It’s time to face up to the very clear reality that long-term infrastructure spending, which brings about significant benefits down the road, cannot compete in an operating budget that has such immediate needs as health care and defense. There are many impediments to the adoption of the federal capital budget but none of them are significant enough to stand in the way of this idea whose time has come.
One of the impediments that has to be changed is how we score under our budget act. The European Union has its own infrastructure bank where loans and loan guarantees are doled out to important projects. They charge a very modest interest rate, and they make a small profit. If we were to construct such an infrastructure bank, under current rules, those loans and loan guarantees would be scored as spending even though there would be a track record showing that the overall program never spends money but actually makes a small profit. In some ways, I feel like a lone voice in the wilderness (although I was happy to hear that the “Problem Solvers” congressional caucus may also recommend a federal capital budget), but it’s the only real solution.
For those who say, “let the states do it,” know that the states are trying. Twenty-five states, both red and blue, have increased their gas tax in the last three years. The states simply do not have enough money to do it alone. For those who say, “let the private sector do it,” they forget that the private sector must have a reasonable rate of return before it invests in anything, and most infrastructure projects cannot give them one. For example, there are 60,000 structurally deficient bridges in America. No more than 100 of them have enough traffic that could generate toll revenues enough to supply that return. This leaves 59,900 that need repair that must be done with government investment.
Edward G. Rendell was the 45th governor of Pennsylvania, former mayor of Philadelphia, and former district attorney in that city. He served as chairman of the Democratic National Committee during the 2000 presidential election. He is now co-chairman of the Immigration Task Force at the Bipartisan Policy Center.