Infrastructure

Saudi Arabia to Fund $20 Billion of US Massive $2 Trillion Infrastructure Needs

Douglas A. McIntyre

Published: May 22, 2017 6:40 am

Last Updated: January 12, 2020 11:48 am

Saudi Arabia will invest $20 billion to address U.S. infrastructure deals. It is a drop in the bucket. America’s roads, bridges and airports need at least $2 trillion in repairs.

Much of the $20 billion will be invested via private equity firm Blackstone, which apparently will try to leverage the investment up to $100 billion. The announcement, made during the president’s visit to Saudi Arabia, comes ahead of legislation the administration will send to Congress that will propose $1 trillion in funds for infrastructure investment, according to CNBC.

U.S. Transportation Secretary Elaine Chao already has indicated the administration will ask for the sum, which will be spent over 10 years. Last week she told the Senate Environment and Public Works Committee:

The proposal will likely include $200 billion in direct federal funds which will be used to leverage $1 trillion in infrastructure investment over the next 10 years.

The proposal will need to go through the House of Representatives and Senate, either of which could trim the funds or kill the proposals altogether.

The need to address infrastructure problems in America is acute, and $2 trillion is needed immediately to fund them, according to the 2017 Infrastructure Report Card created by the American Society of Civil Engineers (ASCE). The report is the gold standard for measurement of infrastructure needs in the United States. According to the report:

Even though the U.S. Congress and some states have recently made efforts to invest more in infrastructure, these efforts do not come close to the $2.0 trillion in needs. The good news is closing America’s infrastructure gap is possible if Congress, states, infrastructure owners, and voters commit to increasing our investment. To raise the overall infrastructure grade and maintain our global competitiveness, Congress and the states must invest an additional $206 billion each year to prevent the economic consequences to families, business, and the economy.

As much as half the need is to repair roads.

An earlier study by the same research group pointed out the dire consequences of not acting immediately:

As ASCE discovered in its 2016 economic study, Failure to Act: Closing the Infrastructure Investment Gap for America’s Economic Future, failing to close this infrastructure investment gap brings serious economic consequences:

$3.9 trillion in losses to the U.S. GDP by 2025;
$7 trillion in lost business sales by 2025; and
2.5 million lost American jobs in 2025.
On top of those costs, hardworking American families will lose upwards of $3,400 in disposable income each year – about $9 each day.

The Saudi $20 billion investment is barely enough to get the needed programs started.