Infrastructure Investment: A State, Local, and Private Responsibility
7 Pages Posted: 4 Mar 2013
Date Written: January 15, 2013
Despite huge and ongoing budget deficits, some policymakers are proposing to increase federal spending on infrastructure. President Obama, for example, has called for passage of a $50 billion plan for new infrastructure investment. The president and other leaders believe that more federal spending on roads, rail, and other assets would boost growth and create jobs. The U.S. economy certainly needs infrastructure. The important policy issue, however, is who can deliver it most efficiently — the federal government, state and local governments, or the private sector. To maximize benefits, infrastructure spending should be allocated to the highest valued projects and constructed in the most cost-effective manner. Yet decades of experience show that when the federal government gets involved in infrastructure, investment often gets bogged down in politics, mismanagement, and cost overruns. This bulletin discusses the advantages of devolving infrastructure activities to the states and the private sector. It examines the global trend toward greater reliance on businesses to finance, design, build, and manage facilities such as highways, bridges, and airports. Policymakers should study these innovations and work to reduce barriers to private infrastructure investment in the United States.
Keywords: US public infrastructure spending, private infrastructure investment, American federal government spending on roads, transportation budget, bridges, railroads, grants
JEL Classification: H54, O18
Suggested Citation: Suggested Citation