The nation’s infrastructure — the lifeblood of our economy — is in rapid decline, the victim of underinvestment. A 2008 report estimated that the United States needs to invest $250 billion annually for the next 50 years to legitimately meet only surface transportation needs. We’re nowhere near that level of investment.
There are dire economic consequences for staying on our present course. Last fall, the U.S. Chamber of Commerce released a study showing that the status quo in transportation infrastructure effectiveness over the next five years will result in the equivalent of $336 billion in lost economic growth.
Why are we falling behind? Because traditional public infrastructure funding mechanisms are inadequate for meeting the growing needs of our economy, businesses and citizens. Receipts to the Highway Trust Fund have fallen substantially because of improved gas mileage and a federal gas tax that hasn’t moved in 18 years. Other traditional funding mechanisms, such as appropriations and municipal bonds, are being squeezed by the economic slowdown.
A comprehensive, multiyear highway and transit bill is long overdue, but it alone is not sufficient. Private investment must play a bigger role.
We can spur private investment by expanding and improving the Transportation Infrastructure Finance and Innovation Act, which provides federal credit assistance to nationally or regionally significant surface transportation projects. TIFIA is designed to fill market gaps and leverage substantial private co-investment by providing projects with supplemental or subordinate debt.
However, the TIFIA’s reach is restricted to surface transportation projects. We need a similar financing mechanism to address our energy and water infrastructure needs. The answer is a new national infrastructure bank that would issue loans and loan guarantees for a broad array of infrastructure projects. With a modest initial investment of $10 billion, a national infrastructure bank could leverage up to $600 billion in private investments from global pension funds, private equity funds, mutual funds and sovereign wealth funds.
An infrastructure bank also would keep politics out of the equation. Careful procedures have been established to ensure that projects receiving loans or loan guarantees are based on merit and are of national or regional significance. The bank would be run transparently by experienced professionals under congressional oversight and would include checks and balances to prevent abuse.
Our infrastructure challenge requires fresh, new thinking. A reinvigorated TIFIA program and a new national infrastructure bank would keep and attract vast amounts of capital in our country, help us compete worldwide and put thousands of Americans to work.
— Tom Donohue is president and CEO of the U.S. Chamber of Commerce.