Big Government Infrastructure Spending Produces Less Return Than Ever

The history of big government spending on infrastructure has shown that more money does not correlate with better public works. The New York Times ran a story on Sunday detailing some of the problems that have plagued massive projects.

While America was able to tout having the world’s best bridges, highways, and water systems in the world for decades, recent years have seen legal challenges for environmental rules and the overall drain of talent away from government agencies reduce the return on additional government spending.

For example, California started a high-speed rail public transit project set to be finished in 2020 at a total cost of $33 billion. As things stand now, the completion date has been moved to 2033, and the price has been revised to $100 billion. Those estimates are reportedly out of date again, and there is a current funding gap of at least $80 billion for the project.

Another rapid transit project in Hawaii has been delayed because of issues with cracking tracks and damaged welding. It was later determined that the wheels used on the trains are a half-inch narrower than the rails they were designed to run on.

The Long Island Rail Road’s East Side Access extension project was planned for decades before the first construction contract was awarded in 2006. The project was set for completion in 2011 for an estimated cost of $2.2 billion. Because of design changes and construction problems, the completion date has been extended to the end of 2022 at a current cost of $11.1 billion.

Government construction projects seem to be subject to significant budgeting and planning errors invariably. If these were honest mistakes, one would expect to find as many overestimates and underestimates. The public is always saddled with underestimation of cost and completion time.

Bent Flyvbjerg of the University of Oxford said after extensive study of infrastructure projects in multiple countries that cost estimates are “systematically and significantly deceptive.” He added that 92 percent of the projects he studied typically exceeded their original estimates for time to complete and total cost, often by significant amounts.

The Times quoted Willie Brown, who said that the first budget for a government construction project is “really just a down payment.” Because the public would never agree to the actual cost, the objective usually is to get started on a project and then demand more money once it is underway.

Like Joe Biden’s “Build Back Better” public works bill enacted last month, infrastructure spending is still typically popular with most voters. When cost overruns and delays come down the road, politicians never seem to be held accountable for the original big plans gone wrong.