At long last, it’s finally “Infrastructure Week.”
On Wednesday, a group of Republican and Democrat senators resolved their final differences with President Biden and reached a long-elusive agreement on a bipartisan infrastructure bill authorizing $550 billion in new spending over 5 years. Later that night, the Senate voted 67 to 32 to advance the legislation for a final vote in the coming days.
According to a congressional fact sheet on the plan, it includes $110 billion for roads, bridges, and major projects, $17.3 billion for ports and waterways, and $55 billion for water infrastructure.
But it also sets aside billions for lesser priorities and pork projects, such as tens of billions for Amtrak, more subsidies for electric vehicle charging stations, and $7.5 billion for “electric vehicle and low-carbon school buses and ferries.”
Given the toxic partisanship and little productivity in Congress these days, it is noteworthy that large numbers of Democrats and Republicans could reach agreement on anything.
But this rare bipartisan congressional action notwithstanding, it begs the question – is the bipartisan infrastructure bill ultimately a good thing for the country?
PRI senior fellow in business and economics Wayne Winegarden, argues no. In an op-ed published in Forbes, Winegarden writes, “the bipartisan plan is wasteful and spends federal money on projects that are traditionally the responsibility of state and local government.”
Citing research from the Cato Institute showing that most of U.S. infrastructure is owned by the private sector, he argues that “leveraging the private sector is a more effective way to fix our crumbling roads and improve our infrastructure.”
Reason Foundation director of transportation policy Robert Poole echoed this point on a recent episode of PRI’s “Next Round” podcast – advocating for more long-term, public private partnerships to finance road infrastructure projects.
“Around the country, about a dozen of the express toll lane projects that have been added to congested freeways are being done as long-term, public private partnerships. Most of those have achieved investment-grade bond ratings,” he said.
The projects he says are funded by a combination of equity investment from pension funds or infrastructure funds, with the rest financed by revenue bonds. In some case, state departments of transportation kick in 15 or 20 percent to make the deal go through, but they are then able to leverage this amount by 5 times when you consider the final project’s total investment.
Ultimately, drivers must be willing to pay tolls to pay back the revenue bonds and ensure the investors get a good return to warrant putting money into the project.
“Virginia, Texas, Florida, to a limited extent Colorado, are the leading states that are using this mechanism so far. And Pennsylvania is trying to do so – they have 10 good-sized bridges on their interstate highway system that need to be replaced and they’ve proposed doing it with long-term, public private partnerships with tolls,” he added.
Ironically, he noted, it is the Republican legislature in Pennsylvania blocking that project under the belief that roads should be “free.”
Reading through the laundry list of areas that would be funded in the bipartisan infrastructure plan, it reads like the typical Washington plan – throw a lot of money at a problem and hope it will solve the problem. There’s little real effort to provide accountability over project spending to taxpayers or demand that limited dollars are spent as effectively as possible. There’s something for everyone to ensure the plan has the votes to pass Congress.
Before they cast a final vote, Congress would be wise to listen to Winegarden and Poole and explore ways to maximize private sector investment in America’s infrastructure future before putting future generations on the hook for hundreds of billions in new spending we can’t afford.
Tim Anaya is the Pacific Research Institute’s senior director of communications and the Sacramento office.