China Investing in Infrastructure for the Future, US Not: Writer
A common observation of first-time Chinese visitors to America’s largest cities such as Chicago or New York is: “The roads and streets are so old and worn down. Feels like going to the Chinese countryside!”. Yep, many of America’s highways are over half a century old. Needless to say, the article writer’s comments on Amtrak point to severe dilemmas faced by US federal and state governments in transport and other infrastructure investment.
China’s high speed trains are more than twice as fast as the fastest Amtrak route (even sub-high speed trains are faster) and its HSR system will link most (all of) China’s largest cities by the end of the decade. The US will continue to be unable to repair its crumbling roads and railways without the Congress biting the bullet on entitlements at the expense of critically needed infrastructure spending. Otherwise, the writer’s son will indeed be riding trains ten times slower than China’s and earning much lower wages than his Chinese counterparts.
A recent Heritage Foundation Backgrounder on the consequences of US’s high debt, citing figures from the Congressional Budget Office’s (CBO) 2012 Long-Term Budgetary Outlook, states that US spending on entitlements and debt interest will remain at around 23-24% of GDP until 2018 as tax revenues linger at about 18%. This means annual budgetary shortfalls of 5-6%. America’s total public debt is already more than 100% of annual GDP and that’s not counting private debt.
And the picture gets even worse after 2018. From that year onward, the CBO estimates that spending on entitlements and interest etc. will steadily rise to near 36% of GDP by 2037 if drastic action is not taken! The consequences for the US, says the Heritage Foundation, are spiking interest rates, much higher inflation, and the crowding out of private investment, let alone what it portends for America’s infrastructure spending.
“US debt is quickly approaching economically damaging levels. US lawmakers should delay no more. Congress and the Presidernt should take firm and immediate steps to balance the budget within 10 years, by cutting spending and reforming the entitlements”, the foundation called out.
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A train ride between New York and Washington, muses Uwe Bott, epitomizes the deteriorating public transportation infrastructure in the United States. Sadly, there appears to be little hope for future improvement. That failure reflects a refusal of the United States to understand investments and returns, an understanding the Chinese already have.
For full article, see: http://www.theglobalist.com/StoryId.aspx?StoryId=9905