When the Soviet Union in 1957 surprised the world with the successful launch and global orbiting of its Sputnik spacecraft, Americans watched in astonishment. At the time many Americans wondered if we had lost our innovative edge for good. We all know how that turned out. But we didn’t win the space race then through complacency, and we won’t win the “sputnik moment of our time” with an economic system dependent on public infrastructure that is inadequate and crumbling.
The challenges posed by our global economic competitors in the 21st century demand that our nation adopt a plan to finance the improvements necessary bring the full spectrum of our infrastructure into the 21st century. Vice President Joe Biden’s announcement yesterday of a far-reaching high speed rail plan shows that the Obama administration is on the right track when it comes to budget priorities and how to use federal dollars more wisely.
In spite of a domestic discretionary spending freeze, President Barack Obama is proposing to torque up funding for dramatically improved and expanded passenger rail services by $53 billion over the next six years. And instead of a new round of state-based planning for where our most significant infrastructure funding should go, the Department of Transportation will invite regions and states to show how their plans address very clearly articulated national need and a rationale approach to expansion. Great funding and good government all rolled together. That’s a novel, needed, and refreshing approach.
And it’s an approach that should be expanded upon. Roads and bridges need urgent repairs, and road capacity is still a problem in some parts of the country. But the thousands of Americans who are regularly trapped in gridlock on our highways now have hope there is an end in sight.
Just as the launching of Sputnik required more of our nation than simply building a space ship, the upgrade of our infrastructure requires that in addition to roads and rail we improve each critical pieces of our public assets, including:
- Transit systems
- Freight rail networks
- Drinking and waste water systems
- Energy transmission
These are all key parts of our economy that need additional investments, but the federal government does not need to foot the bill to rebuild our infrastructure alone. We can replicate the innovative public-private partnership models already common place in Europe and Australia. These partnerships use private investment capital and private-sector approaches to improve assets where users are able to pay for the cost of those improvements over time through tolls or reasonable usage charges. The benefits of these partnerships is that they take advantage of competition to both lower the price of the improvements and to maximize the amount up from capital that can be used from private-sector investors.
Almost every one of our economic competitors boasts a quasi-public financing institution that ensures the quality of viability of large-scale infrastructure projects. These financial institutions work in partnership with large banks and investors, offering efficient and reliable projects for investment and predictable reasonable returns. As a result, our competitors are experiencing a much higher rate of investment in their infrastructure than is occurring now in the United States, boosting the potential for the long-term, sustainable growth of their economies.
That’s why we also need an infrastructure bank to help accelerate the pace and ensure the quality of our large-scale transportation, water, and other nationally significant infrastructure projects. CAP’s proposals to create an innovative Green Bank include critical elements that can and should be replicated in a National Infrastructure Bank, including methods that promote market certainty so that private capital is in the pipeline for the long term.
Specifically well-crafted federal measures to expand low-interest capital, improved tax benefits, and other financial incentives will play a key role in keeping down the costs for the federal government while dramatically expanding the pool of funds available for infrastructure improvements. Likewise, the wise call for the Green Bank to manage a smart and efficient portfolio with well-defined underwriting standards are also critical practices that must be embedded in a National Infrastructure Bank. Where user fees can’t fully support the cost of a necessary public investment, other options must be employed to drive down the cost of the investment and share the burden of the financing with state and local government.
Without question the amount of public and private investment needed is daunting, but so too was the notion of putting a man on the moon. President John F. Kennedy didn’t have a blueprint or a financing plan when he inspired the nation by challenging America to send a man to walk on lunar soil in ten years. But he and his successors in the White House went to work quickly, effectively, and efficiently.
President Obama needs to match that determination today. He should charge his team with the challenge of crafting a strategy that will over the next ten years sufficiently improve our entire infrastructure so that our children inherit the most modern, efficient, sustainable, and smart infrastructure system in the world. A bit audacious, yes, and a bit “Sputniky,” definitely.
Donna Cooper is a Senior Fellow at the Center for American Progress working with the economic policy team at the Center. For more information about our infrastructure investment recommendations and analysis go to the Energy and Environment page of our website.