LISA SCHWEITZER: For sale: U.S. infrastructure

By Lisa Schweitzer

Greece is having a fire sale of its publicly owned transportation system, with planes, trains and roads all being sold off as the country attempts to dig out of its debt crisis. Americans should watch and learn: We could well be privatizing large segments of our own transportation system soon because of the U.S. debt crisis.
Last week, Rep. John L. Mica, R-Fla., chairman of the House Transportation and Infrastructure Committee, introduced a bill that would slash transportation spending, limiting it to the amount brought in by federal gas tax revenues and other existing highway fees. That roughly translates into federal spending of $215 billion to $230 billion over six years for highway and transit projects – about half of what the Obama administration sought last year.
The draconian spending proposal, dubbed “the Republican road to ruin” by critics, comes at a time when groups such as the American Society of Civil Engineers are saying that the United States needs to invest an additional $1 trillion beyond current levels over the next decade just to maintain and repair existing infrastructure.
We are facing a road infrastructure crisis, and it is of our own making. The federal gas tax has been unchanged, at 18 cents, since 1993, even as vehicles have gotten more fuel efficient. Adjusted for inflation, it amounts to a measly 12 cents today. But Americans, according to surveys, don’t want to raise the tax.
For politicians like Mica, this opens doors to privatization projects. Last month, he introduced a bill that would put private companies in charge of Amtrak’s operations in the Northeast Corridor. Taking that step, he contended, would be the fastest way to get high-speed rail up and running in the United States because it’s clear that President Obama’s federally sponsored rail plan has little support in Congress.
Maybe Mica is right. But rushing to privatize
state-owned assets can lead to terrible infrastructure
deals that let private companies walk
away with prime assets and leave taxpayers
with no guarantee of better services or lower
fees.
Unlike the Greeks, who must sell to receive
bailout funds, we still have a say in our infrastructure
future.
Many European countries and cities have privatized
infrastructure and city services. You
want to use the highway – you pay. You want to
stroll through a “public” garden – you pay. You
can avoid higher taxes, but if you want the services,
you pay the private company that holds
the franchise. It is a system that works fine for
those with cash to spend.
So far, privately run transportation projects
show mixed outcomes.
So long as Americans refuse to even index gas
taxes to inflation, let alone raise the tax outright,
we won’t be spending enough to maintain
our transportation infrastructure, which means
that its value will continue to fall. That will
make it difficult to attract private investment or
get a fair price for state-owned assets if the government
opts to privatize its transportation assets.
Without new revenue sources, the long-term
problems for U.S. infrastructure finance are
going to continue even if Congress manages a
debt-ceiling deal. By contrast, if the U.S. defaults
on its debt, our bond ratings will tumble.
The higher costs of bond financing would then
raise infrastructure costs through the roof. And
those financing costs would put government
negotiators at even more of a disadvantage in
privatization deals.
Averting default would give U.S. leaders wiggle
room to find public-private partnerships
that really do serve the public interest. To do so,
they must choose to maintain both America’s
credibility and its existing assets.
LISA SCHWEITZER is an associate professor in the School
of Policy, Planning and Development at the University of
Southern California. She wrote this for the Los Angeles
Times. Contact her at lschweit@usc.edu.