TRANSPORTATION
The perils of privatization
Greece is having a fire sale of its publicly owned transportation system, with planes, trains and roads all being sold off as the country attempts to dig out of its debt crisis. Americans should watch and learn: We could well be privatizing large segments of our own transportation system soon because of the U.S. debt crisis.
Recently, Rep. John L. Mica, R-Fla., chairman of the House Transportation and Infrastructure Committee, introduced a bill that would slash transportation spending, limiting it to the amount brought in by federal gas tax revenues and existing highway fees. That roughly translates into $215 billion to $230 billion over six years for highway and transit projects -- about half of what the Obama administration sought last year.
We are facing a road infrastructure crisis, and it is of our own making. The federal gas tax has been unchanged, at 18 cents, since 1993, even as vehicles have gotten more fuel-efficient. Adjusted for inflation, it amounts to a measly 12 cents today. But Americans, according to surveys, don't want to raise the tax.
For politicians like Mica, this opens doors to privatization projects. Maybe he's right. But rushing to privatize state-owned assets can lead to terrible deals that let private companies walk away with prime assets and leave taxpayers with no guarantee of better services or lower fees.
Many European countries and cities have privatized infrastructure and city services. You want to use the highway -- you pay. You want to stroll through a "public" garden -- you pay. You can avoid higher taxes, but if you want the services, you pay the private company that holds the franchise. It is a system that works fine for those with cash to spend.
Without new revenue sources, the long-term problems for U.S. infrastructure finance are going to continue even if Congress manages a debt-ceiling deal. By contrast, if the U.S. defaults on its debt, our bond ratings will tumble. The higher costs of bond financing would then raise infrastructure costs through the roof and put government negotiators at a disadvantage in privatization deals.
Averting default would give U.S. leaders wiggle room to find public-private partnerships that really do serve the public interest.
LISA SCHWEITZER, WRITING IN THE LOS ANGELES TIMES
