Why+Obama+can't+save+infrastructure+-+Raymond

Article: Why Obama can't save infrastructure Source: CNN - http://finance.fortune.cnn.com/2011/02/17/why-obama-cant-save-infrastructure/ Date: February 20, 2011

Summary: According to the article, America's transportation infrastructure needs to be fixed, however there are two problems: political leaders can't agree on HOW to pay for them and there is simply a shortage of money. President Obama proposed $556 billion in new infrastucture spending over six years, however it is estimated by the American Society of Civil Engineers that a 5-year infrastructure investment is approximately $2.2 trillion. The article proposes an interesting way of solving this dilemma: to privatize infrastructure. What this means is that ownership of roads and bridges will be transferred to private corporations who will borrow money to purchase infrastructure. The article then proposes 3 main reasons to support privatization. The first is that the current system isn't working, hence the lack of $2.2 trillion in infrastructure needs. The opportunity cost of private funding is public insufficient funding. Secondly, private investment firms do everything in their power to make transportation assests safe and efficient. Thirdly, local governments can structure these leases any way they want to, meaning private owners can make any recommended repairs. The final point in the article is that the privatization solution does not require any taxes, so taxpayers have less infrastructure-related risks like maintenance costs and liabilities.

Vocabulary: Shortage- Economic shortage is a term describing a disparity between the amount demanded for a product or service and the amount supplied in a market. Specifically, it occurs when there is excess demand. Infrastructure- The basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function. Privatization- Process of transferring ownership of a business enterprise, agency or public service from the public sector (the state or government) to the private sector (businesses that operate for a private profit) or to private non-profit organizations. Tax- Money paid to the government other than for transaction-specific goods and services

As can be seen from the graph, America's transportation infrastructure is faced with a shortage: the public demand for good quality roads and bridges is higher than the funding that can be supplied to building new infrastructure.

Evaluation: Although I agree with the article that something new needs to be done about improving transportation infrastructure, I disagree with the article's standpoint of privatization. In my opinion, if America were to privatize infrastructure, it would be a bad idea considering that it is only a short-term solution to the issue. In the long term, the largest corporations will charge high tolls and let the roads fall into disrepair. I think a better idea would be if individual states funded infrastructure assets by raising the gasoline tax, which is how transportation infrastucture spending have almost always been funded for. They then need to make sure that the gas tax increase is used strictly for infrastucture.