Policymakers, Financiers Agree on Infrastructure Crisis, but Not on Funding Mechanisms
Former Pennsylvania Gov. Edward Rendell (D) said at an Infrastructure Week forum that the logical way to generate money for infrastructure is to raise the gasoline tax, which is what his state did last year.
“Not one member of the Legislature who voted yes was defeated in the fall 2014 election,” Rendell said.
However, Rep. Rosa DeLauro (D-Conn.) said the former governor’s fixation on having Congress raise fuel taxes is unrealistic.
“There isn’t going to be anyone who is going to vote for an increase,” said DeLauro, who favors the creation of a national infrastructure bank modeled on those in European countries.
The two were among nearly a dozen transportation and finance experts who discussed the country’s infrastructure crisis at a forum sponsored by the think tank, The Hamilton Project within the Brookings Institution. The forum was held at Brookings headquarters.
The forum was opened by a Hamilton Project founder, former Treasury Secretary Robert Rubin, who was co-chairman of the investment giant Goldman Sachs before joining the administration of President Clinton in 1993.
Rubin said private investment, including by foreign countries, could help the United States meet its infrastructure challenges if there was a more welcoming political and regulatory environment.
“That could create jobs now and improve our competitiveness for the long term,” Rubin said.
Two sources of such capital are profits kept overseas by American corporations to avoid U.S. taxes and Chinese money whose owners would like to invest here, Rubin said.
The Hamilton Project released its newest report, “Financing U.S. Transportation Infrastructure in the 21st Century” to coincide with the forum.
The report was written by Roger Altman, who served in the Treasury Department in the Carter and Clinton administrations and is executive chairman of Evercore, an investment bank. Also contributing to the report were Princeton University economist Alan Krueger and Aaron Klein, director of financial and regulatory reform for the Bipartisan Policy Center, a Washington think tank.
All three participated in the forum discussion.
Altman said that both political parties “agree on the urgency of an infrastructure initiative,” but they don’t agree on how to pay for it or on such governance issues as how projects should be selected and how regional differences should be resolved.
“So the spirit of this paper is let’s start doing something even if we’re not going to solve it all in one fell swoop,” he said. “This is just a way to make a start at a moment when there’s deadlock otherwise.”
"We have been grossly underinvesting in infrastructure" -@Alan_Krueger #RebuildRenew @hamiltonproj pic.twitter.com/zZ4wLV53fd
— BAFuture.org (@BAFuture) May 11, 2015
Among the suggestions in the report were that the government reinstitute the Buy America Bonds program that was part of the economic recovery act; and that it expand the Transportation Infrastructure Finance and Innovation Act, known as TIFIA, from its current $1 billion in funding to $10 million.
TIFIA provides financing help for local infrastructure projects via direct loans, loan guarantees and lines of credit.
Overshadowing the forum discussions was the May 31 deadline for extending the federal government’s authority to spend on transportation programs.
Congress has not yet put forth a plan for an extension, which has to include about $10 billion in general fund revenue in order to keep the Highway Trust Fund solvent through the end of the year.
Speakers agreed, however, that saving the trust fund is only part of the nation’s transportation crisis.
Transportation Secretary Anthony Foxx said the bigger problem is how the country is going to build a 21st Century surface transportation system.
“Fixing the Highway Trust Fund is not tantamount to fixing our infrastructure,” Foxx said. “There is a problem when people in this town think you get it stabilized and that’s going to solve our problems; it’s not.”
In the coming decades, population growth alone is going to swamp the highway and public transit systems, he said.
“That kind of need is going to require a different level of investment,” said Foxx, who is going on another of his cross-country tours, this one to mark Infrastructure Week.
The tour beings in Tennessee on May 12, then moves to the Silicon Valley and Los Angeles in California and concludes in Des Moines, Iowa, on May 15.
Foxx said there does appear to be support in Congress for creating and funding a national freight plan.
“There should be bipartisan support and I think there is bipartisan support for that,” he said.
