Could improvements to the nation's aging water infrastructure significantly boost job growth in the United States? During today's OnPoint, Ethan Pollack a senior policy analyst at the Economic Policy Institute, discusses a new report focusing on the economic impacts of a $188.4 billion investment in water infrastructure. Pollack also explains why he believes now is an ideal time for the US to make infrastructure investments across the board.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Ethan Pollack, senior policy analyst at the Economic Policy Institute. Ethan, great to have you on the show.
Ethan Pollack: Thanks Monica.
Monica Trauzzi: Ethan, EPI has just released a new report, along with American Rivers and the Pacific Institute, focusing on the economic impacts of significant investments to the U.S.'s water infrastructure. And you focus on a specific number. You're saying $188.4 billion in investments. How much economic activity and job creation do you think that that investment could yield?
Ethan Pollack: So, that investment will yield-what we did is we took that entire amount that was needed that EPA projected and pushed it into a five-year window with the theory that we can really, you know, have a down payment on those investment needs. And that will yield about $265 billion economic activity, as a multiplier of a little over 1.4, and about just a little under 2 million jobs over that five-year period. These are jobs that are very needed. You know, we're in the worst jobs crisis since the Great Depression. It is the number one need of this country and this is a significant amount of jobs to do something that we should be doing anyway.
Monica Trauzzi: So, how does this all get paid for? Have you suggested ways that the government can pay for this?
Ethan Pollack: Yeah, you know, some-you know, this doesn't necessarily need to be all federal. I mean there are some ways that state and local governments are financing this. You know, you can do things like tax increment financing. You can do things like, you know, just raising rate-the utility rates. But one thing that we focused on that we should really remember is that the cost of borrowing for the federal government is at historic lows. It's at about a 50 year low. In fact, the cost right now is less than a third of what the average cost was over the last 40 years before the recession began. And you've got-and especially if you're adjusting for inflation, it's almost the case where private capital markets are giving the government money for free. This generally does not happen, but we are in a very unprecedented time and this is the type of thing where we would be fools not to take that money and then invest in our future. And it makes sense to do something like deficit financing. I mean, you know, households do the same thing. You know, they know that education or, you know, a house, like the benefits accrue over a long period of time. So it makes sense to then finance it over a long period of time. So, you're matching up the costs with then the benefits over that time window and the government should be doing the same thing. We actually don't really deficit finance infrastructure, with a couple of small exceptions. But generally speaking, we try to pay for it all at once. And that's something that I think that most American families would find is exceedingly odd.
Monica Trauzzi: So, you think that right now is prime time for infrastructure investments across the board-
Ethan Pollack: Absolutely.
Monica Trauzzi: Not just on water?
Ethan Pollack: Absolutely. You know, it's cheaper. We need the jobs. It's also the case that the costs-the bids themselves are coming in well below what the projections are. It's because all of these independent contractors, they want to do the work and they're desperate for this work. So they're all competing amongst each other and they're putting in bids that, you know, during the normal economic conditions you just wouldn't see these type of offers coming in. So we're getting more of the project to work for less cost.
Monica Trauzzi: So, the paper argues that maximizing the use of green infrastructure specifically would be essential to meeting the needs of the water infrastructure in communities throughout the United States. Talk about what green infrastructure is and why that's the way to go.
Ethan Pollack: Well, so we identify a couple different, you know, green infrastructure solutions in the paper. You know, one is for example green roofs or just permeable surface. I mean right now what you're seeing the problem is that you have, you know, especially when you have heavy rainfall. You know, it's coming down, it's hitting this impermeable surface and you're getting this as runoff and all these dangerous chemicals, you know, or there are pathogens are being, you know, in cities they're being swept along into the drainage system. Sometimes they're combined within-you know, combined into then the surface water. And right now we're discharging about over 800 billion with a B gallons of untreated wastewater into American surface waters every single day. So, doing things where we're actually using the infrastructure as a filtering mechanism. You know, things like green roofs. When the water comes down, it's actually filtering it and, you know, similar with, you know, if you're having a lot of tree cover. The tree cover itself is absorbing the water and it's recycling it within the city instead of basically having the water come down and then move away from the city. So, these are the types of solutions that the paper looks at and it can be thought of as green, but it's also just kind of smart.
Monica Trauzzi: But with all the backlash that green investments have been facing recently in terms of loan guarantees and the lackluster green jobs market, why would Congress and the administration back something like this and do you think that there's a climate in Congress right now to talk about these kinds of investments?
Ethan Pollack: Well, first off let's not kid ourselves. There's not really much of a climate in Congress for anything other than speechifying. But I think that this does provide an opportunity for some type of, you know, kind of bipartisan compromise here and the reason is because right now one of the overriding concerns is deficits and debt. And the reason why we care about that is because we don't want to be bequeathing on future generations unsustainable levels of debt. But we need to broaden our idea of what actually is a type of debt. Passing on to future generations a broken infrastructure, you know, one that's literally crumbling beneath our feet. That is also a kind of debt that we pass on to future generations, because they will be sicker in the future and they will have, you know, worse living standards. So, I think that when we are caring about debt and deficits, we can't just think of a financial debt that we're going to be passing on. We need to be thinking about a broader agenda for the future. And that's one that includes much higher levels of investment in inner infrastructure that we currently do.
Monica Trauzzi: All right, we're going to end it there. Thank you for coming on the show, it's nice to see you.
Ethan Pollack: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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