Tags: niall | Ferguson | US | Should | Auction | Off | Highways

Ferguson: US Should Auction Off Its Highways

Wednesday, 23 Feb 2011 08:16 AM

Niall Ferguson, the Harvard professor, has a simple answer for the debt woes facing the states and U.S. federal government: Sell off the highways. And the power companies and bridges and whatever else deep-pocketed foreign investors will buy the rights to revamp and operate for the right to charge tolls.

It has worked in dozens of countries, notably Thatcher’s England, and it could bring tens of billions into desperately empty government accounts.

“Let’s face it: if you want to see serious investment in America’s infrastructure — and the American Society of Civil Engineers estimates that a full upgrade would cost $1.3 trillion — it isn’t going to come from the likes of Governor Brown, much less President Obama,” Ferguson writes in Newsweek. “They’re broke, folks.”

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Niall Ferguson
Ferguson estimates that $735 billion has been raised in privatizations around the world since the 1990s, while the United States lags in taking this approach.

He figures that the United States has $233 billion in publicly owned assets, not counting some 700 million acres of government-owned land.

The highways would be the most attractive target for sovereign wealth funds, he writes. California controls $59 billion worth of roads. Indiana and Chicago have already inked deals in the billions with foreign investors who will fix the byways and then make money back on tollways.

“Why is selling assets to Asians worse than paying them an annual rent called interest on the national debt?” Ferguson asks.

Ratings agency Moody’s warned in a new report that U.S. structural debt — the long-term spending that neither political party is likely to touch for now — will require attention soon if the country is to maintain its credibility with foreign lenders.

If agencies decide to downgrade the U.S. credit rating, interest rates would shoot up dramatically from their historic lows and put the brakes on a stumbling U.S. recovery.

"Additional measures would be required to improve the government's finances and debt position over the long term. The biggest long-term issues are entitlements: Medicare and Medicaid have the largest budgetary impact and a significant reduction of their long-term budgetary impact has not yet been addressed," Moody's said in the report on the initial White House budget proposal.

"Spending on these entitlement programs is nearly two and a half times larger than the non-defense discretionary spending that the budget freezes. Overall, therefore, the budget, while marginally positive, has not addressed the longer-term issues that would improve U.S. fiscal performance," the agency said.

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Niall Ferguson, the Harvard professor, has a simple answer for the debt woes facing the states and U.S. federal government: Sell off the highways. And the power companies and bridges and whatever else deep-pocketed foreign investors will buy the rights to revamp and operate...
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2011-16-23
Wednesday, 23 Feb 2011 08:16 AM
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