In announcing his $1 trillion infrastructure plan earlier this year, the president himself expressed the desire to leverage private investment to help pay for the enormous needs that exist throughout the country. Private activity bonds are a perfect example of smart government policy that taps into the enormous resources of the private sector to the direct benefit of citizens. They make up 20 percent of the $3.7 trillion municipal bond market, driving private capital to fund public infrastructure.
If Congress were to eliminate private activity bonds, we would see a marked slowdown in the construction of affordable housing, hospitals and health clinics, airport expansions and renovations, toll roads and a host of other facilities essential to our quality of life. In the absence of private activity bonds, such privately-funded projects would require taxable, higher-interest rate borrowing, which would doom many of them before they got off the ground.
The Bipartisan Policy Center estimates that America faces $2 trillion in infrastructure needs, including $134 billion in drinking and wastewater needs and $126 billion for airports. Those estimates don’t even take into account the water crisis in Flint or the devastation caused by the hurricanes this past summer and the wildfires that have ravaged California.