Private Financing Does Nothing To Solve America’s Infrastructure Problem

If federal funding has strings attached that incentivize privatization, we’re in big trouble.
07/20/2017 04:02 pm ET Updated Jul 20, 2017

Nearly everyone agrees the country’s roads, water systems, and other infrastructure need serious investment. And there’s lots of talk about how we’re going to borrow the money to do it—Trump’s agenda relies on private financing through public-private partnerships, a foolish and dangerous gamble.

But the difficult question—and the one that really matters—is how we’re going to pay the money we borrow back.

Luckily, a number of cities, pushed by residents and workers, are finding innovative ways to pay for the things they need.

A few weeks ago, the Seattle city council voted unanimously to institute an income tax on the city’s highest earners. The estimated $140 million a year in new revenue will be used to, among other things, provide affordable housing, education, and transit.

In November, over 70 percent of Los Angeles voters approved increasing a sales tax to raise $120 billion for expanding mass transit and improving highways. Like all infrastructure investment, the new spending will help boost the regional economy. But Los Angeles will go even further: construction jobs will be targeted for workers from high-poverty ZIP codes and apprenticeship programs, and the recently incarcerated.

Also in November, Indianapolis voters approved an income tax increase to expand bus service and fund the first of three planned light rail routes. The expansion will greatly benefit poor residents, who make up a third of Marion County’s public transit commuters.

It’s exciting to see local residents and leaders step up to the plate because, remember: the federal government doesn’t build infrastructure. Decisions about what to build and fix and whether jobs will be good, living-wage jobs are made at the local level. More people involved in the conversation often leads to more just outcomes.

The federal government can and must help, though. Through direct funding and legislation like the WATER Act, which funds water infrastructure projects by closing a loophole on offshore corporate profits, Washington can play a key role in rebuilding America’s infrastructure, especially in rural areas.

But if federal funding has strings attached that incentivize privatization, we’re in big trouble.

Not only does private financing jeopardize public control, it does nothing to solve America’s infrastructure problem. It’s not financing that we lack—the tax-exempt municipal bond market is healthy and robust. What we lack is sustainable, dedicated funding to pay the debt back. Decades of tax cuts have drained governments at all levels. Federal infrastructure spending has fallen by half over the past 35 years.

The country’s public infrastructure needs real investment. As the Trump administration and the Republican Congress talk more tax cuts and privatization, the American people are making things happen and getting to work.

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