America's infrastructure is sorely lacking. Matt Rose, CEO of Burlington Northern Railroad, offers solutions.
By Nina Easton, senior editor-at-large
FORTUNE -- Amid all the bitter wrangling between big business and the White House, there is one point of agreement: the need to rebuild the nation's roads, bridges, and rails. The U.S. has fallen from eight to 16 on the World Economic Forum's infrastructure rating; one bipartisan report cites a $200 billion annual shortfall just to maintain our current transportation network. But in these tight economic times, who's going to pay? We took that question to Matt Rose, who heads BNSF, North America's second-largest rail freight system, and is a member of President Obama's jobs council.
Q. Why should we worry about this now? Can't we muddle through until the economy rebounds?
A. Infrastructure investment can be part of how the economy rebounds. It increases the competitiveness of the American worker. The cost of congestion raises the cost of transporting goods and makes the American economy and worker less competitive. It's also job-stimulative. We can create middle-class jobs. For example, we have all these returning veterans who had been building roads in Afghanistan and Iraq and are now having a hard time finding jobs.
The President's stimulus bill made the same claim -- and unemployment went up.
That bill had an infrastructure element, but it wasn't an infrastructure bill. Project after project wasn't shovel-ready because we don't have permit reform. We need to speed up environmental and other approvals that add years to the start of a project. There also needs to be accountability. The American people are jaded with the "bridge to nowhere" and other projects driven by politics. They don't trust the government to spend money wisely. And let me add this: There are 107 federal programs dealing with infrastructure. You can't do anything well with 107 federal programs. You have to create very specific goals and incentives for the states.
The American taxpayer is not exactly in the mood to pay for any of this.
Well, first, we've done a lousy job of explaining how we pay for our infrastructure now. We have had an 18.5¢ federal gas tax since 1993 to support the Highway Trust Fund. But now that is worth only about 12¢ because of the rising costs of steel and concrete. We have a dependency on foreign oil and want a clean environment, so we've raised mileage standards. That hurts those receipts coming into the trust fund. That said, we're not going to raise the gas tax.
So where does the money come from?
I would be much more aggressive placing tolls on roads and bridges, which would create a revenue stream that can be leveraged. There are hundreds of billions that could be raised from pension funds, trust funds, even foreign investors.
This administration wants to make big bets on high-speed passenger rail. How realistic is that?
You tell me what the price of gas is, and I'll tell you what I think of high-speed rail. Unless we want to price gasoline like Europe, I don't think European-style high-speed passenger rail will ever be workable. Maybe we'll see it work in the Northeast corridor and California -- but to build out the top 30 cities on high-speed rail would cost $1 trillion.
This article is from the November 21, 2011 issue of Fortune.
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