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For decades Washington’s answer to transportation infrastructure has been simple: Throw federal dollars at the problem. This thrown cash comes in two forms: big municipal tax breaks and federal grants to states and municipalities.
Here’s a new idea: Why not give the same tax break to private owners and operators of strategic transportation infrastructure here in the US that we do to municipalities and public authorities. Let’s also create a private sector focused co-financing program to augment DOT state and local grants?
Approach - Set - Opportunities - Airports - Ports
I think this approach could open a whole new set of opportunities to invest in our airports, ports and roads.
Every private sector dollar not invested in a bridge or airport here is a dollar invested in a bridge or airport somewhere else in the world. According to Prequin, which counts infrastructure investing, that’s a $350 billion pie annually, which is growing at double digits. Couple that with debt financing, and you can get to over a trillion dollars of privately financed new infrastructure in the US over a five-year period.
Liquidity - Rates - Debt - Risk - Premiums
Significant global liquidity means historic low rates on debt, coupled with low risk premiums for infrastructure lenders and investors. That won’t last forever, which makes now an opportune time to prime our infrastructure pump through equitable tax treatment.
The Founding Fathers believed in privately financed infrastructure. George Washington endowed Washington and Lee University with shares in a canal concession. However, since the beginning of the 20th Century, we abandoned that philosophy for a wholly public-sector approach. That worked well through the mid 1960s, but in recent decades our public sector only approach has resulted in failing bridges, endless traffic delays, Amtrak derailments, and economic dislocation and citizen frustration. What worked for George Washington still has relevance today, a point which our Chinese and other foreign competitors certainly understand, and why their transportation...
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