It is becoming increasingly obvious that the Trump Administration is incapable of pursuing any coherent, sustained legislative strategy. The Administration was unable to play any useful role in fashioning a viable “repeal and replace” health care bill, and it seems equally clueless on the other big agenda item, tax reform. Seeing the Republican legislative machine stall out on those two priority items does not auger well for a third Trump initiative that was once thought to hold some bipartisan appeal: infrastructure spending. That is probably just as well, since any wide-ranging infrastructure bill coming from this Administration and Republican congress would likely be an ideological monstrosity that would entice little Democratic support.
An infrastructure program is, however, more suitable to a piecemeal approach than is health care or tax reform, so it is likely that some sort of new infrastructure policy emerges over the next eighteen months. Trump’s first budget programmed $200 billion over ten years to implement his infrastructure program (while cutting the Department of Transportation’s budget for the coming year by 13 percent). A fact sheet outlined some of the principles that will guide infrastructure policy.
The Trump infrastructure program will invariably seek to maximize the private-sector role, although the Administration’s fact sheet only hints at that direction with proposals such as removing the cap on private activity bonds. Administration officials are also touting the concept of “asset recycling,” whereby government agencies sell existing public infrastructure to private operators and use the proceeds to invest in new infrastructure projects.
The notion of private firms providing public infrastructure is polarizing, with conservatives portraying public agencies as inherently corrupt and inefficient and the left portraying private operators as inevitably predatory. In reality, the economic infrastructure of the United States has always been a patchwork of private and public operations and whatever prevails in a particular region tends to be taken by its residents as the natural state of affairs. Most passenger rail transportation, for example, was originally developed by private firms but virtually all of it was eventually taken over by government entities. Similarly for water supply systems, although about one-quarter of the U.S. population is still served by private water. Conversely, about 70 percent of American households buy their electricity from private, investor-owned firms. Roads and highways, and commercial airports, have always been developed and operated primarily by governments.
In recent years governments have explored privatizing, or re-privatizing, some infrastructure or contracting with private firms to operate it. Encouraging privatization appears to be a key part of the Republican infrastructure agenda, and that will be controversial enough. Even more problematic, though, will be efforts to incentivize the private creation of new economic infrastructure. In that regard the development of Florida’s long-distance passenger rail network is instructive, highlighting both the opportunities and perils of relying on private firms to develop new infrastructure.
The Florida High Speed Rail Project
Efforts to reestablish intercity passenger rail links in Florida have a checkered history reaching back decades. In 2000, Florida voters approved a constitutional amendment mandating the establishment of a high-speed intercity rail system. In order to implement that mandate, the Florida legislature established the Florida High Speed Rail Authority (HSRA) in 2001. However, Florida Governor Jeb Bush was opposed to the idea of a constitutional mandate for transportation infrastructure and was skeptical of the endeavor’s cost. He managed to get the rail mandate repealed in 2004, although the HRSA remained in existence and oversaw the completion in 2005 of an EIS for the Tampa-Orlando segment of a proposed system that was envisioned to eventually run from Tampa to Miami.
Continue reading “The Perils of Private Infrastructure”