What's Keeping the U.S. Behind China on Infrastructure Investment?

The problem, Paul Rosenstiel writes, isn't a scarcity of capital. It's an unwillingness to make investing in infrastructure a lucrative choice for private capital.
August 23, 2016, 10am PDT | Philip Rojc | @PhilipRojc
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Travelers wait at a Shanghai subway station.
Michael Mooney

It's becoming a recurring theme to remark on what China can do that we can't. According to Paul Rosenstiel, former deputy state treasurer for California, we've become used to a diminished version of what's possible. "During the nearly identical years that the Shanghai Metro went from nothing to the largest subway system in the world, California struggled just to replace a few miles of the San Francisco-Oakland Bay Bridge damaged by the 1989 Loma Prieta earthquake."

Gloomy as that sounds, Rosenstiel says the money's there waiting to be invested. "We don't need capital. What we need is a revenue source to provide a return on that capital. But for a quarter-century, we haven't been able to find the political courage to leverage that capital by taking such an obvious step as raising the federal gasoline tax."

True momentum on infrastructure would mean a move away from "bromides" like public-private partnerships or infrastructure banks. If private investors could be certain of a return, either via higher taxes or user fees, they'd be happy to kick in the billions necessary. What we need is more decisiveness about what to build in the first place. 

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Published on Monday, August 15, 2016 in Governing
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