For Release Sunday, September 19, 2010
© 2010 Washington Post Writers Group
It’s sad that politicians and the media have so quickly dismissed President Obama’s pitch for a national infrastructure bank as just more federal spending — or equally unattractive, a cynical political gambit to help Democrats in the November elections.
Of course there’s some politics in everything. But well structured, an infrastructure bank would be disciplined — a way to drive us away from politically motivated earmarks, to put a premium on quality of projects and seek private sector investments to match government outlays.
Plus, as William Galston of the Brookings Institution notes, the bank idea “recognizes a key reality: that the consumer-led model of economic growth on which we have depended for decades has hit a wall. It’s time for investment to lead the way, with new partnerships between the public and private sectors.”
Amen! While the world races down the infrastructure expansion track, we’re constantly shortchanging decaying bridges, aging interstates, antiquated water systems, or high speed rail serious enough to one day rival Europe, Japan or China.
A serious infrastructure bank could start weaning us away from congressional pork-barrel spending and our “silo” pattern ideas of funding infrastructure — roads and transit, airports, waterways and railways, in separate “buckets.”
Yet “on the ground,” the systems are intricately interrelated. So imagine an infrastructure bank that challenges America’s states and cities and public authorities to engage private banks and investment firms to formulate smart, multi-purpose projects. That means mixing modes, and it means serving multiple goals simultaneously — mobility, economic growth, reduced energy use and carbon emissions, community quality of life, and fairness for all economic groups.
A bank “priming the pump” in that imaginative way could have catalytic positive effect, especially at a time when much private capital is reportedly sitting uncommitted on the sidelines, suggests Michael Litosky, author of a forthcoming book, “Obama’s Bank: Financing a Durable New Deal” (Cambridge University Press).
Even under the “quick and dirty” fund disbursements of last year’s recovery act, Litosky notes, the President’s Council of Economic Advisers, in a survey of multiple states, found that every federal dollar stimulated roughly three dollars of investment by the private sector, state or local governments.
An infrastructure bank could also span geographic borders — a big gain from today’s system of funding within individual state or substate areas. Plus, some of our biggest metro regions span state lines. The mere presence of an infrastructure bank looking for best proposals, regardless of borders, would be a powerful motivator for broad regions, some multi-metro, some multi-state, to coalesce behind economically competitive projects.
The idea of an infrastructure bank isn’t new — It’s been kicking around for years, pushed initially by such figures as New York investment banker Felix Rohatyn and former Sen. Warren Rudman (R-N.H.). Now it’s particularly relevant with both Congress and the Obama administration stymied on enacting a new multi-year, multi-billion dollar Surface Transportation Act. Both parties are recoiling at new (i.e. deficit) federal dollars to make up for dwindling federal gas tax yields.
The picture could be even gloomier in 2011 with a Republican Congress dominated by Tea Party and/or “just-say-no” politics. Yet without action, all transportation funding (highways and transit) will likely be slashed in half next year, with ensuing howls of agony from states and regions across the country.
The infrastructure bank poses a funding dilemma too: where will its initial funds come from? Appropriations (i.e., still more deficit dollars?)? Yet the bank, once financed and attracting partnerships, could relieve funding pressure on the federal government.
There is, say proponents, history of Republican support — in Congress and in states — for such measures as broadband investment, Build America bonds (to cut state and local borrowing costs), and clean energy bonds.
At a minimum, Republicans are likely (following through on Bush administration themes) to insist on major concessions to private investors, including major opportunities for privatization of big public transportation facilities. And governors will likely press hard for strong measures of continued federal transportation support.
For infrastructure funding and plans that start to catch up with the rest of the developed world, we might check some of the overseas models. One example: the European Investment Bank. The European Union gave it — and it acts on — a set of critical investment goals, among them secure energy, environmental sustainability and targeted support for medium-to-small sized businesses. The bank supports trans-European networks of transport and energy (including the high-speed rail network we so justifiably envy).
Can we be as smart, as forward-looking? Nothing less than the United States’ 21st century global competitiveness — and that means the opportunities and the standard living of our people — hangs in the balance. The stakes, indeed, extend a million miles beyond partisan campaign-season gimmicks and oratory.
Neal Peirce’s e-mail is firstname.lastname@example.org.
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