There's no doubt about it: America's infrastructure is crumbling. The United States spends only about 0.5% of its GDP on building and repairing its roads, bridges, airports and railways, yet it's one of the most car-dependent nations in the world.
Bridges have collapsed due to disrepair and many more have been deemed unsafe. The last new airport in the U.S. was completed more than 20 years ago. Current air-traffic control systems are less technologically advanced than most smartphones and that contributes to long delays and several recent near-collisions of airplanes.
According to the 2013 report card for infrastructure, America scores a "D+" and would require more than $3.5 trillion in spending by 2020 to get up to snuff.
But money has run dry. States cut their budgets by 5.7% in 2010 leaving little money to repair old infrastructure and the federal Highway Trust Fund is running out of money. The U.S. Department of Transportation estimates that the trust will run out of money by August 2014.
So what’s a country to do? Congressman John Delaney (D-MD) has proposed a solution. The Partnership to Build America Act would finance $750 billion in infrastructure spending through repatriated corporate earnings and public-private partnerships.
"What’s unique about this is the fund isn’t created by the government putting money in, there’s no government spending… it’s created by providing incentives for private companies to invest," Congressman Delaney tells Yahoo Finance. "Right now we have $2 trillion in cash sitting overseas, over half of the cash that U.S. companies have and our bill creates a way for that money to flow back into the United States."
The legislation would create $50 billion in infrastructure bonds, which would have a 50-year term and a 1% interest rate. The fund would then leverage at a 15:1 ratio. Companies that buy bonds will also receive certain tax breaks.
"Increasing our investing in infrastructure should be our number one domestic priority… but we also need private capital to flow because right now in Washington we have a lot of fiscal pressure; debt levels are high,” says Rep. Delaney. The bill is gaining bipartisan backing and President Barack Obama showed his support for it in his 2014 State of the Union.
Still, organizations like The Economic Policy Institute have criticized the bill for creating expensive tax breaks for multi-national corporations and rewarding them for keeping money overseas.
More from Yahoo Finance
- Politics & Government