#TBT: How Public-Private Partnerships Can Get America Moving Again

By / 2.15.2018

This week, President Trump unveiled proposed specifics for the infrastructure plan he discussed in his State of the Union address last month. As part of Trump’s proposal, the federal government would dedicate just $200 billion (by cutting existing infrastructure funding without adding new sources) to infrastructure initiatives, relying instead on local and private investments to reach the administration’s goal of $1.5 trillion in total spending. Whether or not this plan gets passed, it is clear that private investment will play a key role in any infrastructure initiative from the Trump administration.

In this 2014 piece from Diana Carew, former director of the Young American Prosperity Project, PPI explores the potential role of public-private partnerships (P3s) in American transportation systems. In “How Public-Private Partnerships Can Get America Moving Again,” PPI argues that P3s “have several key advantages over traditional public funding.” Specifically, P3s require fewer taxpayer dollars, encourage innovation, and help depoliticize public works projects. All of these factors allow P3s to achieve higher financial returns. However, institutional support from government is necessary for these partnerships to succeed. The paper argues that, in order to facilitate meaningful partnerships, Congress should allow more tax-exempt private activity bonds, encourage the participation of foreign investors, and set up a fund for projects with national significance.

Although specific legislative circumstances have since changed, the PPI article offers an important starting point for considering the role of private investment in public infrastructure projects. The memo explains that public-private partnerships “are a complement to, not a replacement for, the traditional model of financing infrastructure through public appropriations,” and that thoughtful public policies can help make P3s a more effective financing strategy. Before relying heavily on private financing for infrastructure, lawmakers must consider the ways in which government limits or facilitates the efficiency of this process. Without legal support for P3s, President Trump’s confidence in them is premature. Revisiting this 2014 piece offers a timely examination of “how to get the biggest bang for the federal buck.”