Private capital investment essential to pay for U.S. infrastructure, experts say
Passing and paying for the next infrastructure investment plan will not only mean bringing the two sides together to work in a bipartisan fashion, but using private capital in innovative ways, a panel of experts said earlier this month.
The Bipartisan Policy Center hosted a virtual forum on “How Private Investment Supports Smarter, Cleaner, and Faster Infrastructure”. Guest speakers included John Delaney, former United States Democratic Representative for Maryland and board member of the Bipartisan Policy Center; Eric Cantor, vice president and general manager of Moelis & Company and former leader of the Republican majority in the House; and Jane Garvey, former director of the Federal Aviation Administration and current North American president of Meridiam.
All panelists agreed that neither President Joe Biden’s $ 2.3 trillion US jobs plan nor the Republicans’ proposed infrastructure counter-proposals would prevail, but a compromise somewhere in the middle should be. find.
What that package would look like – from what it would cover, how much it would cost, and how it would be paid – is still pending, however, the panelists said.
“Infrastructure, like beauty, is in the eye of the beholder,” said Delaney. “I hope the bipartisan nature of the subject of infrastructure is what prevails in the end… I think we can agree on a narrower definition of infrastructure as the traditional physical infrastructure of roads, bridges, airports and ports. But I think we need to add broadband to that definition. During the pandemic, we saw first-hand why broadband is such a critical piece of infrastructure in 21st century in America.
Cantor said infrastructure could likely be defined as whatever it takes to get 51 votes in the Senate. He felt that the final infrastructure package would likely encompass transport, energy, communications, education and perhaps include some climate resilience.
Graves said the nature of infrastructure is changing, just like before the invention of the airplane. Where it was once unthinkable to include airports in infrastructure, it is now unthinkable to imagine infrastructure without airports, she said.
As for the size of the package, experts disagreed on what the package should contain.
Cantor said any package that includes climate resilience, but ignores existing systems based on fossil fuels, is unlikely to gain the support of Republicans.
“If it were up to the Republican Party, I don’t think you would see (clean energy technology) driving the bill. It would be much more appropriate for Republicans to react to what happened with the colonial pipeline, ”Cantor said. “I think this raises questions about fossil fuels and our economy and where it’s going. If you lean more into clean energy and don’t worry about increasing the resilience of carbon-based fuel systems, I think you’re going to lose some support on the Republican side.
But in the airline industry, Garvey said, clean energy and resilience is a central issue for the future of the industry.
“Every airline I know emphasizes climate change and resilience,” she said. “Ten years ago you rarely heard these questions, but now their investors are asking them what you do about the climate? What are you doing in terms of sustainability? “
Congress shouldn’t be looking at the price, Delaney said, but what the money in the package is for.
“I think to close that gap… we have to go back to what’s in the numbers,” he said. “Because every dollar of government spending is not the same. Some dollars spent by government produce huge economic multipliers, others do not. Some government spending goes against things only government can do … some doesn’t. Other public spending replaces private capital and competes with private capital. Think about what these negotiations will come back to is what has the best return on investment, what is essential for government to do, and what can most effectively leverage private capital.
To pay for everything that is included in the infrastructure package, regardless of its size, user fees and corporate tax increases are not the only solutions, the panel said.
Delaney and Cantor agreed that a large amount of private capital is available for the federal government to fund infrastructure, but that there are barriers and risks that need to be addressed first. The three panelists said innovative solutions leveraging private debt and capital could help meet infrastructure needs now and in the future.