Infrastructure goes unloved at U.S. conventions

ST. PAUL (Reuters) - Not far from the site of a deadly Minnesota bridge collapse, infrastructure investment was hardly mentioned when Republicans gathered to nominate Sen. John McCain for president.

It was a similar story at the Democratic National Convention last week in Denver where Sen. Barack Obama accepted his party's presidential nomination with a speech that spoke only in passing of rebuilding U.S. cities.

Both political parties acknowledge that modernizing transportation, power grids, air traffic control and other public services is vital but the task of paying for it all is falling increasingly to cities, states or the private sector rather than the U.S. federal government.

Municipal governments are struggling to meet existing obligations because the housing bust and weakening economy have hurt property and sales tax revenues, and the credit crisis has made borrowing costlier.

Many states are looking at selling or leasing highways, bridges or airports to fill budget holes.

"The real story is there's no money," said Norman Anderson, chief executive officer of CG/LA Infrastructure in Washington, which consults on infrastructure projects. "The federal budget is obligated to the tune of 70 to 75 percent at the start of every year. There's very little discretionary money available."

Anderson said infrastructure was not among the top five priorities for either candidate. That may be because it isn't first and foremost in voters' minds either, falling well behind wider economic worries and the Iraq war.

Even in the Minneapolis-St. Paul area, where construction on the Interstate 35 bridge serves as a daily reminder of infrastructure needs, it wasn't the primary concern among several voters interviewed by Reuters.

"It's not my number one priority but it's up there," said Emily Jerve, 29, an agriculture research analyst based in the Twin Cities who said she was "leaning" toward voting for Democrats. "It's a concern for safety reasons."

On August 1 last year, the eight-lane bridge on Interstate 35 collapsed during rush hour, killing 13 people and injuring more than 100. The bridge had been labeled "structurally deficient" by the U.S. Department of Transportation.

WILLING BUT UNABLE

Florida Rep. John Mica, the highest-ranking Republican on the U.S. House of Representatives Transportation and Infrastructure Committee, toured the bridge reconstruction on Wednesday and hailed it as a model for federal projects.

"It normally takes at least seven to eight years to undertake an infrastructure project of this magnitude, but the new I-35 bridge was contracted to be designed and completed in 437 days," he said.

Mica said following that pattern in other projects could dramatically lower costs. "This will be our goal in the next highway bill, which is scheduled for renewal in 2009," he said.

At the state level, there is no shortage of support for infrastructure from both ends of the political spectrum. Securing the money to pay for it is another story.

Earlier this year, Pennsylvania Gov. Edward Rendell, California Gov. Arnold Schwarzenegger and New York Mayor Michael Bloomberg launched a coalition to promote infrastructure spending, and pegged the need at more than $1 trillion over the next five years.

Federal infrastructure investment has accounted for a declining share of non-defense spending since 1966, the coalition said. Between 1956 and 1966, it represented about 10 percent. In the past 20 years, it has averaged between 3.5 percent to 4 percent.

Congressional Budget Office research shows that the federal government shouldered only about 15 percent of the infrastructure spending burden in 2004.

Of the more than $400 billion spent that year, federal funds accounted for $60 billion, CBO director Peter Orszag said in July 10 testimony before Congress. State and local governments paid for 42 percent and the rest came from the private sector.

INFRASTRUCTURE BONDS

U.S. Chamber of Commerce President Tom Donohue criticized the Bush Administration for not paying much attention to infrastructure needs, which he said were vital to supporting U.S. economic growth.

"I have to say we had a hard time with this president," he told reporters in St. Paul on Tuesday. "They looked out the window and said, 'Oh, a plane went by, I heard a train, the cars are running, everything's fine,' because they had so many other things on their plate. They saw that as a tax bill and it certainly is not."

He said he was optimistic that the next administration -- regardless of which party wins the November 4 election -- would recognize that something needed to be done.

Anderson, the CEO of CG/LA Infrastructure, said the most viable option under consideration was a federal infrastructure bank that Obama has backed. While the proposal is short on specifics, the basic idea is to sell government bonds to support infrastructure investment.

"There's a huge amount of money in China and the Middle East. They would love to buy nice, safe bonds backed by the full faith and credit of the U.S. government. We would love to have that money put into infrastructure projects," he said.

(Additional reporting by Richard Cowan in St. Paul and Lisa Lambert in Washington; Editing by Howard Goller and Jackie Frank)