Cyclical Accrual and the Counter-Cyclical Borrowing Facility are based on solid theory and detailed technical evaluation.  But the relevant story really can be told in a five pictures.

1)  US state and local governments face revenue volatility, low growth and general uncertainty — and it’s not getting better.

2)  Uncertainty makes it hard to manage budgets, which leads to using addictive and expensive “credit cards from hell” to plug shortfalls by deferring needed spending — with really bad results.

3)  Budget and fiscal reform should remain the long-term objective, but “cold turkey” change is neither efficient or realistic.  For critical infrastructure investment in the near-term, P3s can provide a framework to utilize inexpensive and disciplined financing that covers project costs during budget shortfalls (as determined by an objective index) but absolutely, positively requires repayment when budget is less constrained  — in effect a “Tough Love” credit card that works like a built-in rainy-day fund:

4)  Federal and state infrastructure loan programs or infrastructure banks could dramatically expand the size and acceptability of P3 Tough Love cards — but at low risk and low cost to taxpayers due to high credit quality of P3 contracts and collateral and private-sector skin in the game.  No Solyndras here:

5)  This type of P3 could also be used for sale/leasebacks or similar concession sales of existing assets — with proceeds used to address deferred maintenance on the asset itself and to pay off other expensive credit cards from hell balances: