Optimism For the Infrastructure of the Future:
Increased infrastructure spending to update dilapidated and failing structures was a huge promise point that President Donald Trump ran his campaign on. President Trump has earmarked $1 trillion for spending for infrastructure spending over the next 10 years. The plan also involves an 82% tax break for any private equity investment that is invested into revenue-generating infrastructure projects. The announcement of this plan has given many that work in the field of infrastructure a great dose of optimism for the upcoming years as they hope to kickstart the country's economy and upgrade infrastructure that, in many cases, is very old and in other cases completely failing.
Besides investing money and giving tax breaks, exactly what else is in the proposal for improving infrastructure in the coming decade? That's what the rest of this piece is going to take a look at.
What Principals is the New Infrastructure Bill Founded On?
President Trump has stated that this new infrastructure spending initiative will cite 3Ps which are: a) better procurement methods, b) market discipline, & c) long-term focus on maintaining assets.
This P3 will use public-private company approaches to partner together to help fix infrastructure that needs to be repaired. These same partnerships will also continue to take on new projects to invest money in upgrading the infrastructure across the US. In return, the companies will get an estimated 82% tax break on all of the money that was spent on the project. The public will get a much-needed infrastructure upgrade and the upgraded infrastructure.
How Do These Public-Private Relationships Work?
These relationships outlined in President Trump's infrastructure plan utilizes the traditional public-private relationship that has been used between companies in the past. The public company contracts out a private company to build and maintain the structure for many years, eventually returning control of the structure to the government years down the road. Then the government will maintain that structure from then on.
In return for building infrastructure projects that benefit the general public, the private company gets a massive tax cut. The public gets new infrastructural buildings that they can use. These partnerships are intended to help rebuild the dilapidated infrastructure the US sorely needs to upgrade.
Does This Plan Work?
The $1 trillion infusions of funding into the infrastructure is certainly a great boost to the infrastructure of the US's future. However, it remains to be seen if the aforementioned public-private partnership works for every infrastructure project that needs to be done.
It's also worth noting that the $1 trillion investment is a far cry from the entire gap that the US has to fill in the infrastructure sector. For example, right now there is a $2.1 trillion deficit in the waterway and transportation industry alone. This includes projects like fixing roads or inland waterways as well as other infrastructure upgrades. So, while $1 trillion is a start for infrastructure is a great start, there is much more that will still need to be done.
Others question if this P3 and public-private partnership works for many projects such as road repaving, bridge rebuilding, and school construction. There might have to be more than one solution that is required to fix the US's crumbling infrastructure problem in full. This may certainly be a good start, but more may need to be done as the biggest problem is lack of funding and the $1 trillion estimated isn't even 50% of what will be needed to completely upgrade the US's infrastructure.
It's An Ongoing Problem:
The conclusion, in the end, is that this can possibly be a great start for the infrastructural future of the US, however, there will need to be more that is done to complete our country's infrastructure problem. President Trump has offered one possible solution to help with some infrastructure upgrades in the future. The 82% tax break is a great incentive for private businesses to get involved.
However, more still ultimately needs to done to continue to upgrade the US infrastructure as it will be an ongoing issue well into the future.