Chao Lauded in Fiscal Times Column
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The Fiscal Times today praised Secretary of Transportation Elaine L. Chao’s approach to infrastructure spending. Below are excerpts from that article, which is titled “The Biggest Barrier to Rebuilding America’s Infrastructure Is Red Tape.”
“Given the overwhelming (and rare) bipartisan enthusiasm for infrastructure spending, it’s tempting for the Trump White House to charge ahead, on the assumption that this is one project that could move quickly through the legislative thicket.
“Elaine Chao, Secretary of Transportation, is not going to make that mistake. Instead, she is focused on two objectives: streamlining the cumbersome red tape that drives up the costs of building our tunnels and rails and pushing for new financing models to ease the burden on the federal government. In the long run, attaining those goals will prove more important and enduring than a quick infusion of spending.
“Speaking recently at the Milken Conference in Los Angeles, Ms. Chao said an infrastructure proposal is in the works, involving 16 different agencies (part of the problem), as well as state and local government bodies and representatives from the private sector. The plan will encompass spending in numerous areas, including energy development, water systems, broadband access, veterans’ hospitals and perhaps even workforce training. Ms. Chao says the ambition of the White House is to leverage some $200 billion of federal dollars over ten years in part through stimulating greater use of private funds and especially through public-private partnerships, known as P3s.
“These partnerships do not denote privatization; rather, P3s involve a private funder taking an equity interest in a project such as a toll road. In return for investing in and in some instances managing the project, the equity partner expects to earn a profit. The approach is widely used in Europe and in other OECD countries, where it accounts for about 10 percent of outlays. By contrast, in the U.S., most infrastructure spending has historically been financed through municipal bonds, with only about 1 percent coming from P3s.”
“The expected funding breakdown ($200 billion from the feds seeding a trillion-dollar program over ten years) is close to the breakdown of spending today; some 16 percent of infrastructure outlays come from Washington, with the balance from state, local and private sources. The federal investment will be used for developments unable to attract private money and as an incentive (possibly through tax credits) to get projects moving quickly.”
“Other countries, especially Canada and Australia, have successfully enacted measures to speed approvals for projects. The U.S. needs to follow suit. Though Democrats will likely decry streamlining the permit process as an end-run around environmental and work safety rules, Republicans can point to enormous waste in the current process. After all, even President Obama advocated cutting through red tape.
“Pressed on when we might actually see an infrastructure proposal, Ms. Chao noted that the legislative calendar is jammed with healthcare and tax reform. While the country (and especially long-suffering commuters) is impatient, the delay may give Ms. Chao time to get her program right. Nothing could be more important.”