Trying to avoid the large number of potholes that appear at this time year is a constant reminder of the importance of sound infrastructure.  The sad fact of the matter is that in spite of the role of infrastructure spending in making our communities livable and our economy competitive net investment in infrastructure in recent years has been close to zero.  One out of every nine bridges in the U.S. is deficient. A third of our roads are rated poor or mediocre.  Not one U.S. city ranks in top 25 globally for livability.  Not one U.S. airport, an important driver of commerce, ranks in the top 25 in the world.  Our electric power grid is inefficient, decrepit and vulnerable. 

It has been estimated that the loss or sabotage of just nine power substations could bring the power supply grinding to a halt. This would not result just in inconvenience of having to light some candles or pull out a blanket until the power is restored.  A prolonged shutdown on the electric system would interrupt the water supply and food distribution and could result in large scale loss of life. The American Society of Civil Engineers (ASCE) in its most recent annual report card gives the US infrastructure a grade of D+.  Our dysfunctional political system was able to commit the US to spending $6 trillion to destabilize the entire Mideast through the Iraq war, but cannot find any way to come up with $3.6 trillion through 2020 that ASCE estimates would be required to get the United States infrastructure back into the game.

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As is often the case when things make no sense, ideology is involved.  In an effort to counter perceived liberal bias for “tossing money out of helicopters,” conservatives seem to have taken the view that investment in infrastructure is some type of boondoggle.  What is required is a pragmatic middle course that focuses on return on investment.  The early roads, trails, canals and railroads that marked U.S. westward expansion involved the national government in a central and catalyzing role.  This was also true of the Interstate highway system and the Internet.  Silicon Valley, the preeminent economic engine, was based on decades of government investment as part of the Cold War buildup in such things as microprocessors that were too big and risky for the private sector. Those first roads built in the United States were the result of fixing a defect in the Articles of Confederation that called for the government to establish only post offices, which the Framers of the Constitution corrected by adding for the government to provide “post roads” in Article I Section 8.  In truth our history and our future depend on partnership and cooperation between government and private industry. As American prosperity attests, infrastructure spending when done well is not a fiscal cost, but provides a return on investment and is the wellspring of national prosperity.  The Federal Reserve places the return infrastructure as $1.5 to $3 for every dollar invested, a number supported by the International Monetary Fund.  As is often the case Ronald Reagan can be quoted to support policies opposed by his supposed disciples such as when he argued for increasing the gas tax to reinvest in the highway system.     

There are any numbers of methods for funding pubic private partnerships in a way that can rebuild America without endangering the budget. First, as in private business, such investments should be capitalized and not treated as an expense.  Some mechanism, such as an infrastructure bank, should be created, that would require significant private sector involvement in funding and project due diligence to ensure investment in projects that can provide returns based on user fees or monetization of economic benefit.  Investments that meet that test generate returns, not costs.  At a time when savers are facing zero interest rates creating instruments for individuals and retirement accounts to invest in infrastructure could make sense.  Bipartisan proposals for repatriating some of the trillions of dollars that US corporations have stashed offshore in return for some investment in such a bank as proposed by Rep. John Delaney (D-Md.) deserve attention rather than dying at the end of each session.  The U.S. dollar has surged since July 31 as the U.S. has become clearly the safe haven of choice for the world.  If savers and investors around the world desire to place money in the U.S. at historically low interest rates we should quickly find a way to put that to work in rebuilding our marine terminals, airports, highways, communication system, water systems and electric grid. We have an opportunity and an obligation to the future but unfortunately our national leadership on this issue is falling down just like our bridges.

Wise, a resident of Annapolis, is a retired business executive and frequent commentator on public policy. He holds a graduate degree in international business from The Fletcher School of Law and Diplomacy at Tufts University.