At its best, America's infrastructure has powered our economic prosperity, created well-paying jobs and served the public interest.
Today, however, it has fallen into a dangerous state of disrepair. The Minnesota bridge collapse last summer brought home the urgency of repairing and modernizing our nation's system of highways, bridges, tunnels, power plants, transmission lines and airports.
But doing so will be prohibitively expensive. Current plans seek to exploit the nation's need for private profit. But there's a better source of capital at hand: public pension funds.
The American Society of Civil Engineers estimates that $1.6 trillion is needed in the next five years alone just to maintain the adequacy of existing infrastructure.
But even if every bridge was repaired, it still would not be enough trillions more will be required to build the new systems necessary to keep our economy competitive. As anyone who commutes every day knows, we need to reduce congestion on our roads and in the air, speed the transportation of people and goods, increase energy efficiency and do so in ways that are environmentally sustainable.
The thought of coming up with the money necessary for all this makes people wince understandably. This is a time when many states face budget shortfalls and our federal deficit is at an all-time high.
Leaders of both the Republican and Democratic parties know the U.S. cannot raise money from traditional public sources of financing, including municipal bonds, user fees and taxes.
The financiers on Wall Street already have positioned themselves to take advantage of this national crisis for their own gain. Where most Americans see crumbling bridges and traffic congestion, the money managers see a treasure trove of fees, profits and more record bonuses for CEOs.
It's why some private equity firms and banks on Wall Street are raising massive funds to buy these assets that have typically been owned and managed by the government.
In recent years, new infrastructure funds have been established in North America with capital commitments of $40 billion to $45 billion. These private funds have sprouted up like weeds, structured for short-term profits and sky-high fees usually up to a 2 percent management fee plus up to 20 percent of the profits.
It would be a monumental mistake to turn the future of America's infrastructure over to the same crowd that brought us the subprime crisis, an economy loaded down with debt and recession.
We should know better by now than to create a scenario where bridges and highways are sliced and diced like subprime loans into financially engineered "collateralized infrastructure obligations."
America needs a large source of stable, long-term capital to build the system of buildings, roads and power supplies needed to sustain the country. We need a source of capital that values infrastructure because it provides a reasonable rate of return, strengthens the overall economy and doesn't burden users with excessive fees.
Enter that source of capital:
Public pension funds, which are responsible for the retirement benefits of more than 18 million Americans, have more than $3 trillion in assets and a long-term investment approach consistent with the stable returns that infrastructure assets generate.
Pension funds could buy and build infrastructure, putting the profits to work for the retirement of workers, not for the benefit of Wall Street CEOs.
This is how it works: Pension funds pool their assets and invest directly in projects to build new roads and bridges in multiple states, bypassing the Wall Street firms that want to siphon off profits. The steadily increasing streams of revenue that come from tolls and other sources would deliver stable, long-term returns to working Americans, while creating well-paying construction and service jobs connected to each project.
These pooled pension direct investment vehicles would:
• Provide the much needed capital infusion sought by governors and state legislatures to improve their states' infrastructure;
• Ensure that billions of dollars stay in our communities instead of going to big financial firms;
• Create a multiplier effect, generating jobs, economic activity and new tax revenue for states;
• Achieve strong investment returns and stable long-term cash flows that meet or exceed actuarially required levels; and
• Support "green" infrastructure projects that are environmentally sustainable.
Hurdles remain to pension funds' direct investment in infrastructure. Pension funds with little history of collaboration will have to work together. But one important barrier could be lifted by passing federal legislation that would allow pension funds to access tax-exempt debt to finance infrastructure investments.
This is a solution worth supporting. Public pension funds, governors, state treasurers, comptrollers and the Service Employees International Union, whose members participate in pension funds with more than $1 trillion in assets, have begun preliminary discussions about how to create this type of investment vehicle.This collaboration offers a promising model for a win-win solution to help address the growing infrastructure problem we face across America.
Kathleen Sebelius is the Democratic governor of Kansas. Andy Stern is the president of the SEIU and author of "A country that works."