Tom Smith, American Society of Civil Engineers Executive Director, joins Yahoo Finance's Brian Sozzi, Julie Hyman and Myles Udland to discuss the impact of crumbling infrasture on Americans and its overall impact on the economy.
MYLES UDLAND: Oh, well, during the Trump administration, infrastructure week ended up becoming a punch line, but with the Biden years underway, it does seem that there is a real institutional impulse to finally get some increased investment in our infrastructure here in the US. Here all week at Yahoo Finance, we're going to be discussing the challenges facing the country and some solutions that are possible as we look to rebuild and improve our infrastructure over the years to come.
We begin our conversation this morning with Tom Smith. He's the executive director for the American Society of Civil Engineers. Tom, it's great to have you on this morning. I'd love to begin, as we sit here in February of 2021, with how your group sees the state of US infrastructure, how you think about that, how you define it. I think for citizens, there's a lot of different-- and maybe it's the pothole on the road they see. Maybe it's the commuter train they take. From your vantage point, as an engineer, what is the state of the United States' infrastructure.
TOM SMITH: Well, it's certainly been a cause for concern. You know, we've been doing a report card on America's infrastructure since 1998. And unfortunately, a lot of our infrastructure is nearing the end of its useful life. We have a lot of it that's 50, 75, 100 years old. And while it has served us well over time, it is not certainly suitable much oftentimes for the present, but certainly not for the future. And there's a lot of work to be done.
BRIAN SOZZI: Tom, I'm sure you're watching the situation in Texas. People dealing with rolling blackouts, people unable to get heat. You know, as you look at Texas-- let's single them out here, given what's happening there. How outdated is their infrastructure? And as part of any infrastructure bill, do you think Texas will now need more attention, more funds, given what we are seeing this week?
TOM SMITH: Well, you know, I think it's indicative of things we're seeing across the country. We saw rolling blackouts, of course, in California. And we're seeing what's happened over the past year, where we have more extreme weather events. We had, I think, 22 separate $1 billion storm events, whether it's-- or disaster events, whether it's wildfires or cyclones or severe storms or droughts.
And the dollars that we're spending are very significant. And we know that we can spend more-- if we spend upfront, it will save us in the long run. In fact, you can leverage that money. Every dollar can save you 6 on the backend. So if we mitigate these things and we invest upfront and stop being reactive and more proactive, including in Texas, I think we're learning now what is our tolerance for risk.
And as we see more extreme weather events, whether it's heat, cold, seismic storm, we really have to recognize that we need to be prepared. We need infrastructure that is resilient. But we also need infrastructure that is sustainable. And I think that's one of the things you're hearing a lot of from the Bush administration as well, is making sure that we're protecting future generations and the environment.
JULIE HYMAN: Tom, we've been putting up some of the stats on our screens of what effect this sort of crumbling infrastructure has. And one of the figures that you shared with us that really struck me is that this is costing American households, on average, $3,300 a year. Break that down for me, how exactly that is playing out and how fixing it would help.
TOM SMITH: Yeah, I think that's very important for us to think about. Because we often talk about what does it cost to fund our infrastructure in order to maintain our infrastructure. And certainly, that's required significant funding. That's a significant investment. But we also have to ask ourselves, what's the cost when we fail to invest in our infrastructure, fail to maintain our infrastructure? And that cost, that hidden tax that we all pay, as you just referenced, is about $3,300 per year per family.
And that's because, you know, the added costs for goods and services, the aging electric grid, the inadequate water distribution, the two to three minute intervals between waterline breaks in this country right now-- much of our water lines are really nearing the end of their useful life-- in addition to sitting in traffic and congestion, all of these things add to the cost. They're inefficiencies in the system, and they cost us money.
It also impacts our global competitiveness. When we look at what other countries are doing and investments that they're making in their infrastructure, we cannot afford to sit back. We used to have the top infrastructure in the world. And now if you look at the World Economic Forum, we're not even in the top 10 anymore.
So if we look at our global competitiveness, the ability to give jobs, especially as we're coming out of a pandemic like this, dealing with these issues, putting the country back to work, building back better, I think it's really critical for us looking over the horizon, being prepared for the future, and future generations not just relying on the work that our former generations put in. And again, this has served us well over time, but we need to look forward and be prepared for the future.
MYLES UDLAND: And, you know, Tom, when you think about the mix, I guess, of new things versus maintaining the things we have, I mean, I think about it here right in the New York City area. Everyone's excited about building a new tunnel from New Jersey to New York. Well, the ones we've got are eroding. They're full of salt water, and they don't work all the time.
And I understand it's not as fun to go and throw a crew at fixing a bridge. But is there a misunderstanding perhaps from both politicians and from the public that this is a maintenance project, first and foremost? It's not a bunch of new shiny stuff. It's the things we have a pretty good. But if they start falling into the ravine, then they're not worth anything.
TOM SMITH: You gave a great example. You know, I travel Amtrak, as the president does quite a bit. And when you take that up even between here, DC, and going up to New York, you know, you're going through a tunnel that was built back in the 1800s in Baltimore. You're going through the gateway tunnel that you talked about. These are big challenges.
And we do have to do this basic maintenance. If you fail to change the oil in your car, you're going to have major problems. And it's going to cost you more in the long run. And again, if you look at what other countries are doing with high speed rail, as the president talked about last week, you know, they're going over 200 miles an hour. And we're slowing to 20 miles an hour to go through some of these tunnels.
When we did our failure to act study just recently, what does it cost? We did an economics study when you failed to invest in infrastructure. And over the next couple of decades, I mean, we're talking about $10 trillion in gross domestic product. We're talking about $2 and 1/2 trillion in exports, $23 trillion in business productivity, 3 million jobs. I mean, that's at the macro level.
But then at the micro level, just how does it impact all of us when we're sitting in congestion? When the water line breaks and the water floods into the metro, and all of a sudden, the street system is now congested and the bussing system is congested. This is a big connected system. And when there's energy problems, you never appreciate infrastructure more than when you don't have it. And you can ask the folks in Texas right now. It's really, really a problem. And it's a health safety public welfare issue.
So we cannot afford not to invest our infrastructure. There's a lot of things we have to prioritize in the budget. But I don't know how you don't put infrastructure very much at the top of your list. Because we're dependent on it for our quality of life and for life itself. So it's absolutely imperative that we invest in it.
MYLES UDLAND: And, you know, Tom, I have about 30 seconds here. As we sit here in the early days of the new administration, how constructive are you that something will get done over the next couple of years?
TOM SMITH: Well, I'm forever optimistic, and I've heard a lot of conversations that I think that are very positive. Now, of course, as you might know, we heard it from the Trump administration, the Obama administration, and the Bush administration before that. And we've been talking about it for a long time. But I think that the iron's hot right now. I think that the president is committed to this.
I think also when you have the alignment of COVID relief, when you have the things about climate change, you look at the environment and pollution and impacting our quality of life, we have the ability to impact all of these things, as well as our global competitiveness. So I still remain optimistic that we're going to get this done this year. And we're going to keep pushing and make sure that the public knows and is educated on the implications if we fail to act, that hidden tax we will all continue to pay.
MYLES UDLAND: All right, Tom, we'll leave the conversation about the relative merits of the New York City subway versus the metro for another time. Maybe in person, we'll have that conversation. Tom Smith, executive director for the American Society of Civil Engineers, appreciate the time.
TOM SMITH: Thanks very much. Take care.