One of the major punchlines during the Trump era in Washington, D.C. was the ever-occurring “infrastructure week”: that ill-fated time every year in which the White House was supposed to unveil a major infrastructure package, but which would then inevitably go off the rails, often due to the administration’s own incompetence. For instance, in 2017, Trump used the platform of infrastructure week not to push for investments in roads and bridges, but instead to rail against former FBI Director James Comey and the mayor of London, among others. Two years later, he spent infrastructure week attacking the Mueller investigation.
However, the decaying state of U.S. infrastructure is no laughing matter, and the Biden administration has brought a new level of seriousness to the topic, releasing an expansive $2 trillion plan at the end of March. In April, he followed that up with another nearly $2 trillion plan for “human infrastructure” such as paid family leave and child care. While much of the attention around these plans so far has focused on the question of what should be considered infrastructure, an equally important question is not yet being asked: Who should own and control our infrastructure?
Rather than privatizing new or existing infrastructure through exploitative so called “Public-Private Partnership” deals, private operating contracts or outright asset sales, progressives in Congress and the Biden administration should instead ensure that any and all investments apply the principle of democratic public ownership.
In practice, this means establishing or preserving local, community control over infrastructure wherever possible (while also making it more accessible). Where larger scale public infrastructure is genuinely needed (such as interstate passenger rail or electrical grids), a focus should be put on establishing new, multi-stakeholder governance processes, democratic accountability and transparency.
There is ample precedent for this more democratic approach emerging around the world, such as the remunicipalized (aka de-privatized) Paris water utility, which has become a world leader in local control and democratic and participatory governance processes. And traces of this approach are even contained within the pages of the Biden’s American Jobs Plan (AJP) itself, which includes a commitment to supporting and defending the right of local communities to establish their own publicly owned or cooperative broadband networks.
The current state of infrastructure
It is a generally accepted fact that U.S. infrastructure is crumbling and significantly lagging behind many other countries around the world. In their 2021 report card, the American Society of Civil Engineers (ASCE), the oldest national engineering society in the country, gave the country’s infrastructure an overall score of C- (on an A to F scale). Moreover, in many critical categories the score is far worse, including aviation (D+), dams (D), hazardous waste (D+), inland waterways (D+), levees (D), public parks (D+), roads (D), schools (D+), stormwater (D), transit (D-) and wastewater (D+).
In the real world, evidence of this disinvestment is apparent everywhere — and it disproportionately affects BIPOC and low-income communities. In just the past few months, the Texas energy grid collapsed after winter storms, the city of Jackson, Mississippi was left without water for weeks, and a leaking wastewater reservoir in Florida required state officials to dump hundreds of millions of gallons of toxic water in Tampa Bay in order to avoid a catastrophic flood.
By the low standards the federal government has set for itself in recent years, Biden’s AJP infrastructure proposal is undeniably ambitious. Divided roughly into four parts, it includes around $650 billion for physical infrastructure like clean drinking water, affordable housing, high speed broadband, schools and electrical grids; $621 billion for transportation infrastructure, such as roads and bridges, public transit, passenger rail, electric vehicles and airports; $580 billion for economic development, including research and development, workforce development and manufacturing; and $400 billion for care work through expanding access to Medicaid services and raising wages for care workers.
However, from the perspective of addressing the massive infrastructure needs that have built up over generations — and adequately tackling the threat of climate change — the plan is insufficient. For instance, ASCE has estimated that over the next 20 years the country’s water infrastructure alone is facing a $2.2 trillion cumulative capital investment gap — the size of the entire Biden infrastructure plan. Climate activists have also pointed out that the plan — which will be rolled out over an 8-year time frame — doesn’t come close to the amount of spending or the speed of deployment that is urgently needed to avoid runaway climate change. For instance, responding to the plan, the Sunrise Movement stated: “This is unacceptable. Your proposal needs to include at least $10 trillion on infrastructure if you want to meet the scale of this moment.”
Responses to the AJP from progressive and Republican policymakers alike have primarily focused on two aspects of the plan: the definition of what constitutes infrastructure, and the amount to be invested in it. Unsurprisingly, Republicans have argued that anything beyond the traditional definition of infrastructure — i.e. roads, bridges and airports — should not be included, with the Republican National Committee calling Biden’s proposal a “far left wish list” that needs to be reduced in scope and scale. The Congressional Progressive Caucus, meanwhile, released a list of priorities that includes further investments in care work and affordable housing, as well as a cap on drug prices, raising the minimum wage, a roadmap to citizenship for immigrants and a climate jobs program.
These priorities would undoubtedly strengthen the AJP and are all critically important in their own right. In particular, expanding public housing and establishing public employment programs could lead to important structural changes in the way the U.S. economic system operates that benefit working people.
However, the CPC priorities are short on details, and it’s unclear whether even they meet the needs and imperatives of the moment. And even if they are included in the final piece of legislation, it seems unlikely that many of them would survive the “budget reconciliation” process that may be needed for it to pass without Republican support. (For instance, when Biden’s Covid relief bill, the American Rescue Plan, was passed through the reconciliation process, the $15 minimum wage increase was stripped out of the bill.) Achieving these progressive priorities will likely require democratic reform of the U.S. Senate itself.
The question of ownership
While it is critical to fight for the biggest and boldest infrastructure plan possible, it is equally important not to ignore considerations about how these investments will be made, and who will benefit. Already, business groups like the U.S. Chamber of Commerce are arguing that instead of reversing some of the Trump era tax cuts on corporations to fund the plan (as the Biden administration has proposed), the investments should instead be paid for by fees on consumers, such as a gasoline or mileage tax on drivers for road infrastructure improvements or increases in water and electricity bills for utility improvements.
In addition to being politically disastrous, such moves to “pay for” infrastructure investments by putting additional costs on the backs of working families are completely unnecessary in the current economic context, as the economist Stephanie Kelton and others have pointed out.
Similarly, some investment banks and Wall Street asset managers are voicing opposition to AJP because it minimizes the role of private sector and cuts off the profit-making opportunities that they naturally assumed would accompany a large-scale infrastructure plan. Rather than higher tax rates on corporations or direct government spending, these investors were anticipating a slew of new “Public-Private Partnerships (PPPs)” that would hand over control of infrastructure assets and generate long-term revenue streams extracted from users and local communities.
As the Financial Times puts it, the Biden infrastructure plan has “disappointed some investors and asset managers who once expected public-private partnerships would be a lucrative financing opportunity.” Similarly, writing in The Wall Street Journal, Robert Poole — co-founder of the conservative Reason Foundation and longtime privatization advocate — wrote that if the Biden administration wants Republican support “they should invite private capital to play a major role in paying for portions of the plan.”
The Financial Times article is also surprisingly candid about how such PPP deals would shift costs onto working people. “Unlike the federal government, which pays a lower interest rate on its debt than almost any other borrower, private sector infrastructure operators must earn commercial rates of return, a cost that ultimately lands on the users of essential services,” the article states. As far as it relates to the high cost of private sector borrowing, this is true. And combined with the need of private investors to extract significant profits from these projects, this dynamic often leads to PPPs being substantially more expensive than public projects over the long term.
Additionally, many PPPs give long-term control of an infrastructure asset (such as a highway or bridge) over to private sector operators — essentially privatizing the asset for as much as a century in some cases. For instance, the widely cited 2008 Chicago parking meter fiasco involved a 75-year contract to a private consortium led by the investment bank Morgan Stanley. These quasi-privatization deals often lead to massive rate hikes and other tolls on users of infrastructure, i.e. most of us. The so-called “champagne highway” in Virginia, where rates under private operation are so high that even local Republicans have been attempting to take the road back under public ownership, stands as another prominent example.
In some cases, PPP deals are also accompanied with public subsidies to private investors if usage is not what was expected, or restrictions on the public from building any “competing” infrastructure (such as a new road to ease congestion, or a rail line to get people off the roads). These clauses have the effect of essentially guaranteeing profits for investors while handcuffing the public sector’s ability to engage in long-term infrastructure planning. While supporters of PPPs often claim that problems with the model have been ironed out over time and that new PPPs are not nearly as exploitative as earlier versions, the truth is that the history and continued practice of infrastructure PPPs in the United States and around the world is one of failure as it pertains to the needs of the working class.
The Financial Times article also revealed another telling and deeply troubling fact about the financial sector’s current orientation towards the country’s infrastructure. Shut off from new PPP deals, the vast amounts of private sector capital (at least $655 billion) that were being assembled during the Trump era for infrastructure are now being deployed to “buy existing assets such as ports, railways, and toll roads.” Moreover, the article states that some investors are hoping that “Biden can be persuaded to sell off assets that are currently in public ownership, allowing investors to earn a return on existing infrastructure while leaving risky construction work to the public sector.” Already, signs of such an approach are starting to appear in the water sector, where privatization pressures are rising once again due to the damaging effects of the Covid-19 pandemic on local budgets.
This would be a catastrophe for many communities, as privatization routinely leads to higher costs for residents, lower service quality, long-term disinvestment and a loss of local planning and coordination capacity. For instance, in late 2015, the city of Pittsburgh cancelled
its contract with the private water company Veolia due to rising lead levels in drinking water, increased water rates and a class action lawsuit from customers alleging erroneous and exploitative billing and shut-off practices. More recently, the city of Jackson, Mississippi successfully sued the German multinational company Siemens over a botched water PPP that had thrown the city even further into debt.
Building for the future
By definition, infrastructure is the foundation on which our economy and society is built. The types of infrastructure investments that are made today will help to define the contours of what is possible — and impossible — for decades to come.
If we are to have any hope of developing a more equitable, democratic, reparative and ecologically just system, a robust foundation of widely accessible and high-quality public infrastructure will be critical. As political debates and negotiations about infrastructure intensify in the coming weeks and months, it is vitally important to ensure not only that the overall amount of investment adequately addresses our needs, but that those investments are made in a way that strengthens, rather than undermines, community control and democratic public ownership.