The Debate about P3 is not “Inside the Beltway”: It is about the Beltway.



Short Case Study About How Elected Officials Are Going Nuts Without a National Infrastructure Bank

August 11, 2021--The following is merely one example of the desperate condition our nation has been reduced to, as local, regional, and federal financing have failed to address crucial upgrades in our regional infrastructure. The alternative, already discredited, has become public-private partnerships(P3). While they work, at best, in a limited number of cases, they have already failed as a policy antidote. Even so, powerful financial interests have made P3 part of the ongoing debate around infrastructure, and an included feature of most of the ‘infrastructure banks” other than the real, authentic Hamiltonian variety as seen in HR3339.

Here is one, brief story.

July 9 2021- Despite previous opposition in Montgomery County, Md, the proposed P3 financed “hot lanes” for I-495 and I-270 are now set for a vote in the upcoming week. The Maryland Board of Public Works, which has three members including Maryland Governor Hogan, has the green light to vote because of the now majority support from the Montgomery County Council, and they are expected to approve the

deal. (1) (Editor's note: the board approved moving forward in the vote today.)

The companies expected to win the contract include Macquarie and Transurban, both Australian companies involved in constructing private toll roads.

The point can be made by pointing to another nearby and related project.

 Part of Transurban’s contract in constructing the hot lanes in Virginia (also on the same I-495 Beltway) includes a provision that effectively prevents the creation of rail lines connected to these interstates, which would “siphon off” money from the private investors. They have a right under their contract (which expires in 2087) with Virginia, to seek compensation from the state, if Virginia would dare invest in such regional rail such as rail which went around the DC Beltway. (2)

The attack on rail (which is clearly a sane, long-term solution) has also been evident in the debate around the region’s greatest traffic congestion headache, the American Legion Bridge, also a target for P3. Local rail enthusiasts have advocated building a new bridge, to include the infrastructure for future rail. Opponents point out that the new $3.5 Billion Wilson Bridge, completed in 2016, included new rail for the future, but that there are no plans or discussion from regional rail authorities to ever build such rail. (These are the bridges that cross the Potomac into Maryland from Virginia, on the two different sides of I-495.)

Isiah Leggett, former Montgomery County Executive, recently penned an opinion column in the Washington Post, where he reflected the cynicism, hysteria, and likely the corporate money behind pushing the urgency of going with these public-private partnerships. Leggett said: “It’s flat-out irresponsible to reject public-private partnerships (P3) out of hand… If public-private partnerships are not part of the solution, then we have no practical solutions in the foreseeable future…We can also wait for another highly significant infusion of resources from the federal government. If we choose that path and get in line now for those dollars, my 12-year-old granddaughter may get to see her grandkids attend the groundbreaking ceremony.” (3)

Given the proclivity of Privateers such as Macquarie and Transurban to purchase passels of politicians with what amount to bribes, it is not below the belt to ask whose payroll is Leggett on. Politicians and bribes are the norm not the exception. 

Ask yourself the following questions about the debate as summarized above:

1)   Why are we spending tens of billions on expanding interstates to 10,15, or more lanes, where there is no future planning involved in such insanity?

2)   What ordinary working people can afford to travel in such “hot lanes”, whose prices increase like the stock market? (The lanes are often derided as “Lexus lanes.”)

3)   Are we witnessing the wholesale hijacking of our regional infrastructure, to the benefit of privatized gangsterism?

These public-private partnerships are portrayed as the only reliable form of long-term financing since public funding has never been reliable to keep up with the required improvements.

There have been many failures of P3’s, including the oft-cited cases of I-69 in Indiana, and the Chicago Parking lot fiasco. P3 fundamentally is a flawed concept because these deals are based upon enabling private companies to maximize user fees as the profit stream for their investment, the opposite of the concept of “the common good.” These private companies, in exchange for accepting a minimal amount of risk, are given all sorts of guarantees, which include getting out of these contracts.

But the fundamental inconsistency of P3 with long term infrastructure, is that the return from infrastructure often derives from the general improvement of the productivity of the economy, thus increasing tax revenues indirectly, and that type of improvement does not represent the kind of “profit” that these corporations can monetize.(4) (5)

These arguments work for one reason only: The United States needs a $5 trillion-dollar National Infrastructure Bank, which circumvents the current dysfunctional appropriations process. The NIB will also allow for actual long-term urban planning which is rational.

Why would anyone oppose such a National Infrastructure Bank? (…Unless they were going to make a lot of money in the form of pay-offs).

If the American people knew of the NIB alternative, these crazy debates about hot lanes would take the fast lane to oblivion, where they should be.

Sources:

(1) “Washington, DC-Area Planning Board Revives $11B Md. Express Lanes”, Engineering News-Record, July 21 2021

(2) “A Metro ‘Beltway Line’? Transit advocates say a new American Legion Bridge should leave room for rail. “ , Washington Post, May 22 2021

(3) Isiah Leggett, Opinion: ”On fixing Maryland’s transit crisis, no is not an option”, Washington Post, July 16 2021

(4) Rosa Pavanelli, Public Services Institute, “Why Public-Private Partnerships Don’t Work” , Global Policy Forum, February 13 2014

(5) Joseph Stiglitz,  “The Harms of Infrastructure Privatization: A Step Backward in Progressive Policymaking”, Roosevelt Institute, July 26 2021