The Right Way to Boost Infrastructure SpendingThe most important thing the federal government can do is get out of the way.Veronique de Rugy | June 8, 2017As part of its "Infrastructure Week," the Trump administration is holding infrastructure-themed events around the country this week to promote $1 trillion of private and public infrastructure investment. Based on the 2018 budget outline, we know that the administration intends to seriously streamline the permit process, reduce regulatory barriers and encourage private investment.
However, lost in the debate is the fact that the private sector is already the biggest player in the infrastructure sandbox; all the federal government needs to do is get out of the way.
However, lost in the debate is the fact that the private sector is already the biggest player in the infrastructure sandbox; all the federal government needs to do is get out of the way.
A little-known fact is that the private sector already owns and finances most of the nondefense infrastructure. A new paper by Chris Edwards at the Cato Institute—called "Who Owns U.S. Infrastructure?"—breaks it down in great detail. Edwards writes, "In 2015, private infrastructure assets of $40.7 trillion were four times larger than state and local assets of $10.1 trillion, and 27 times larger than federal assets of $1.5 trillion, according to the (Bureau of Economic Analysis) data." Also, 94 percent of the $3.5 trillion of funding in 2016 came from the private sector and state and local governments.
Looking at infrastructure assets owned by the government tells the same story. The federal government owns 13 percent of the assets, leaving the rest to state and local governments. For instance, Edwards documents that state and local governments "own 98 percent of highways and streets, including the entire interstate highway system. They own schools, water and sewer systems, police and fire stations, and transit systems."
Though the federal government owns relatively little infrastructure, its policies have an oversize impact on what investments and decisions state and local governments and the private sector make. As Edwards puts it, "the federal government is the tail that wags the dog on the nation's infrastructure—and not in a good way."
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