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Bold Banter: How Will We Pay to Overhaul Failing U.S. Infrastructure?

Bold Banter is a series where our regular contributors debate important policy and cultural issues that we face as Americans.

David Grasso: Trump’s Infrastructure Plan Is A Start

While infrastructure is the lifeblood of our nation, our political class has ignored critical investments for generations. Today, we’re seeing the legacy of turning a blind eye to infrastructure maintenance as it’s literally crumbling before our eyes.

It’s important to take a time out to remind our readers why good infrastructure is critical to a modern economy. If you’ve ever spent a significant amount of time in a poor country, you’re likely familiar with all of things we take for granted in the first world.

Clean water, well-maintained highways, a reliable energy grid, environmentally responsible disposal of waste and dependable public transit are all things people in rich countries consider normal. Historically, rich countries have invested a massive amount in infrastructure because it improves economic prospects. Simply put, not having good infrastructure harms economic growth.

Fixing America’s infrastructure is something that has bipartisan appeal and should proceed as soon as possible. Trump’s infrastructure plan will soon be unveiled, and our elected leaders should do everything they can do try to get something passed. No plan is perfect, and before we start ripping apart any proposal that’s floated, we need to consider where we find ourselves as a nation.

We have people in Flint, Michigan literally drinking water contaminated with lead. Interstate highway bridges are collapsing. Miami’s beaches are regularly contaminated with raw sewage because of an out-of-date water treatment system. Washington, D.C. and New York’s transit systems are in such a state of disrepair that officials are planning to shut down lines. Mind you, these horrific examples are just the tip of the iceberg.

Trump isn’t over-exaggerating when he says that America’s infrastructure is “third world.” A recent report by the Obama White House confirms our worst fears: “65 percent of America’s major roads are rated in less than good condition, one in four bridges require significant repair or cannot handle today’s traffic, and 45 percent of Americans lack access to transit.” As a result, traffic on our highways and in the skies has become so congested that average travel times have gone down in the past few decades.

There’s little doubt that changing this reality is going to require unprecedented efforts. Trump’s infrastructure plan undoubtedly will be a good start to begin to address our massive infrastructure deficits.

Yordanos Eyoel: Infrastructure Is Much More Complicated Than A Real Estate Deal

During one of the presidential debates, Donald Trump vividly described the crumbling state of America’s infrastructure, making stark contrasts between airports and rail systems in the United States, the Middle East and Europe. The problem is visible and one that all of us have experienced — America needs an infrastructure boost. The 2017 American Society of Civil Engineers’ Infrastructure report card, which evaluates the condition and performance of our infrastructure across 16 dimensions, gave the United States a daunting D+ rating.

Addressing this massive infrastructural challenge will require significant capital, favorable public policies and an infusion of innovation. Trump has mentioned spending $1 trillion dollars to rebuild our roads and bridges, primarily by attracting private capital incentivized through tax breaks.

The architects of Trump’s trillion dollar idea — Wilbur Ross and Peter Navarro — argue in a paper they co-authored in October, the $137 billion worth of tax credits to private businesses will provide a significant portion of the equity required for new projects.

But this analysis has been received with wide skepticism by several economists, including Lawrence H. Summers. First, tax incentives will only attract investments in projects that generate cash flows versus what cities and communities need. This is especially important as the most viable way to rebuilding America’s roads might be maintenance, which does not generate significant revenue. Second, some economists argue that the tax benefits will only serve those seeking “tax shelters” and not those seeking to make smart investments.

Trump’s promises and desire to cut down red tape and dismantle bureaucracy are both admirable and necessary. Infrastructure might be one area where the President could leverage his real estate development expertise to bring about a cost-effective and efficient plan.  However, unlike a private real-estate investment, America’s infrastructure is a massive and complex undertaking that has to balance communities’ needs with financial structuring.

As the administration works to flesh out its proposal, it would be advisable to consider different options for capitalization that combine public-private partnerships, federal government investment and state and local policies — and not simply rely on tax credits. This isn’t just about financing roads, but it is about revitalizing the synapses of country.

Photo by Unsplash

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