Jan 30, 2019

How public-private partnerships failed in the Trump administration

Illustration of two hands about to shake

Illustration: Sarah Grillo/Axios

After President Trump was elected, private equity firms rushed out to raise giant new infrastructure funds. It was a mistake.

Backdrop: The idea was that the White House plan would lean heavily on public-private partnerships that leveraged federal dollars with outside investment. Everything from bridge repairs to rural broadband to upgrading ports, airports and highway rest stops.

Infrastructure improvement is a bipartisan goal, and the public-private model had historical support from many members of both parties.

  • If Trump wanted to tout a $1 trillion infrastructure plan, then the private sector felt justified in seeking to raise hundreds of billions of dollars. Not only to fill their federal ask, but also to continue doing more traditional and state/local projects. Unprecedented investment opportunity.

But the White House infrastructure plan was stillborn, shunted aside for other priorities and midterm politics. Now the administration has again begun infrastructure discussions, both official and ad hoc, but Axios has learned that public-private partnerships are effectively off the table.

  • There isn't yet a consensus replacement for funding mechanisms, particularly as many Trump advisers continue to oppose a gas tax increase.
  • There also isn't too much infrastructure expertise left in the White House, with prior point person DJ Gribbin now at private equity firm Stonepeak Partners.
  • Reuters recently reported that Trump may touch on infrastructure in his State of the Union address, but so far it sounds like any mention would be about the whys rather than the hows.

The bottom line: Many of the private equity firms insisted they weren't banking on a federal infrastructure plan. They weren't really telling the truth, but now they'll have to make good on those false promises.

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