heritage and includes parades and street festivals. president obama will host a reception at the white house. i'm david shuster. "inside story" is next. remember, for news up dates around the world head to aljazeera.com.

>> one thing hasn't changed in 20 years. the gas tax. gasoline prices have been on a

steady incline for weeks. just in time for families to pile their car. as we head into the summer, we see a seasonal spike which may or may not hold through summer. 1993 the average price of a gallon of gas was $1.07. today it costs $3.64 for that same gallon. but since 1993 americans have paid just $0.18 in federal tax known as the gas or fuel tax. combined with what your state adds on to the federal tax, the nationwide average is $0.50 for a gallon of regular. but today the highway trust fund largely supplied by federal gas

tax revenue is being buried by the nation's up keep of highways and roads. since 1996 highway funds have paid for transit projects. the funds from the gas tax is expected to run out by this summer. and it's draining the fund putting it on a path of insolvency. >> not enough money to pay for any of it. >> anthony fox wants to release states from an age old ban that prevents them from using tolls to pay for federal interstate highways. local and state governments could stand to lose nearly $50 billion in funding and

transportation projects if congress can't find a way to get more money to the highway fund. for now federal tax money can pay for existing projects. >> so the bottom line there is work to be done. workers ready to do it. rebuilding the infrastructure is vital to business. it creates good paying jobs that cannot be outsourced. this is one of congress' major responsibilities, helping states and cities fund new infrastructure projects. >> reporter: the white house is seeking more than $300 billion in the next four years to fix the nation's crumble roads and bridges. the grow america act is meant to address the backlog of structurally weak bridges and an aging transit system. in decision it will create millions of jobs. none of that will change the gas tax. instead the higher corporate

taxes to fill the funds shortfall. as the administration does not want to ask people to pay more at the pump. >> it may just be human nature to assume that the most popular source of revenue maintaining roads, bridges, rails, tunnels and so on is somebody else. today there is a lot of need and not enough money, and this time on inside story we're trying to figure out what will work. joining us from that conversation. >> let me start with you. is there a good figure that people who follow this business closely and in this part of our common life closely work with

when we talk about what it would take to fix the things that need fixing in the near term? >> but it's often in trillions of dollars, but that doesn't mean that every project has to be funded at harvard business school. we're talking about the need for strategy, the need to set national priorities, and to get the private sector involved in helping finance that states and localities want to get done. >> so if people drop their jaws at the sounds of trillions what about a little treage and figuring out what has to be done right away. aren't there bridges and roads in such bad shape that it is something of an economic necessity to make sure that they've got an useable future? >> there is enormous economic

impact of now paying attention to our infrastructure and positive economic impact if we do. think about lost productivity, think about areas that are so congested that the goods can't get to customers who have bought them and chicago has two of the highest road congestion spots, railroad congestion spots in america, but it effects the highways because it's partly congested because they crossroads which means if that's going to be fixed they need tunnels and bridges so that the railroads and the streets don't cross. those are big projects. chicago is partly through funding repairs but they can't go further without additional money. and it effects how we move goods not only through a city like that but across the entire

country. >> if you visit big metropolitan areas from maine to southern california you'll find the results of a century of lavish building. tremendous bridges, fabulous highway interchanges, airports, and if you look at the dates on the cornerstone they're likely to say 1 1938 or 1945 or 1954. when did we become a country that didn't keep on building and just sort of rested on our infrastructure laurels. >> i don't agree with part of your premise. i don't think america's infrastructure is falling apart like many think. there is highway data that shows the quality of the nation's highway bridges, all 600,000 of them have been steadily getting better over the last 20 years. there are less bridges deficient now than in the past.

and they have steeldly been getting better over the last 20 years. so everything isn't all going to pot. i would say that a lot of solutions here i think can and should come from outside of washington. as our guests were harvard noted there is a trend to bring more private money into infrastructure. anthony fox, well, in the 1980s britain privatized the sea port and when it came to aviation, you can do a lot of infrastructure reform that don't rely on more money from washington. >> is that a fair comment. >> the privatization. >> have we been with a deficit of imagination when it comes to figuring out how to pay for these projects. they really do need doing. >> they do, and i guess we would say look, things are changing.

there needs to be a private role. states and localities are stepping up. but the federal government can't walk away from this. it needs to rethink it's role but remain an investor and the projects have the biggest bang for the buck. absolutely vital to the nation's economy and the flow of commer commerce. >> professor, i'm sorry, i cut you off. >> what were you about to say. >> i was going to say privatization is not necessarily the way to go in the united states, but public private partnerships where the federal government, the state government, localities have a role together with the private sector can be very effective. in miami one of the best projects that i know of that will have huge positive economic impact when the panama canal with the port of ships is th.

it is a $1 billion project coming in on time, and with under budget. it's going to move truck traffic from the port of miami away from the interstate. it will open up development in downtown miami, and it's going to help move goods it will help with financing and has the concession to run the construction of the tunnels. but the public sector is overseeing the projects and that partnership notion is what we need for the future. we don't get rid of the government role because it has to be a standard setter. >> isn't there one of rigidity, of delay, of budgets that soar

into the stratosphere because the parts can't be harmonized. i travel the country and watch price tags go out of sight which only made it slower to get it done. >> i think there has been a lot of studies done on this in terms of delay and bureaucracy and red tape. i think we would agree with folks. that said most studies point to the lack of funding at the end of the day that's actually holding up much of these projects. the trust fund dries up. $48 billion in federal investment we won't have in the next fiscal year. >> when we come back after this short break we'll talk more about specifically the gas tax, what it pays for, what it hasn't

been paying for, and where it really is going to run out in august. you're watching inside story. stay with us.

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>> welcome back to inside story. i'm ray suarez. unless congress acts sometime this summer the highway trust fund. it has not increased in 20 years while americans are buying less gas. we're talking about the gas tax and aging infrastructure, and chrichris edwards, do you suppoa raise in the gas tax something more proportional to something that we're paying for gasoline itself?

>> i don't agree to a tax gas increase. i think state governments can raise their taxes any time they want, th so for example, the $2 billion project inside washington, d.c. to widen the beltway in virginia there is a lot of broad agreement. to think that the federal government should repeal or take back its tolls on the interstate highways. the interstate highways are owned by state governments and i believe the states should be allowed to solve their own transportation problem. part of that is putting in new electronic polling system in congested areas of the interstate to reduce congestion

but raise money for state infrastructure budgets. that makes a lot of sense. >> public-private means eventually public private equity in those projects where private companies have taken a controlling interest in what had been perceived as pieces of public property like the chicago skyway. is the public happy with the way it's turned out? those tolls have gotten very heavy, and once they put tolls thon those widened roads a lot of people have not been using t and it's not meeting its revenue fund. is this a working model? >> most infrastructure in america used to be private, and most urban transit but the rail systems from private in america. this is a bit of a back to the future. and as we've discussed most other high income countries around the world are doing much

more, i think it could work for everyone. you get projects that are on time, on budget and they're done efficiently than old fashion government procurement. >> there are two things. there are things that we would distinguish thes between these o things. you can do public-private partnership which is putting more risk on the private sector for the public benefit but get eefficients in terms of contracting and labor costs and everything else. it is important that we understand the differences in these projects. private money as you noted has to be repaid at some point. so you have to have another financing source. typically it's been tolls. there are a lot of questions to be answered on this.

>> elizabeth, is there enough of a track record that public money is going to want to come in and do these works? >> well, there is a very interesting thing that my team at harvard business school found when preparing for a national summit, a large number of the investors in u.s. infrastructure in project are foreign companies, and i'm all in favor of taking foreign capitol, i won't turn that money down, but we don't have enough u.s. companies yet. some are now getting into it with the expertise, the knowledge and the interest to be very good planners at the table when those regional coalitions do create the state and local strategies. by the way it can't all be done by the state because transportation by it's very nation crosses state lines. you do need the port authority of new york and new jersey. in addition to the little traffic problems of last september it turns out that

new jersey has one of the most congested port orders in america. you need things that expand state lines. there is always a federal role. but we have to get more u.s. companies interested and involved in this sector, the chicago sky ways was privatized. there were no bidders. they tried for a second time to sell midway airport in chicago, and they only had one bidder so they had to withdraw the offer. >> if you can't sell midway after tremendous capitol investment there it's a much improved airport. if you can't sell it in the condition that it is in now, it's hard to know what would bring any kind of capitol investment from the private sector. just a short break. when we come back. >> some of that is uncertainty. the very uncertainty that we're going through now is will there be funds which mean states can't

plan for transportation needs if they don't know what to expect from the federal government. that climate of uncertainty now in washington is affecting our ability to attract capital investment into the united states by u.s. or foreign companies. >> as we've been mentioning, america needs a lot of work. how it gets paid for this time on inside story. we're going to take a short break. stay with us.

>> welcome back to inside story. i'm ray suarez. the obama administration has put forward a four-year, $300 billion plan for transportation infrastructure improvements. structurally deficient bridges are at the heart of the plan, but there is no call from the administration's idea for an increase in the $0.18 a gallon federal tax.

we're talking about the problems, who benefits, who pays if the problems are fixed on this edition of "inside story." still with us, professor at harvard business school. in our washington studio, james coreliss, and from the cato institute. what is the contract between a rise in the gas tax and the obama administration's current plan? do they yield the same amount of money, and do the people who use the facilities end up paying. >> very few have proposed raising the tax gas. the obama m has talked about the corporate tax reform, repatriate

the funds. if we grease the gasoline tax and index it to inflation we get something that is a bit more sustainable. >> chris edwards, i know you're not in love with either proposal, but which one is the easer one to swallow? >> i don't think president obama's corporate tax plan will go anywhere. the federal government than been known for bridging to nowhere. that's why i think it makes a lot more sense for state governments to tackle these problems. you're looking at gas tax revenues or electronic tolling

or local, private partnerships, i think the solution is at the state-government level not the federal level. >> is there any analysis of one approach over the other? you heard about sending a price signal to oh people who use these facilities, is that a good idea? >> i think users should understand what they're consumer. at the same time there is a wider public interest. one of the reasons why i'm pleased to be part of this conversation, we concluded that we need a national conversation. we haven't--we're now doing this in a crisis mode because of the highway trust fund running out of money, but that we need national priorities and national strategy, and so i think in the events over the next few months

are going to be unrolling. there are no answers today. we're going to continue the discussion and we hope that it will be in a cordial manner, and we could keep the potholes fixed. the u.s. is not competitive globally in infrastructure. we score 15 in the world according to the world forum. that means 14 advance countries ahead of us. we really have to do something to catch up for the 21st century rather than maintain the policies of the 1950's. >> you talk about a price signal. we put in that tax in 1993. tax went up. the tax remain the same, but people use less gas. even as our needs for more investment go up the amount of

money to do it has been going down. how do you get yourself out of this short term. >> well, short term, we would hope, and we have a proposal to increase the gas tax $0.62 per day per commuter. if that doesn't happen, a short term fix. the gas tax have been flat. we've had to raise it and index it to inflation. look at the state of virginia. they went to a sales tax on gasoline so it increases with the cost of gas. a lot of states as chris was saying are innovating. i don't think that means the federal government shut get out of this business, but they should follow the lead. >> before we go, all those people that i see out there in

volts and prius and various types of hybrids. they're using the highways but not paying as much for them because they use so much less gas. if that trend continues will we have a problem? >> i think there is. if people drive gasoline-guzzling cars less in the future we have to find other ways to finance the highways. i think the solution is using a tolling technology on the congested parts in the state. i would like to see the states tackle that, and not have top-down mandates from washington. >> to my guests, thank you all for being with me today. that brings us to the end of this edition of "inside story," and you, thanks for being with us as well. from washington, i'm ray suarez.

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