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Is Private Spending a Real Solution To U.S. Infrastructure Challenge?

Interesting article in today’s The Wall Street Journal entitled: Where the Money Is (Hint, It Isn’t the Government). The article was written by R. Richard Geddes, an associate professor in the Department of Policy Analysis and Management at Cornell University, and it tries to make the case that private investors will shoulder more of a responsibility for the transportation systems of the future. “This is not a pipe dream,” the article says. “States and municipalities are already turning to private investors to finance and manage highway, transit, rail and aviation projects. Private investment not only injects much-needed capital into infrastructure, but it also brings strong incentives to adopt new technologies and to get project finished quickly and on budget.”

Private financing for transportation infrastructure projects totaled $10.2 billion for the period between 1993 and 2007. From 2008 to the present it grew to $14.2 billion. The article states that as much as $400 billion could be available from pension and mutual funds, insurance companies and other investor groups that “like the stable, inflation-linked cash flows” that transportation projects generate.

The challenge with articles such as these is that the intent of the author is rarely made clear. For instance, in the additional credentials listed by The Wall Street Journal, it notes that the author is an adjunct scholar at the American Enterprise Institute in Washington. What is the American Enterprise Institute? A conservative think tank. Does that mean the author has an agenda for less government spending on transportation infrastructure, which is not clearly stated in the bio or in the article? What do you think? Is private spending really an answer to the nation’s growing challenge of rebuilding our nation’s transportation infrastructure?

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