Important projects will get off the ground with or without Congress. It'd just be a whole lot easier with them.
In last night's State of the Union address, President Obama once again made that most eat-your-vegetables of admonitions—America's urgent need to invest in infrastructure. Still, the same questions remain: which projects are most deserving, and above all, how should we pay for them?
Infrastructure is the ultimate unsexy topic, notoriously hard to get anybody excited about, despite the regular D+ grade the nation’s infrastructure receives every year (not to mention scary events like collapsing bridges). It does have at least some potential for bipartisan cooperation, but in today’s environment, it's difficult to see much chance of agreement on the details of how we'd pay for it. One thing the president did not mention, for example, was an increase in the gas tax, which has not been hiked or indexed to inflation since 1993, to fund the continually languishing transportation bill.
Nor was there any allusion to another potential source of revenue for infrastructure, by building up funding through so-called repatriation and tweaking the overseas tax code. Maryland Congressman John Delaney’s Infrastructure and Global Tax Competitiveness Act (HR 5857) would make the Highway Trust Fund solvent for six years, and create a new infrastructure fund for state and local governments.
Nobody in Washington appears to be entertaining the idea of an infrastructure bank, a novel idea a decade ago, as it conjures a model similar to Fannie Mae and Freddie Mac. The concept of value capture—financing urban infrastructure by tapping private developers to share a portion of the increase in property values that result from, say, a new transit station—is widely used elsewhere in the world, but only beginning to gain traction in the U.S.
Public-private partnerships and privatization surely will be one important part of the way forward for cities, though experiences like that of Chicago with its parking meters haven’t been inspiring. “Over time, they will become a much bigger piece, but still only a piece,” says Marcia Hale, president of Building America’s Future, the advocacy group co-chaired by former Pennsylvania Governor Ed Rendell, former New York City Mayor Michael Bloomberg, and former U.S. Transportation Secretary Ray LaHood “They’re not a substitute for what should be federal involvement. Not everything we need to build has a revenue stream attached to it.”