Democrats have long resisted the idea of making deals with private companies to provide public infrastructure. It goes against their philosophy that the government should be in control of certain public services. They claim that involving private business will lead to the public getting a raw deal. And they also want to raise taxes on the rich.
Meanwhile Republicans are arguing over the definition of infrastructure and also pushing for more public private partnerships as a means of funding. They are more willing to pay private companies who are experts at planning and executing a project in a quicker time and keeping costs down, and then sharing the revenues from the infrastructure.
As of today, July 23, 2021, the Biden plan has not passed. A test vote failed yesterday. Republicans refused to vote on a bill that had not been written. Mitch McConnell had asked them to delay the vote until Monday, but they did not. They need at least 10 GOP voted to pass it.
Some have said that the Democrats will try to include the infrastructure plan in their separate $3.5 trillion budget for a social safety net, which includes massive new spending on pet Democrat projects that they could never pass in past years and which they intend to pass with budget reconciliation.
Their plan to pay for these projects, which include child care, expanded Medicaid, and clean energy deals, has always been by raising taxes on corporations and the wealthy.
Using public private partnerships is not part of their plan.
Some of the Democrat’s skepticism stems from widely-publicized failures of past public-private partnerships to complete the job, as well as distrust in the way private companies have managed some partnerships, such as the Chicago parking meter contract.
The larger issue is that anti-capitalist beliefs and the desire of more radical Democrats to have all infrastructure funded and regulated by the government automatically excludes the idea of a private companies being able to make a profit off of a public facility or institution that they invested in and worked to build.
Public Private Partnerships are very popular around the world, with Canada and Australia leading the way and European countries frequently utilizing the model for infrastructure projects.
Attempts to privatize various public assets have had varying success.
A plan was developed in 1996 to allow privatization of airports in the United States but 25 years later there are only two that have been privatized, one in Puerto Rico and one in Florida. The reasons given for the lack of private airports are that the process is too time consuming and there are too many regulations, but also that it’s financially more advantageous not to privatize.
The University of California Merced $1.3 billion campus expansion was completed on time using the P3 model. The Australian based Plenary Group, a global investment firm specializing in P3 projects provided the funding and Webcor was the contractor for the largest project of this type in US History.
PPP has many meanings and implications that can be praised or criticized. There are multiple models that can be used.
The UC Merced was an example of the DBFOM, design, build, finance, operate, maintain model. The project is a 39 year contract with the university and Plenary sharing the costs. Plenary will be reimbursed as the project is completed. This contract “does not transfer the university’s property rights, does not assign revenue streams and is not a lease. “
Despite the extensive use and success of the various types of P3 models worldwide, the far left is not convinced that it’s a good way to fund infrastructure.
According to an article by Sam Brody on the Daily Beast website, Bernie Sanders says it’s a ‘bad idea, period.’
Chuck Schumer called it ‘gimmicks and giveaways’
Alexandria Ocasio-Cortez decried P3 as a ‘trap that gives lawmakers a way out of taxing the wealthy’, her preferred method of funding everything.
Jared Huffman, Democrat from CA, dismissed the idea because “Trump tried that. That is not real thing.”
David Van Slyke wrote on Politico that public private partnerships ‘would allow exploitation of public assets and is a ‘betrayal of government responsibilities.”
Evidently these Democrats have not done their homework and are unaware of the UC Merced project that was started in 2015 during Obama’s administration, in a very Democrat state!
What they seem to be in denial about is that the government has a pretty bad track record when it comes to doing things cheaply and quickly. Private businesses are motivated to keep costs down and get the job done on time.
All you have to do is look at public school costs versus private school costs. Or the post office versus Federal Express.
However there are legitimate concerns that can and must be managed such as described here :
• “ensuring open market access and fair competition;
• protecting the public interest and maximising value added;
• defining the optimal level of grant financing both to realize a viable and sustainable
project, but also to avoid any opportunity for windfall profits from grants;
• assessing the most effective type of PPP for a given project.”
The comments on an article on The Hill about using public private partnerships reflect some citizens’ distrust of the model. Fears of corruption in handing out the contracts, policies that could making public infrastructure unaffordable to some people, and loss of control over the infrastructure. However, there are strings attached to these partnerships.
The fact that P3 is hated by the radical left even though it is widely used in Canada and Europe shows that these leftists like Bernie and AOC want nothing less than pure socialism.
Public private partnership works when done correctly.
But the government agencies in charge must make sure they understand the value of the deal, how much the private partner stands to make in the future, and not get impatient to sign the contract. Oversight, transparency and accountability are essential.
Obama’s Solyndra debacle was a good example of a bad deal and is often used as a reason not to consider P3 for funding infrastructure projects. However, we can learn from it and do better in the future.
Whether his party likes it or not, Biden has already made it public on the whitehouse.gov that P3 and asset recycling are among his list of possible ways to fund his $1.2 Trillion Infrastructure plan to rebuild aging roads and bridges as well as closing the digital divide with high-speed internet for all.
The Covid pandemic ‘public health emergency’ provided fertile ground for the growth of P3 as federal funding was poured into vaccine companies, but also brought the issues of patented vaccines and intellectual property rights back into the news.
Obama’s promised Infrastructure plans turned out to be mostly talk and little action. Only time will tell if the Biden administration will be able to deliver.
These promises will likely hinge on the acceptance of and successful implementation of public private partnerships.