A narrow GOP House midterm victory promised division in the 118th Congress. The first week of that Congress has delivered plenty of it — 15 bruising rounds of voting for Speaker of the House and the arrival in force of the Freedom Caucus.
What does this mean for major Biden administration initiatives? In the case of the administration’s largest commitment — infrastructure — it may mean surprisingly little. It may also mean — unexpectedly and perhaps improbably — that infrastructure might wind up on a firmer footing than before.
While the president achieved a once-in-a-lifetime bipartisan infrastructure bill, the era of large-scale direct government infrastructure funding will not repeat itself for a long time. And as large as the infrastructure bill is, it is not enough to cover our 10-year, $2.59 trillion infrastructure deficit.
Instead, the private sector will have to lead the way. The answer is to rely on private investment and public-private partnerships. That idea has broad bipartisan support. It might appeal to pragmatists on both sides of the aisle.
It is certainly popular. In a national survey I conducted in August, Americans strongly supported private management of public infrastructure. Forty-four percent said private management of transit systems should be allowed (only 28 percent were opposed). And 41 percent favored private sector management of airports (with 29 percent saying no) and water systems (only 28 percent said no). Support was equally strong across income groups and among Democrats and Republicans. Forty-four percent thought the private sector could do a better job than the government of managing toll roads, public transit, water systems and airports. And nearly half reported that the U.K.’s system of privatization — where airports and water systems are regulated by the government but are privately run — could work in their communities.
Those findings certainly open the door, politically, to public-private partnerships. But direct private-sector funding will also be needed. The good news is that ample private-sector funds are available. As of June, U.S. public pension funds alone had $10.8 trillion in assets under management. And the private sector is eager to invest in infrastructure, which offers stable, competitive returns over a decades-long time horizon.
Right now, however, it is challenging to bring private funds to bear. Private investors can find it difficult to identify infrastructure investment targets, and even if they do, direct private investment is often impossible — projects are funded through bond issues and similarly cumbersome mechanisms. This is where the new Congress can and should play a role.
There are several ways to streamline funding, including measures to allow public pension funds to invest more — and more directly — in infrastructure projects. But the most promising option is a national infrastructure bank — a not-for-profit government-sponsored enterprise that would marshal both public and private funds and direct them to infrastructure projects.
In some states, such banks already exist on a limited scale. But a national bank, with $100 billion in equity capital and a $1 trillion balance sheet, would be sufficiently large to galvanize capital markets and generate funding on a long-term basis — decades rather than years. It would separate infrastructure investment from the vagaries of the political cycle. It would serve as a clearinghouse, helping investors identify the most promising projects, and as a source of expertise for state and local governments. And it could prioritize and fund infrastructure initiatives that are critical to the U.S. economy, national security and strategic global competitiveness — those that make infrastructure resilient to climate impacts, severe weather and cyberattack, support energy security, renewables and domestic manufacturing and that export our infrastructure capabilities to extend our global influence as an aspect of our “invest, align, compete” policy toward China.
A national infrastructure bank has been mooted for years — most recently in HR 8682, which was introduced last year and deserves serious consideration. My conversations suggest that the concept has support on both sides of the political divide.
In the new Congress, where it will be challenging to advance any initiatives, the bank might turn out to be the exception — a reasonable, pragmatic policy measure that gets traction and truly advances the public good. Let us hope that, as we enter the next phase of our infrastructure decade, Republicans and Democrats can come together to make it a reality at long last.
An expert on global infrastructure investment, Sadek Wahba, Ph.D., is a member of the President’s National Infrastructure Advisory Council and of the Global Advisory Council of the Wilson Center, the key U.S. nonpartisan policy forum for tackling global issues. He is also chairman of I Squared Capital. The views expressed here do not necessarily reflect the views of those organizations.