As politicians and pundits continue to pillor Wall Street and the Beltway for bad investments, on this week's Meet the Press, David Gregory welcomed a new group of investment advisers, "Building America's Future". Governors Rendell and Schwarzenegger along with Mayor Bloomberg formed this subnational coalition dedicated to reinvestment in American infrastructure in January 2008. Having just had a bullish meeting with our Infrastructure President last week, they laid out the case for a second more ambitious round of infrastructure investment on Sunday morning.
The coalition leaders made a compelling case for America's dire infrastructure needs. They hit on all the resonant talking points:
(1) an astounding depth of need across sectors from water to roads, sewage to rails.
(2) Katrina and Minnesota.
(3) more money for infrastructure means more jobs for Main Street.
(4) state-of-the-art infrastructure is a prerequisite to recovery and national competitiveness.
To their credit, these elected officials have been making this case under freeways, in statehouses and in Washington for a number of years.
How will we pay then? The coalition argued that Americans are willing to pay for infrastructure so long as decisions are made on the merits, rather than by the earmark system.
However, they then went on to tell us that we might not even have to pay for it anyhow. Governor Schwarzenegger told us about public-private partnerships that use private money not public. Governor Rendell explained that the Obama Infrastructure Bank, which is in the proposed budget, could take $30 billion a year of public money and make it into $400 billion up front through private co-investment. In doing so, he indirectly referenced building upon the generous tax inducements for partnerships in the second half of the American Recovery and Reinvestment Act: "There's so many innovative ways to, to use the tax code to get private investment."
This national attention to our massive infrastructure needs is welcome. Building America's Future has been one of the main drivers of not only undertaking a realistic assessment of our infrastructure needs, but also in opening a productive dialogue about how to finance our needs. The Coalition has been clear that it advocates ensuring that our needs are met with appropriately tailored financial instruments. Merit-based assessments and financial instruments. Building America's Future represents the public good, not private interests.
We must take up this invitation to debate financing.
We are beginning to see the public-private-partnership market reopen from Oakland's $700 million port development to the $1.8 billion dollar Interstate 595 deal in Florida. These deals and the many others now in the works may be unqualified goods.
The private appetite for public works may simply be a healthy sign that paper wealth is out, the real economy is in. The pitch is that a healthy economy is backed by durable infrastructure assets. This was Eisenhower's point with our national road system.
However, if we are going to move away from a society that backs its economy with subprime mortgages and toward one that uses drinking water and commuter trains, then we need to ensure frank discussions of the costs and benefits as well as risks and rewards of the financing tools we choose to carry out these infrastructure investments. We must be our own investment advisers.