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An economic strategy for investing in America’s infrastructure

July 1, 2008



Infrastructure investment has received more attention in recent years because of increased delays from road and air congestion, high-profile infrastructure failures, and rising concerns about energy security and climate change. The United States now has the opportunity to channel public concern and frustration into a national infrastructure strategy that promotes infrastructure as a central component of long-term, broadly shared growth. While increased spending on infrastructure is likely to be needed, this paper emphasizes the large gains that could be reaped by using existing infrastruc ture more efficiently and by making better decisions about how to invest in infrastructure.

For physical infrastructure, we recommend establishing pricing mechanisms such as road congestion fees and air traffic control fees to make users bear the costs of their infrastructure use more fully. At least part of the revenues from these fees should be used to offset their potential adverse distributional effects. The federal government can also promote better decision-making about new investments by removing distortions in its own policies and providing more flexibility in exchange for accountability by states and localities. For telecommunications infrastructure, we propose that the government make better use of the wireless spectrum by facilitating sales and leases of unused spectrum and by introducing more flexibility in its policy of interference prevention. Further, the government should consider targeted, cost-effective subsidies to encourage private firms to expand high-speed Internet access to unserved rural areas.


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