I appreciate the efforts by Glenn Kessler, the Washington Post’s Fact Checker, to find “the truth behind the rhetoric.” However, as someone who spends a considerable amount of time analyzing transportation and other matters, something didn’t seem right about a claim the Fact Checker repeated in its recent story about politics and transportation infrastructure in the US (“Obama’s strained symbolism at an Ohio River bridge,” http://www.washingtonpost.com/blogs/fact-checker/post/obamas-strained-symbolism-at-an-ohio-river-bridge/2011/09/25/gIQAPRB1xK_blog.html). In the September 26th story, the Fact Checker wrote that “the value of the freight that passes over it [the Brent Spence Bridge] each year is equal to about 3 percent of the U.S. domestic product.” The Brent Spence Bridge is a massive structure and an important part of our transportation infrastructure, but this claim compares apples to oranges, is highly misleading, and should not be used to formulate national transportation policy.
I assume the Fact Checker’s phrase “U.S. domestic product” was a reference to Gross Domestic Product (GDP), the value of all final goods and services. The World Bank reports that the US GDP in 2009 was $14.1 trillion; that in 2008, 77.47 percent of US GDP ($10.9 trillion) was from “services;” and that 21.29 percent ($3.0 trillion) was from “industry” (data used are the most recent available). The fact that the value of “services” is almost four times the value of “industry” illustrates why the US is called a service economy. The industrial segment of our economy produces physical goods but the service segment does not, which means that only approximately one fifth of the US economy produces freight that may ever carried by trucks.
In 2008, the Ohio Kentucky Indiana Regional Council (OKI) estimated the value of truck freight crossing the bridge at $417 billion. The OKI methodology, which follows the Federal Highway Administration’s (FHWA’s) Freight Analysis Framework (FAF), adds the value of freight items each time they cross the bridge. For example, consider the process by which raw material becomes the steel that is used in automobiles. Iron ore is converted into unfinished steel which is used to make components such as engines which are then installed in new vehicles. Each time these intermediate products goes across the Brent Spence Bridge, their value gets added to the total value of truck freight crossing the bridge. This is not the way that GDP is calculated. Because GDP is the value of all final goods and services, only the value of finished automobiles is included, not the value of each intermediary product.
Where did the 3 percent of GDP figure come from? The earliest appearance I have seen of this estimate is in a 2009 letter from then Congressman Steve Driehaus (D-OH) and Congressman Geoff Davis (R-KY). The letter was sent to Congressman James Oberstar, then chairman of the House Committee on Transportation and Infrastructure, in support of a funding mechanism for “nationally significant mega projects.” The letter says that the Texas Transportation Institute (TTI) was asked by their offices to assess the potential benefits of a project to improve the Brent Spence Bridge, and that TTI concluded that rehabilitation of the bridge and construction of a new parallel bridge would substantially improve delivery times and reduce congestion costs from excessive time spent in traffic.
There are more meaningful figures against which the $417 billion value should be compared.
One meaningful comparison is the value of shipments crossing the Brent Spence Bridge against the US Department of Transportation’s (DOT’s) estimate of the 2009 total value of domestic shipments of $12.1 trillion. The value of shipments crossing this bridge is 3.4 percent of the total value of domestic shipments. Note that the total value of domestic shipments is somewhat less than total US GDP but four times the value of the industrial component of US GDP.
Another meaningful comparison is between the contribution to GDP of shipments crossing the Brent Spence Bridge to the industrial component of GDP and to GDP as a whole. (This latter comparison seems to be what the letter from Messrs. Driehaus and Davis intended to provide.) Given that the industrial segment of the economy is valued at $3.0 trillion and domestic shipments are valued at $12.1 trillion, a rough estimate of the contribution to GDP is 24.8 percent of the $417 billion in freight crossing the bridge, or $103 billion. This figure, in turn, is 0.7 percent of GDP, which is significantly less than the 3 percent that is often reported.
Finally, the letter does not suggest that TTI played any role in claiming that the value of the freight carried by the bridge is equal to 3 percent of GDP. However, TTI seems to have been involved in the development of other estimates, including annual person-hours of delay, annual wasted fuel, and annual congestion cost. I have not reviewed those estimates nor their interpretation, but given the misleading nature of the stated relationship between the value of the freight passing over the bridge and GDP, these other estimates and their interpretation should be considered carefully.
