Public Private Partnerships Can Transform America
The world is buzzing with the news that Saudi Arabia pledged to invest $20 billion in U.S. infrastructure. Since Donald Trump took over as President, he has repeatedly promised to invest $1 trillion in infrastructure projects across the nation. It is central to his plan to drastically reduce unemployment and jumpstart the U.S. economy.
Yet, many have questioned where that $1 trillion will come from, particularly in light of the fact that Trump has also been clear that he intends to reduce taxes substantially. Pundits laughed when he claimed that Public Private Partnerships, PPP, were the key to updating and transforming our infrastructure.
The Saudi pledge proves the pundits wrong. The money is there, waiting in the wings, if the government will simply get out of the way and let it be put to productive work. While the Saudi’s $20 billion may seem a drop in the bucket to a $1 trillion sea, with the leverage to be gained from private finance, it is a whopping 10% of the total seed money needed to make that $1 trillion investment a reality.
If a tiny, albeit rich, foreign nation can pony up funds this easily, imagine how much idle capital is waiting in the wings to be put to good use. The Public Private Partnership plan could become an infrastructure investment bonanza.
Infrastructure Companies are Lining Up to Repair America
Companies like KBR, AECOM, Emerson Electric, Chicago Bridge & Iron, Great Lakes Dredge & Dock, Tetra Tech, McDermott, Macquarie, and more will be big players in the upcoming projects. America’s roads, rails, ports, airports, dams, bridges and power grid are outdated and worn out. Years of government neglect have left them in a state of disrepair.
The problem has been the competition for government funds. Money that is sorely needed for infrastructure is easily diverted into a myriad of other programs and projects. While we paid for things needed at the fringe, the core of America was falling to pieces.
In addition, government building projects and programs are almost by definition slow, unwieldy and inefficient. Yet, a variety of rules and regulations make it difficult for private business to take on the task and get things done.
This is why PPP is such a game changer. Sweeping away barriers that prevent private companies from participating is key to getting America moving again. Private companies are can build and complete projects efficiently, under budget and on time. Public Private Partnerships will allow America to develop and improve infrastructure. PPP harnesses dormant resources, and provides the biggest bang for the buck.
And remarkably, PPP projects won’t require hardly any investment from the government at all. Business will finance our critical infrastructure needs out of their own pockets. The public wins twice, by having new modern infrastructure to jumpstart economic growth, and the additional tax revenue that can be generated from that growth.
In addition, private equity is better at selecting those projects that are most needed and will be the most used. Only government would build a ‘bridge to nowhere.’ Private equity doesn’t start building a bridge until they know that there is a need and that people are going to use it.
Saudi Contribution is Just the Beginning
Various companies like Blackstone, Goldman Sachs, Carlyle and others stand ready to finance infrastructure projects. The seed money contributed by investment funds and individuals can be leveraged, to create a $1 trillion infrastructure investment for a $200 billion dollar outlay.
A variety of sovereign funds, private equity, and corporate contributions will revitalize the physical environment of America. It’s high time that we adopt new modern ways to build and improve our infrastructure. PPP is a bold move that will have huge impacts on the American economy for generations.