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What can your government do to increase infrastructure investment?

People invest for future security. Infrastructure investment is one type of investments where the government used your money to fund infrastructure projects like airports, distribution of water supply, electricity generation, hospitals, ports, railways, roads or telecommunications facilities. Being a long-time investment, these kinds of projects take time to generate profit.  

Aside from the length of time before earning cash flow, there are other reasons why infrastructure investment in government is declining. Continuous partisan squabbles in the House left huge infrastructure bills at a standstill due to two reasons:

(1)  Congress needs to grant states the flexibility of pursuing other options for financing sources from bond programs, lower loan cost via innovative credit,  public-private partnerships (PPPs), tolling and user fees; and

(2) Congress and the President need to initiate improvement of government financing programs and grant dynamic approvals of regulations to move massive number of dollars toward investment plans for construction. Both measures can be approved through a simple modest legislation or through presidential action.

Today, the government is already looking for ways to increase infrastructure investments since federal funding is unsure and budget allocation is exhausted. Many states are finding ways to increase infrastructure investments:

  1. Congress adjusts regulations and rules on taxes by utilizing improved management of the federal credit programs that have been popular with states and private investors.
  2. Congress adopts smaller project proposals that do not involve billions of dollars that can easily be approved by both Houses this year.
  3. The House gains popular support from the Republican by presenting proposals that emphasized the negative effect of federal deficiency and efforts to decrease and not widening federal bureaucracy and regulations.
  4. Congress opens state and private investment by limiting costs of borrowing, granting flexibility for other sources of revenue and utilizing private capital for financing solutions.
  5. House increases infrastructure investment by utilizing capital from private-sector capital, as well as unused sources of revenues like tolls and user fees. Congress eliminates this cap and makes tolling options available for any interstate improvement project.
  6. Congress updates the PPPs by granting flexible rules on government contracting and concessions; as well as grants and other help to improve the PPP programs of the state.
  7. Congress assists the states to attract private capital by permitting extended use of tax-favored structures chosen by many investors for other types of investments as REIT or real estate investment trusts and MLP or master limited partnerships.
  8. Congress minimizes borrowing costs by exempting municipal bonds from government taxes, reducing rates of interest collected from state debt to attract the attention of more investors.
  9. The House streamlines its reviews of regulation, approval of financing processes and enhancing management of program to speed project delivery and minimizing regulatory doubts for project sponsors.
  10. Federal policymakers coordinate and improve existing finance programs. They update various infrastructure loan programs that have been disseminated all over federal agencies and departments.
  11. The government eliminates red tape in applying for new projects. In fact, President Barack Obama already issued a new executive order directing improvement in the federal permitting performance and in reviewing of infrastructure projects.

These measures are small steps to increase infrastructure investment but they could open big opportunities for the government to earn billions of dollars from new investment over the coming decade.

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