With Washington in paralysis over how to pay for billions of dollars in needed improvements to our transportation network, the conversation has increasingly turned to what are best called “deals with the Devil.”
Sometimes the deals involve turning over traditionally public roads (and other public assets) private enterprises. Other times, the deal falls short of privatization, but it involves a private financing scheme often engineered by Wall Streeters to look like taxpayers will save money while distracting taxpayers from the private profits that will be milked from the deal. Then there is the devilishly tempting deal we’ve repeatedly called out that offers more funding for infrastructure – if only we allow corporations that have shunted profits overseas to avoid taxation to bring that money back into the states to be taxed at a deeply discounted rate.
Anti-government conservative ideologues and their big-business benefactors have an interest in convincing people that privatization, privatization-lite and breaks for tax evaders are the only options worth discussing when it comes to how we pay for bringing our transportation network and other infrastructure assets up to 2st-century needs. But there are in fact other options, and some of them were in a policy paper released Monday as part of a forum on “Financing U.S. Transportation Infrastructure in the 21st Century” by The Hamilton Institute and the organization Building America’s Future.
Roger C. Altman of Evercore, a former Clinton administration Treasury deputy; Aaron Klein, a former Obama Treasury official now with the Bipartisan Policy Center; and Alan B. Krueger, also a former Obama Treasury official who is now an economist at Princeton University, offer a mix of short-term and long-term strategies that accept the role of the federal government as a leader in marshaling resources and mediating disparate state interests.
Among their suggestions:
● Improve and expand the Transportation Infrastructure Finance and Innovation Act, which offers loans and loan guarantees to state and local governments. This program was created in 1998 and has financed $80 billion in projects. Loans are extended when recipients agree to a dedicated revenue stream for repaying the loans, and almost all loans are paid back in full. The report authors recommend increasing annual appropriations from $1 billion to $10 billion a year; that would support up to $200 million worth of projects.
● Bring back the Build America Bonds program. This municipal bond program was part of the 2009 Recovery Act legislation and expired in 2010. Unlike regular tax-exempt bonds, Build America Bonds are directly subsidized by the federal government, which pays a portion of the interest costs. That subsidy allows state and local governments to offer the bonds at higher interest rates, which makes them more attractive to a broad range of investors.
● Raise the federal gasoline tax, index it to inflation, and allow it to float based on gasoline prices. If gasoline prices fall, as they did last year, the gasoline tax would rise to absorb most of the drop. When prices rise, the tax would fall somewhat. Prices at the pump would be less volatile, and when gasoline prices fall, everyone benefits through the additional funding available to pour into mass transit as well as roads.
● Invest in research on future revenue-raising technologies. A gasoline tax as a user fee to pay for transportation projects will have diminishing returns as more vehicles are powered by sources other than gasoline. The federal government can lead the development of new ways of ensuring that users continue to pay based on how much they use the road and whether they are driving a passenger car or an 18-wheeler.
● Encourage state and municipalities to band together for bulk purchases of raw materials and equipment, enabling governments to lower costs through economies of scale.
● Develop a national infrastructure strategic plan. This would involve creating a commission that brings together federal, state, local and private interests, as well as state and local strategic plans. This commission would identify national and regional transportation challenges, help set priorities for funding and conduct research.
The report does not include a call for dramatic increases in infrastructure spending along the lines of what has been called for by Sen. Bernie Sanders, I-Vt., or the Progressive Caucus People’s Budget in the House. Also missing is any suggestion that we should reform our tax code to require the wealthy and corporations to pay more for the infrastructure that enabled them to earn their wealth in the first place. But the report does offer some ideas worth considering, including some that the Obama administration could implement without congressional action.
Most importantly, these proposals won’t sell off our infrastructure to the highest bidder. Public roads and transit systems should always exist for the public good, and not pawned off in desperation to private profiteers.