Hi, we're here with Carl Tannenbaum, chief economist of Northern Trust. Carl, great to see you.
Great to be with you.
In the 2016 presidential campaign, there was talk of greater infrastructure spending. What progress has been made?
Unfortunately, virtually none. Because of other legislative priorities, which have included action on regulation and taxes, infrastructure hasn't gotten a lot of conversation. And as a result, the nation's infrastructure is now two years older and we've missed two years of opportunity investing in the infrastructure that we'll need for the future.
Why is investing in infrastructure so important?
Well, there are really two sides to it. There are facilities, roads, and bridges that desperately need to be maintained. We had a terrible bridge disaster in Genoa, Italy earlier this year that illustrated the consequences of neglect.
The Army Corps of Engineers has estimated that here in the United States, we need about $3 trillion of infrastructure investment just to bring things up to code and avoid those kinds of disasters.
And on the other side, perhaps more positively, technology and the support for it are really going to drive our economy over the next 30 years. And if don't have fast broadband and a modernized electric grid, which are both infrastructure concerns, we probably won't be as competitive as we'd like to be.
What's been holding things up?
Well, as I mentioned before, legislative priorities are one thing. In addition, our budget deficit has been growing quite a lot so there isn't a lot of room for new spending initiatives to stay within some reasonable debt and deficit targets.
And also, I think the challenge of infrastructure is that it's not really owned just by the federal government. A variety of private groups, local and state governments are involved, and getting them all onto the same page to make progress here has been very difficult.
If government spending is limited in this area, can private capital help?
Well, that's been the hope and this notion of public private partnerships for infrastructure works very well in countries outside of the United States. Unfortunately, a few of the situations where that's been tried here have not worked out very well either for the communities, the investors who took on the project, or both. And as a result, there's a lot of skepticism on how broadly those can be applied here.
Nonetheless, going forward, since public budgets are strapped, private capital is an essential part of the solution. And if we can't come to that solution, we'll be the poorer for it.
Carl, thanks for your views.