With President-elect Obama's announcement of Ray LaHood for Secretary of Transportation, we take another step toward putting the anticipated economic stimulus package into action. In Friday's press conference, Obama again set forth the logic underlying our anticipated stimulus--a massive job program whereby workers fuel our economic recovery by remaking our national infrastructure.
Without explicitly uttering LaHood's Republican Party-affiliation, Obama underscored how this appointment reflected a bipartisanship and a devotion to finding the 'best person for the job'. Obama's anti-partisan-preoccupied remarks framed our first wave of press coverage with its speculation of the significance of the character of LaHood's brand of Republicanism for Obama's policy commitments. If we want to shape the implications of the appointment for our economic recovery, then we should swiftly move away from talk of personalities and parties.
America has tremendous infrastructure needs--ones that must be met in order for serious economic growth to be possible. The stimulus is an adrenaline shot aimed at reviving the economy and also accomplishing what the financial stimulus did not, unclogging the arteries of our credit system. Obama will hand out needles to state governors in hopes that they are better at spending money than our bankers. The governors have lots of infrastructure projects ready-to-go, workers ready to pay. They are likely to pay not only state engineers, but also private contractors--so our construction companies must too imbibe this public spirit.
The foundation of our economic stimulus is a public-private-partnership. What should this partnership look like? How should benefits and burdens, risks and rewards be distributed? The market value of our construction companies is likely to rise with our capital infusion. As major employers and as firms tasked with producing public goods, the rising prospects of our construction firms should be a sign of national health. This is essential, because the economic stimulus is just that--a boost to get things started. The actual cost of meeting our infrastructure needs dwarfs the enormous amount of money now on the post-inauguration table.
Most policy-makers, bankers and construction company executives will tell you that these dramatic needs are likely to be met by P3s or 'Public-Private-Partnerships'. Large pools of money sit in private infrastructure funds waiting to bankroll massive P3 infrastructure spending. This money filled the funds long before the crisis. Fund managers have not been deterred by the economic crisis. The US economy continues to be an attractive investment environment.
Since a good deal of this money hails from overseas, P3s have been viewed with skepticism by those fearing 'here-one-day-gone-tomorrow' capital. The fact that early experiments with P3s have been accompanied by toll increases hasn't added to their popularity. Long-term leases of roads to private companies have, for some, taken the 'public' out of 'public transport'.
There is nothing inherently wrong about how the economic stimulus ties our public hopes with the health of private construction companies. Is there something necessarily wrong then with leveraging the federal infrastructure stimulus money to tap the cash sitting in the P3 infrastructure funds? What if it means more projects and more jobs? Are the benefits of more investment money outweighed by the risks--can we align P3s with the public-interest?