We previously wrote about the role that P3s can play during a recession and the (albeit limited) infrastructure funding included in the CARES Act. At the time, Congress was continuing to discuss a new, infrastructure-focused bill, although more recent reports indicate that infrastructure funding has—yet again—been delayed, despite the President’s recent support for a $2-trillion funding package. Fortunately, discussions continue, and the time is still right for a new infrastructure bill in Washington.
Even putting aside the current COVID-19 crisis, and any economic stimulus that an infrastructure-funding bill would provide, a significant investment in public infrastructure is more than justified. As we discussed in a prior post, the nation’s infrastructure backlog exceeds $4.5 trillion in the next five years, and that amount is simply to meet short-term needs, not to adopt new technologies or adapt to meet future threats such as climate change. In that context, even a $2-trillion bill (which does not appear to have sufficient support at this time) is not enough to ensure that the continued availability of what we currently take for granted—e.g., that the bridge won’t collapse, and that when we flush the toilet, its contents are never seen again. In other words, infrastructure spending is justified right now because it is needed right now. Fortunately, infrastructure investors remain keen to invest in infrastructure, and the federal government’s investment can therefore be leveraged (in appropriate cases) with private-sector financing, through public-private partnerships, in order to move critical projects forward.
And still putting aside any economic stimulus, the time is right for infrastructure spending because infrastructure can be constructed more efficiently when its usage is reduced. If entire roads, transit systems, or airport terminals can be shut down for a period of time, for example, construction can be expedited (and its cost reduced) by eliminating the need for complicated phasing and hour restrictions. While that is nearly impossible to accomplish when demand is high, it is absolutely feasible when the majority of the population is quarantined in their homes (and many government agencies are already taking advantage of this silver lining to expedite infrastructure construction). In some cases, labor can also be obtained less expensively during a recession, further maximizing the benefit of investing in infrastructure right now.
For those who believe that the current pandemic justifies a Keynesian intervention—that the government should spend the economy out of the recession—a massive federal infrastructure program, akin to the New Deal-era Works Progress Administration, is easy to justify. But, as explained above, even for those who do not believe in any economic stimulus at the federal level (whether related to COVID-19 or as a general principle), a significant infrastructure investment is still justified, and now is the right time.