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Challenging the Wisdom of the Trans Texas Corridor.
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Toll Road lease wise -- for Australia MICHIANA POINT OF VIEW July 11, 2007 MARLIN F. SCHMIDT, South Bend Tribune The wisdom of the lease of the Indiana Toll Road has prompted articles of late. An interesting question is, where did the money come from to pay for the lease? Who can write a check for $3.8 billion? The investment was initiated by Allan Moss of Macquarie Bank for, in part, the Australian version of Social Security. In 1992 the Australian government legislated that 9 percent of workers' salary be set aside for retirement. The retirement pool now totals $750 billion and it is expected to top $1.5 trillion by 2015. Australia's markets are far too small to absorb all this cash, so they have been forced to seek investment opportunities out of their country. Moss feels that placing money into infrastructure such as the Chicago Skyway, the Indiana Toll Road and Duquesne Light Holdings, a Pennsylvania utility, are good long-term investments. On the other hand, our Social Security trust fund consists entirely of Treasury securities. Does this mean that the Treasury has invested in U.S. government securities, the safest investment in the world? For instance, in 2003 the Old Age Survivors Insurance program collected $450 billion in payroll taxes and paid out $400 billion in benefits. Congress used the excess taxes -- $50 billion in 2003 -- and similar amounts for each of the past 20 years to pay general government spending. They took the trust money and put IOUs into the "lock box." Congress has promised to eventually pay back everything it has "borrowed" with interest. These IOUs now total more than $1.4 trillion and represent the "assets" of the OASI trust fund. Would we be more secure if our trust fund had some infrastructure to the "lock box" rather than IOUs that can only be paid by increasing future regular income taxes and FICA taxes? Perhaps Indiana would still have control of the Toll Road if the Toll Road board had increased tolls to be competitive with other state toll road fees for at least that 70 percent who come from out of state. Marlin F. Schmidt lives in South Bend. |
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