America, as everyone knows, runs a permanent budget deficit, and most states, cities and towns can barely balance their budgets. But there are some people with lots of money to spare: billionaires in China have huge surpluses to invest, and global pension funds and insurance companies have more money than they have good investment ideas. Can't we attract some of that money here at home to pay for badly needed subway, rail, airport, flood-protection, power and road investments?
Sort of – except for one minor detail: People with money to spare want to be paid back, with interest. Some infrastructure can pay for itself, and pay its investors, too – and some can't.
Take a couple of examples from New York. After a gas explosion killed eight people last year, politicians talked about the “lack of support for infrastructure investments.” But in New York, a private company delivers power and gas. The bills that people pay for these services cover the cost, plus a profit for investors. In this case, private investment in infrastructure already works, and has for a century.
Big-city airports, too, pay for themselves. New York's three airports, run by the Port Authority of New York and New Jersey, made about a half a billion dollars in profit last year, helping to pay for loss-making operations like the Port Authority Bus Terminal in Midtown. LaGuardia Airport badly needs a new central terminal – and private investors, with a contribution from those Port Authority profits, can easily foot the cost. The problem isn't money, but state-government delay.
But some infrastructure will never turn a profit – and so it can't attract private dollars. New York City's mass-transit system is $15 billion short of what it needs to invest over the next five years. The state-run Metropolitan Transportation Authority runs permanent deficits and depends on billions of dollars each year in tax subsidies to stay afloat.
Yes, the M.T.A. could sell one of its profit-making enterprises, such as the Triborough Bridge, to a private company, just as the Port Authority could sell its airports to a private company. But then the government would be losing profits it needs to cover losses at subway, bus and rail operations.
Some of the problem is political. Private investors might well have paid for the Tappan Zee Bridge replacement going up north of New York City right now. But they would need to double or triple the toll to make the project profitable. Gov. Andrew M. Cuomo wants to keep the toll artificially low. If New York had the political courage to allow a private company to raise the toll, it would have the political courage to just raise the toll itself – eliminating the need for the private investment, anyway.
Private companies can do many things well – but they can't solve our unwillingness to pay for critical infrastructure.
This piece originally appeared in New York Times Room for Debate