL. And an emerging driver is retail, which just had its strongest holiday season since 2011.”

Pitt Ohio President Chuck Hammel agreed, adding: “With very few exceptions, all of our customers had a strong year. Consequently, we had a strong year.”

Now Donohue and other pro-business advocates are hoping action from the Trump administration will continue to grease those wheels—and not accidentally throw sand in the engine. 

Withdrawing from the North American Free Trade Agreement (NAFTA) would be such a “huge mistake,” Donohue said. Trump administration officials are threatening to do exactly that. Another round of NAFTA negotiations are scheduled for this month in  Montreal, and the outcome of those talks is an economic wild card.

"A wrong move on NAFTA would send uS five steps backward,” he said. 

Noting that Mexico and Canada are our largest trading partners, with an annual trading exchange of more than $1.4 trillion, Donohue said: “We support modernizing this agreement. It should not close markets, undermine investments or limit trade with regulatory red tape.”

Growth will be “weakened, not strengthened” if the U.S. pulls back or withdraws from its many multinational trade agreements, he said.

“If we don’t lead on trade, we fall behind,” Donohue said. “The EU (European Union) is striking major deals with China and other countries. This is a reminder we are in global competition to sell our products and services to the 95 percent of the population that does not live in this country. We must strengthen our global partnerships.

“To be clear, we don’t need everything to turn out just right for us to prosper this year,” Donohue said. “We can overcome some adversity.”

Noting “hope is not a strategy,” Donohue said economic growth remains the best way to expand opportunity “to restore the American dream for the many, not just the few.”  But that economic growth must be inclusive for all Americans, he said.

“So growth must be strengthened—two quarters of 3% growth is a start, but we must make up for a lost decade,” Donohue said. “It must be sustained—we need policies that will support growth for years, not quarters.”

Donohue took credit for helping shape the recent corporate tax cut and unraveling “a slew of Obama-era” regulations “that directly harm workers.” But he said there was “more work to do,” including rewriting Obamacare and additional systematic regulatory reform.

Older Americans and baby boomers need to be attracted to continue stability in the work force, Donohue said. Noting that 10,000 baby boomers are retiring every day, he said older Americans’ experiences are needed in virtually every industry.

“Who says we need to throw in the towel when we reach a certain age?” the 79-year-old Donohue remarked wily. “Not me!”