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Ailing U.S. infrastructure needs public-private investment [Commentary]

BusinessFinanceHighway and Road TransportationUnemployment and LayoffsDemocracy

When traveling this summer, you will likely encounter some combination of traffic on the highway, large crowds and delays at the airport and high gas prices. Some of this is the natural result of vacation season, but these experiences are also due to the declining state of our nation's infrastructure. While you may not fully appreciate it as you sit frustrated in bumper-to-bumper traffic, the time is ripe to follow a new path for improving our roads, bridges, pipelines and more — essential investments for bettering our economy and strongly positioning the United States to be more competitive in the 21st century.

The poor state of our nation's infrastructure is shocking. Recent Federal data indicate that 63,000 U.S. bridges are in need of significant repair; 333 of them in Maryland. And driving on roads in need of repair costs the state nearly $1.6 billion a year in operating costs and vehicle repairs; that's $422 per motorist.

There is a direct correlation between investing in infrastructure and improving the economy, including the nation's employment rate. While our economy continues to improve following the Great Recession, it is not growing nearly fast enough for many. As of April, the unemployment rate for people with only a high school degree was almost double that of someone with a bachelor's degree or higher, and the rate for people who had not finished high school was just about triple the rate for people who had a college education. Many unemployed, non-college graduates are in the construction industry, which is currently experiencing double-digit unemployment and has not seen the sustained pick-up necessary to truly lift our economy.

Traditionally, government has been the primary investor in infrastructure, but this cannot continue as the costs are higher than what the public is likely willing to spend. In the coming months, the Highway Trust Fund, a critical source of federal government backed infrastructure investment, will be depleted. The Baltimore Sun recently advocated for an increase in the Federal gas tax to avoid the shortfall as it also noted that similar increases in Maryland have not hampered economic growth. While this is an important short-term measure, it will not alone adequately ensure our future global competitiveness. The private sector accounts for only 6 percent of infrastructure funding. Encouraging private-sector investment in our infrastructure in a transparent, secure manner is essential both to improving the roads and keeping businesses here. A consequence of poorer infrastructure is that it encourages employers to locate their businesses elsewhere — in a different city, state or country.

Currently, conditions appear to be emerging that, if taken advantage of through public-private partnerships, can help our economy now and better position our nation for years to come. Business-oriented groups, such as the U.S. Chamber of Commerce, have recently come out strongly supporting infrastructure investments as a way of boosting our economy while also arguing for more streamlined, predictable permitting and regulatory processes. Permits and regulations ensuring the safety of people and the environment are essential, but they must be appropriately applied so that projects can be completed efficiently to make a positive economic impact. In addition, in the U.S. alone, companies are holding close to $2 trillion on the sidelines and earning very little as a result. The injection of some of their capital through private investment could help to address our infrastructure shortcomings that government alone cannot solve.

Congress will likely only put in place a stop-gap measure for the Highway Trust Fund prior to the mid-term elections. During the lame-duck session, however, Congress should not only boost the fund but also take steps to incentivize public-private partnerships in infrastructure investment. Some iteration of the Obama Administration's idea of an infrastructure bank, which would work with private investors to finance projects through cheap long-term loans or loan guarantees, may be a place to start.

Our infrastructure challenges cannot be solved by traditional, government-based solutions. Merging private investment with smart government expenditures will make for a foundational 21st century public-private partnership that builds American competitiveness in the long term while creating jobs and boosting the economy in the near term.

Mike Beland is an adjunct professor at the University of Maryland Francis King Carey School of Law and a visiting fellow at the Center for Health and Homeland Security. He served in the first term of the Obama Administration as the chief of staff of the Office of Infrastructure Protection in the U.S. Department of Homeland Security. Twitter: @mabnh.

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Copyright © 2014, The Baltimore Sun
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