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Michael Likosky Headshot

Obama & Buffett Bullish on P3s

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Getty File
Getty File

Last week was a big one for public-private-partnerships:

On Friday, President Obama fleshed out his partnership plan, which he had announced during the State of the Union and the American Society of Civil Engineers issued its annual Report Card on infrastructure. We got a bump because of partnerships in the rail sector.

The president announced his plan in front of the Port of Miami Tunnel project. It was one of the most high-profile partnerships during his presidency. Here are additional details:

  • It closed in the midst of the crisis, after being stalled for years.
  • No tolls will be charged, so that truck drivers can afford the tunnel.
  • The tunnel allows truck drivers and others to bypass the downtown which lessens congestion in Miami.
  • The tunnel involved governments at all levels: Federal, state and local governments teamed up with private firms to move the project forward.
  • * Many of the private firms underwriting the project (and jobs) were European ones, part of an influx of global investors during Obama's presidency. The introduction of his America Fast Forward bonds is a way of getting these overseas investors involved along with pension funds, insurance firms, and endowments
  • Part of Obama's infrastructure plan is to make it easier for these global investors to generate infrastructure and jobs. Also the tunnel technology was imported from Germany; it is an especially long tunnel which the German firm specializes in.
  • The project was bipartisan, Florida Governor Rick Scott (R) secured the re-purposing of a U.S. Army Corps of Engineers' appropriation to leverage state financing.
  • The Port of Miami modernization also included a TIGER federal grant to join the port to the freight rail system.

There was a whole lot more also to the American Society of Civil Engineers acknowledging the value of freight rail partnerships. Most noteworthy was Warren Buffet's acquisition of the Burlington Northern Santa Fe.

He created a new investment class -- to categorize it -- in his annual letter to shareholders a few years back. The idea was that investors and citizenry enter into a "social compact" when pursuing public-private-partnerships together.

More on the public-private-partnership-driven growth the president is spearheading when he announces the budget. We should expect some type of infrastructure fund or bank.