A Bank For Our Public Needs

A year ago, I called attention [1] to efforts by some progressives in Congress to establish a national infrastructure bank that would finance critical investments in our transportation network, our waterways and other public assets. This week, that push is happening again—but this time with the help of the White House.

Rep. Rosa DeLauro, D-Conn., on Wednesday introduced [2] the National Infrastructure Development Bank Act of 2009 (HR 2521), which would provide financing for projects that have regional or national impact, such as high-speed rail, interstate highways or major water projects.

The bank would be financed with a relatively meager $5 billion a year annual appropriation over the next five years (plus access to another $250 billion in total capital from the U.S. Treasury). But the real breakthrough of this legislation is that finally the federal government will be paying for its capital investments the same way the private sector usually does—through a separate capital budget with its own funding.

President Obama has embraced the idea of an infrastructure bank, and there is a provision allowing for the bank's launch in the budget resolution Congress approved in April.

America's Future co-director Robert Borosage explains why this infrastructure bank is significant:

This legislation will make an important contribution to addressing America’s investment deficit. We have always been a nation that has looked to the future by investing in our land and in our people. Historically, we directed roughly 8 percent of our gross domestic product to long-term investments, and that investment paid off. Public investment built the interstate highway system and transcontinental railroad, universal primary education and public universities, and much more.

But since then, we have adopted a short-term “pay-as-you-go” mentality that stops long range investment before it begins. Nowadays, public investment as a percentage of GDP has dropped below 4 percent. Our post-World War II infrastructure is decaying and we aren’t replacing it. Levees are overflowing, water mains are bursting and our roads are potholed. Instead of building for the future, we sit in traffic and worry about budget deficits a decade from now.

The National Infrastructure Investment Act would help address these problems by creating an instrument that can help finance long-range investments with public and private capital. . Infrastructure investments can create jobs in the short term and economic growth in the long term, addressing both our current investment deficit and next decade’s budget deficit at the same time. This bill supports long-term growth that will keep America competitive globally and improve our way of life.

The infrastructure bank bill has broad support, with endorsements from the U.S. Chamber of Commerce, key unions, Wall Street investors such as Felix Rohatyn and groups such as PolicyLink, a research organization that promotes progressive social policy solutions. Previous infrastructure bank proposals have been embraced by Republicans as well as Democrats.

That coalition of support is not new, but what is new is that for the first time the infrastructure bank could become a reality this year. If it does, its existence will come at a particularly crucial time. One of the major agenda items facing this session of Congress is a reauthorization of federal highway and public transportation funding. The last time Congress addressed the issue, in 2004 and 2005, it was constrained by a White House that refused to consider a modest increase in gasoline taxes—five cents a gallon—that would have helped finance enough construction to help the country's transportation network keep pace with growth, including the rush to public transportation that accompanied last year's oil price spike.

This time, the financing options are harder and the task bigger. We need the infrastructure bank to help the nation build and pay for the assets that are fundamental to our economic growth and well-being.