Posted on 06/11/2017 11:05:39 PM PDT by Tolerance Sucks Rocks
Investors are hoping to seize upon the $1 trillion infrastructure plan proposed by President Donald Trump to transform the nation’s highways, bridges, and tunnels into assets they can monetize by adding tolls and other user fees.
The Trump infrastructure plan, which the administration plans to roll out this week, is centered on the idea of “asset recycling,” which refers to the process of securing new infrastructure spending by leasing the operations of existing public property to private operators.
The privatization-centered scheme has the nation’s largest toll operators salivating. Transurban, Cintra, and TransCore, three major toll operators, have retained federal lobbyists to influence the upcoming plan.
Transurban, which operates Washington-area Beltway tolls, has been accused of price gouging and predatory debt collection practices. In one lawsuit, a driver claimed that she was charged $3,413.75 for unpaid tolls, fees, and fines after Transurban failed to accept her initial payment for $104.15 for missing tolls on the Beltway toll lanes. Washington Post writer Fredrick Kunkle assailed Transurban for “price gouging” after the company hiked its rates to $30 during a winter snowstorm.
During an investor day presentation last month, Transurban’s Jennifer Aument, in charge of North America operations for the Australian company, hailed the Trump infrastructure plan as an opportunity for toll operators like Transurban to expand.
“The people that Trump has put in his administration, they are people who get our business,” Aument said. Trump, Aument added, had appointed several individuals who “were personally involved in working on Transurban’s projects under the Bush administration,” including the Beltway express lane tolls.
Watch:
At least one prominent Trump official involved in the infrastructure plan has recent financial ties to toll operators. Jeffrey Rosen, the deputy secretary of the Department of Transportation, previously provided legal services to Kapsch TrafficCom North America, according to his ethics disclosure. Kapsch TrafficCom provides tolling technology to several public agencies, including the Port Authority of New York and New Jersey.
The concession model has been used in the past to finance infrastructure deals without raising taxes or securing other sources of revenue.
Former Indiana Gov. Mitch Daniels negotiated a deal in 2006 to lease a stretch of Indiana highway to a consortium of investors. The money raised from the deal financed construction in other parts of the state, while the investors were promised toll proceeds for 75 years. The Indiana Toll Road went from $4.65 to $8 for a car traveling the length of the highway, with semitrailers now paying double.
The public-private partnership model now favored by Trump administration officials is being spearheaded by White House economic adviser Gary Cohn and Transportation Secretary Elaine Chao. “We like the template of not using taxpayer dollars to give taxpayers wins,” Cohn told reporters on Friday, explaining his preference for the asset-recycling approach.
But many fear that such privatization schemes simply shift the burden from taxpayers to motorists and truckers, while creating a two-tier system that unfairly impairs the ability of low-income drivers from accessing the nation’s interstate highway system. In the process, a small group of investors reap the most rewards.
Cohn and Chao, notably, have ties to the financial firms positioned to exploit the tolling of America’s highways. Cohn is the former chief operating officer of Goldman Sachs and Chao is a former board member to Wells Fargo. Both firms have expressed interest in toll road deals. Though both Cohn and Chao have said they will recuse themselves from matters that directly affect their former companies, it is unclear if they will recuse themselves from private-public infrastructure policies that will attract interest from investment banks.
The rush to embrace a public-private model based on tolling and other private financing methods is seen as a political winner that can bring infrastructure-friendly Democrats together with Republicans concerned about the cost to taxpayers. But the short-term solution based on political expedience may have long-lasting societal impacts.
Alan Pisarski, a travel consultant, noted in a recent column that the fundamental justification for the interstate system was to connect America for military, economic, and social reasons. There was a reason the first 50 years of the national highway system prohibited tolling.
“Where do those people and trucks go if they are priced off the interstate highways by tolling? What national interest can justify that action?” Pisarski asked.
I think it is pretty clear that this scam sells far better to the swamp than it does to honest folks.
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I’m obviously missing something.
So we see a public private partnership, in which these toll companies come in, pay money towards road improvements and upgrades, but then, turn the roads into toll roads. And then everyone using the road pays a toll.
How is this fundamentally different, from biting the bullet and raising gas taxes, or other taxes, to pay for road maintenance??? What am I missing?? How is this good for taxpaying drivers on these roads, who instead of paying road taxes, pay a toll to use the road instead??? They are still paying, just paying a toll company, right????
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I’m still failing to see where the authority exists for Fedzilla to be in the mix all together.
Unfort., those pub/priv partnerships never seem to be equal, mass transit is highly subsidized and thus the robbed, I mean toll-users are taken to the bank.
Add that many of the mass trans. is now going LNG or such = NO fuel taxes, again hitting those that use the pump.
How ‘bout, instead of looking to the golden goose, we start looking into the costs of time, materials, union contracts, fraud/graft/no-bid contracts, etc.?
The whole ‘MUST be union’ B.S. would knock a lot of the cost out (most likely be under budget and under time).
I, for one, have had enough of the constant road construction where I see just put-down/paved ripped up for another go....in FLORIDA (no snow/cold).
>>You’re just a Socialist. LOL. Be ready for the tolling shills (you know, the ones that think you can have 10 companies each running parallel toll roads between city pairs, so that you can have ‘competition’ on a level playing field). If you don’t support handing MONOPOLY CONTROL of our highways to foreign interests, you are a SOCIALIST - at least by their ‘reasoning’.
LOL. Well said!
>>socialism for interstates has failed. Time to let the free market do its magic
Governments building roads is not socialism! It predates socialism by THOUSANDS OF YEARS! It was still done after commerce between people was established and before socialism.
How will the free market “do its magic” anyway? Will each lane be run by a different company so I can choose the one that meets my needs best? Will they take different routes to get from Point A to Point B? My city is cut in half by a river. Will they build a dozen more bridges across the St Johns River to give me choice as a consumer?
I know (and I hope that you aren’t such a blind ideologue to see it too) that your “free market” on these roads consists of companies lining up at the government trough, lobbying, paying off politicians, and then being granted a LICENSE (franchise) to operate the roads that people have to use to get back and forth. There’s no free market in that to “work its magic”. It’s just more pockets to fill as I struggle to go to work each day.
>>privatize interstates not all roads. just the interstates.
Let’s start with rural roads and city streets first. Less impact on commuters and much higher cost per vehicle mile driven on them with more consumer options to actually create a free market. Remember that it wasn’t the free market that electrified the rural USA, or gave it telephone service. That was the government. If we did things your way, people in flyover country wouldn’t even have power yet.
And, please, don’t go to the absurd absolute by claiming that I am a Socialist. The government is responsible for national defense, shared infrastructure, and treaties. Period. That’s not socialism (even though Socialists try to portray it as such). That’s just common sense. What you propose is little more than medieval banditry committed under the banner of the local baron.
The negative arguments come down to this:
Government run highways are inefficient, bloated, and serve unrelated political constituencies;
v
Private sector is rent-seeking.
I’m no fan of rent-seeking, but I’d rather a corporation profit from a highway than a highway finance wasteful bus, rail, whatever that have no relationship to the highway itself.
The problem with cost-comparisons between public and private sector roads is that the public-sector roads financing is diluted by overall and wasteful government spending and taxes and public debt that support it. Privately-funded financing is directly related to the road itself.
The Trump administration point on this is that no private-sector investor would bother with all the contrary rent-seeking of political adversaries (green lobby, etc.), dilution of revenue for other political constituents, etc. so the true cost of infrastructure can only be discerned through the private market. I understand the problems of the private sector, but if terms are fair and rent-seeking possibilities diminished its far far more efficient than socialized infrastructure.
“...but I don’t think it is right to call this a “free market”....”
Agreed, you could get the worst of both worlds.
When they “deregulated” the gas and electric power companies (many operating as monopolies) they disconnected the profit motive from system maintenance and upgrade. Where you had a monopoly that benefited from upgrading the systems for greater profit, now you have maintenance service providers that have no incentive to upgrade the grid.
Before the mid 1990’s when the “deregulation” occurred you NEVER EVER heard concern for our “aging electrical grid”...BECAUSE there was incentive to continuallity upgrade...more power delivered the more profit.
In effect, we went from monopolies to something worse...only a government can make things that bad.
I expect the same here.
I played around on Google maps, plugging in two major cities that I have driven between a lot. Avoiding the interstate adds only 15% to the distance but 76% to the time. Not much of an alternative. Also, there are not literally dozens of ways to go. These cities are less than 200 miles apart.
wrong
ROFLMAO
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