Privatization, the next illogical step after public-private partnerships, will become a mantra of the Trump Administration, but from prisons to toll roads, we've seen that privatization can be a mess. Lord help us all if efforts to privatize the U.S. air traffic control system, and others around the world, take hold.
Stimulating private investment in infrastructure projects, as President-elect Donald Trump has proposed, can cover only a fraction of the costs of solving America’s transportation problems, Transportation Secretary Anthony Foxx warned as he prepares to leave office.
Financing schemes called public-private partnerships, which involve both government dollars and private capital, are useful and can address about to 10 percent to 20 percent of America’s transportation “deficit,” Fox said in an interview this week with The Associated Press.
“But we’re still going to need a fair amount of public funding,” he said. “I don’t see public-private partnership as a 100 percent strategy to solve our transportation problems.”
Such partnerships typically rely on revenue from tolls or sales taxes dedicated to that purpose to provide investors with a profit. Major transportation projects financed by public-private partnerships have had a mixed record in the U.S. Several private toll roads have gone bankrupt, but express toll lanes on major highways constructed in part with private capital have had more success.
During the campaign, Trump frequently deplored the state of roads, bridges, airports and railways. He promised to generate $1 trillion in transportation and other infrastructure investment, creating jobs in the process. But he has been vague on the details. A paper by two of the president-elect’s top economic advisers estimates that $137 billion in federal tax credits could generate $1 trillion in private infrastructure investment over 10 years.
Trump’s nominee for transportation secretary, Elaine Chao, said at her Senate confirmation hearing last week that she wants to “unleash the potential for private investment.”
However, when pressed by Sen. Corey Booker, D-N.J., on whether the infrastructure plans will include direct federal spending as well, Chao responded: “I believe the answer is yes.”
Foxx agreed that “there is a lot of private capital sitting on the sidelines today not being as productively put to use as it could be.” He said the Obama administration has laid the groundwork for more private investment through the creation of its Build America Bureau inside the Transportation Department. The bureau is designed to be a one-stop destination for help dealing with federal regulations, applying for aid and accessing useful information.
But Foxx also cautioned that “you could put $5 trillion into America’s transportation system and if the money isn’t directed in the right way, we will still have congestion, still have problems.”
Historically, transportation dollars have been allocated according to the mode, with the largest share going to highways and other shares designated for transit, aviation, intercity rail, and ports. Instead, Foxx said, the government should look at transportation needs more “holistically,” concentrating on projects of regional and “mega-regional” significance regardless of mode. That could mean projects that involve multiple modes across multiple states, he said.
But Congress is under pressure from interest groups like the highway lobby or the transit lobby to make pools of money available by mode, Foxx said. Congress is also wedded to divvying up transportation money among states according to a formula even though travelers and goods flow across state lines.
Besides shoring up aging highway and transit systems, Foxx said other top transportation challenges include laying the groundwork for the safe introduction of new technologies like self-driving cars and drones and providing transportation options to underserved and low-income communities. Foxx, who was previously the mayor of Charlotte, N.C., has emphasized the connection between poverty and the accessibility of transportation during his tenure.
“I can tell that as somebody who had to take the No. 6 bus to my very first job that if you don’t have good access to transportation, there is no job, there is no housing, there is no opportunity,” he said.
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This article was written by Joan Lowy from The Associated Press and was legally licensed through the NewsCred publisher network.
Photo credit: Transportation Secretary Anthony Foxx says funding shouldn't be allocated by type of transportation and instead needs should be addressed regionally and mega-regionally. Associated Press