America’s Infrastructure Moment

April 21, 2020

The United States has shown speed, determination, and ingenuity in responding to the economic impacts of the Covid-19 pandemic. Three bills have been rapidly signed into law, injecting over $2 trillion into the economy. The Federal Reserve brought interest rates effectively to zero and then found new ways of adding another $2 trillion in liquidity to financial markets. Still, the economy continues to shudder. Shutdowns sweep the nation. Some 22 million Americans have joined the ranks of the unemployed. More are expected. 

The measures to date are unlikely to be enough. New legislation being considered is focusing on ways in which the economy can be rapidly restarted and on getting people back to work. A $2 trillion infrastructure program is at the center of these deliberations and for good reason. Infrastructure is the backbone of any economy, and infrastructure can put thousands of people to work. But an infrastructure bill is also a once-in-a-century opportunity for the United States to reaffirm its global leadership not just in hard infrastructure, not just in economic efficiency but in the digital infrastructure of the future.

What could $2 trillion do? The Marshall Plan, which revitalized Europe after World War II, cost the United States about $161 billion in today’s dollars. President Eisenhower’s national highway program, which built our interstate system, cost about $538 billion in today’s dollars. A $2 trillion infrastructure plan has the capability to address both short-term job creation needs and investment in the strategic infrastructure that will underpin our success in an increasingly competitive world. It is important to get this right.

U.S. infrastructure is in a precarious state. The American Society of Civil Engineers (ASCE) estimated in 2016 that the costs of the United States’ continuing underinvestment in infrastructure would be $3.9 trillion in lost GDP by 2025 and 2.5 million fewer U.S. jobs. To get U.S. infrastructure back to a globally competitive standard, ASCE estimates some $2 trillion in investment is needed.

ASCE has looked at what is commonly referred to as “core” infrastructure: transportation, water systems, and the like. These are essential to our economy. But the best roads, ports, or railways are no longer sufficient to ensure and underpin economic prosperity. The digital economy is increasingly the most important and powerful factor in global competitiveness.

For example, China’s digital industries are expected to contribute as much as 50 percent to GDP by 2025 (when the country is expected to have surpassed the United States as the world’s largest economy). This comes on the back of China’s significant investments in 5G, artificial intelligence, autonomous vehicles, quantum computing, and more. Digital industries contribute 6.9 percent to U.S. GDP today. Few would dispute that digital capabilities will shape the industries of the future.

But what will that future look like now in the face of this pandemic? While it’s too early to tell the full extent of change, certain trends are emerging that will apply to a wide range of nations and should be considered in an infrastructure strategy.

First, strong digital economies and networks have proven enormously important in addressing the pandemic and managing through it—from telemedicine to e-commerce to 3D printing. The need for greater digital connectivity, bandwidth, and applications to both facilitate connectivity and apply digital tools to address societal problems will be at the forefront of many nations’ agendas.

Second, for middle- and upper-income economies like China and the United States, respectively, the question remains of whether societies will return to a heavy reliance on commuting, physical office presence, and in-person interactions or whether there will be a downturn in travel demand (at least for business) with consequent impacts on a host of industries from real estate to transportation to hospitality.

Third, there will be a shift in global supply chains to create greater "resilience" and less dependence on singular suppliers (be they countries or companies). This will impact infrastructure investment as resilient logistical infrastructure will be a more important factor in investment decisionmaking for companies, along with keeping certain critical supply functions closer to home.

An infrastructure bill offers the opportunity for the United States to lead again, not just at home but around the world. We can meet short-term stimulus needs and invest in our future. To achieve this, the bill should:

• Set aside a portion of the funding for near-immediate infrastructure repairs and upgrades. Start the planning and funding now so that in six months or less these projects can break ground and gainfully employ thousands of workers.


• Set aside a significant portion of the funding for longer-term infrastructure upgrades and new builds that underpin our economy, including highways, ports, water systems, and other core infrastructure. Build advanced technology requirements into their design, delivery, and maintenance.


• Make specific investments in the U.S. digital economy, including: (1) significantly expanding broadband access particularly in rural and underprivileged areas; (2) substantially expanding U.S. telemedicine capabilities to be world-leading; and (3) investing in digital R&D and pilot programs (such as sensors, software, artificial intelligence, drones, and other tools that will improve productivity and introduce new business models) and digital ecosystems (such as smart city environments and mobility solutions that are already starting to create whole new industries).


• Finally, leverage U.S. financial markets and entrepreneurs—partner with the private sector. There are literally hundreds of billions of dollars in private capital looking for investment opportunities, particularly at the intersection of infrastructure and technology. The bill should foster private investment alongside public monies.

As the world recovers from the pandemic, economies will emerge with new consumption and production patterns and an even greater reliance on digital infrastructure. A well-designed infrastructure bill will enable the United States to lead the way: putting citizens to work, improving hard infrastructure delivery through new technologies and financing, expanding digital access for all, and building the industries of the future.

Peter Raymond is a senior associate with the Simon Chair in Political Economy and the Reconnecting Asia Project at the Center for Strategic and International Studies in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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