Lee and Medcalf: Invest in Infrastructure, Create 6 Million Jobs
A major reason the administration’s infrastructure bill failed to pass was Democrats’ insistence on taxing millionaires to pay for bridges and Republicans’ refusal to allow new taxes for bridges or anything else.
The administration plan was nothing more than a drop in the bucket anyway, as fewer than 100,000 new jobs would have been created through the proposed $10 billion investment in an infrastructure bank. Instead, we need a game-changing, visionary and bold infrastructure strategy investing a trillion dollars in our deteriorating infrastructure so we can create 6 million quality jobs and get America moving again.
President Barack Obama and Speaker John Boehner (R-Ohio): Please end the income-taxes-for-infrastructure debate. It’s going nowhere, and as long as it continues, gridlock around our infrastructure investment and economic growth strategy in Washington will be as acute as the rush-hour gridlock across our cities.
Congress and the administration need to stop grandstanding and instead invest $250 billion in an independent infrastructure bank focused on public-private partnerships. They must also create, in partnership with the states, a Fast Track Infrastructure Board, so that infrastructure projects and job creation can be permitted and approved in a matter of months, not years or decades.
The infrastructure bank we propose is not more government pork or stimulus. Rather, it’s a greatly needed catalyst between a public sector that desperately needs capital for essential projects and a private sector, including pension funds and endowments, eager to invest in attractive projects.
Developed and developing economies all over the globe have successfully followed this model for decades. Why not start doing that here in America with a goal of attracting a trillion dollars of private-public capital to jump-start our economy, create 6 million jobs and get America moving again?
The infrastructure bank will make sound loans and investments. It will be transparent and above politics, managed by best-in-class investment professionals. The infrastructure bank is designed to provide an attractive financial return to the Treasury in addition to a home run economic and social return for millions of Americans.
Voters get the importance of rebuilding our infrastructure. Recent referendums have approved more than $23 billion for new infrastructure spending all across America, from California to Arkansas to Pennsylvania.
That said, a major reason so much of our infrastructure is in such sad shape is that Americans have been spoiled for decades by the illusion of seemingly free infrastructure largely funded through tax-exempt bonds and taxpayer grants and subsidies from Washington. Today, this illusion is gone. This is particularly true in surface transportation, where drivers and shippers are increasingly paying to use our rapidly deteriorating bridges, tunnels and roads through endless stalled traffic, gridlock and escalating cost to our economy in the form of lost competitiveness.
These facts owe much to American’s long-standing resentment of user fees, particularly tolls, coupled with our politicians’ abject fear of the gas tax. User fees are not taxes. If you go to a movie or out to dinner, you buy a ticket or pick up the tab. Why should using roads or bridges be any different? If Americans want to have a first-rate transportation infrastructure system once again, we need to get over our phobia of fair and appropriate user fees.
Achieving this goal requires user fees that generate realistic levels of cash flow to rebuild and maintain our infrastructure in a manner that is both attractive for investors and fair to consumers; here we need look no further than the model America has so successfully developed and followed for many generations in the transportation of natural gas.
America leads the world in this sector with a network of more than 300,000 miles of regulated interstate natural gas pipelines — two-thirds of which is privately owned. Think of these vital pipelines as toll roads paid for by every American household and business that uses natural gas. The tolls that virtually all Americans pay for our natural gas toll roads as part of our monthly gas bill are transparent, fair and well-regulated and have been for decades.
So just as we do in our vital natural gas sector, let’s stop subsidizing our infrastructure and start investing in it. Successfully creating broad-based, economic revenue streams in infrastructure through appropriate user fees, coupled with transparent rate-setting mechanisms that are above politics, will source the long-term and stable new investment capital (principally from the private sector) that can rebuild America’s infrastructure — not just roads, but seaports, airports, power transmission and more — and create the millions of quality jobs we need so critically to get America moving once again.
Let’s break our addiction to subsidies and tax breaks from Uncle Sam and get to work investing in our infrastructure in a way that works for all of us. This must happen, and it can happen right now through bold vision and bipartisan leadership. This is the same vision and leadership that created the transcontinental railroads, gave us the interstate highway system and put us on the moon.
Mr. President and Mr. Speaker, this is a bipartisan issue. Americans want to go back to work and regain our global economic leadership. Please bury the partisan rhetoric and make job creation, through productively investing in America’s infrastructure, job one.
Christopher Lee is the founder and managing partner of Highstar Capital, an infrastructure investment firm. He is chairman of Ports America Chesapeake. Sean Medcalf is an investment professional with Highstar Capital.