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One Way to Rebuild America

As anyone who has used a passport recently knows, infrastructure in the United States has fallen well below world standards. Decades of underinvestment have taken their toll, fiscally hard-pressed states are cutting back, and the current system of federal appropriations for infrastructure projects precludes a coordinated approach that matches the scale of the problem and reflects national priorities.

There’s a solution, which Barack Obama advocated during his presidential campaign: a National Infrastructure Bank. A bipartisan commission co-chaired by Felix Rohatyn and former Senator Warren Rudman developed the proposal a few years ago, and bills to establish such a bank have been introduced in both the House and the Senate.

While the details vary, the general idea is this: The bank would be established with an initial infusion of federal capital--$60 billion is a frequently cited figure--and an independent board of directors. All projects seeking federal support over a fixed amount ($75 million in the 2007 Dodd/Hagel version) would have to be submitted to the bank for approval. The governors would employ an explicit and rigorous template for evaluating projects’ benefits and fundability. Projects surviving this test would be eligible for a range of financing options.

Beyond reducing the influence of local pork-barrel considerations on infrastructure investments, the bank would offer two other advantages. First, it could mobilize additional capital by reselling the loans it makes in the private market. This would enable the bank to make more loans without additional appropriations, multiplying the bank’s impact on the direction and level of investment. Second, it could help smooth over some short-term political problems. Rather than forcing current taxpayers to bear the entire burden of investments from which the next generation will also benefit, revenue bonds would enable all users over a period of decades to pay a fair and affordable share.

We have an urgent need--a growing gap in providing public goods that improve economic efficiency as well as the quality of social life. We have massive unused resources, in the form of idle plants and equipment and sky-high unemployment. Infrastructure investment creates high-quality jobs here at home, and it produces tangible results to which politicians can point with pride.

So what’s not to like? Or more precisely, who doesn’t like it? Congressional appropriators, for one, are likely to because a bank with an independent board would clip their wings. And it is rumored that some senior members of Obama’s economic team are opposed as well. It is, however, an idea that Barack Obama has repeatedly endorsed. And it’s a natural centerpiece for any agenda that emerges from the White House’s December “jobs summit.”

So will the president have the courage of his campaign convictions? Will his advisors suspend their disbelief? Will we become once again the country that created the interstate highway system? Or are we too divided and dispirited even to try? Stay tuned.