Not the Macquarie Model: Using U.S. Sovereign Wealth to Renew America’s Civil Infrastructure

Source: Richard G. Little, Keston Institute for Public Finance and Infrastructure Policy, University of Southern California, December 2008

As this paper is written, the United States finds itself at the vortex of multiple converging forces that could change permanently the manner in which the nation’s civil infrastructure is funded and paid for. Simply put, there is recognized need for comprehensive reinvestment in the infrastructure of the United States and the magnitude of the shortfall between needs and spending is daunting. Taken together, annual investment in public and quasi-public infrastructure systems of 4 to 6 per cent of GDP ($500 – $700 Billion) will probably be necessary for the foreseeable future. At the same time, no funding source, either dedicated such as the Highway Trust Fund, or general, such as the Budget of the United States, is projected to have the capacity to generate funds sufficient for infrastructure investment at these levels. Private capital, broadly deployed through various forms of public private partnerships (PPP or P3) could address a portion of the shortfall but PPPs have generated considerable opposition in the U.S. and the long-term viability of this model in the face of the on-going financial crisis is unclear.

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