Jonathan Cohn over at the New Republic has a nice piece today about how a national infrastructure bank ought to be a great idea that liberals and conservatives could latch on to.
Establishing this bank would essentially make the TIGER grants program perpetual and self-sustaining. A certain amount of money would be given to a government-overseen bank. This bank would work very much like a private bank, lending money to cities or states (or even private utilities) to improve infrastructure. The money would have to be repaid with interest, and projects would be given priority based on their cost/benefit ratio.
Such a bank could ensure that projects are funded based on merit rather than which particular senator controls which particular committee. Because the money would be repaid to the bank, states and cities would have an incentive to get local buy-in with general referenda (like the Atlanta Regional Sales Tax Referendum next summer). People would pay for the transportation improvements they want, and would see that highway projects have been heavily subsidized as well as public transit.
Some may wonder why the private sector cannot simply fill this role. A government-run entity would retain at least some connection with the democratic process; the president could appoint directors who are more or less inclined to support high-speed rail, for instance. Further, the government would likely ask for lower interest rates than private investors; this would increase competition for the limited number of grants and improve the overall quality of analysis. More jobs for us, and higher quality options for both the government and the private investors. Finally, the amount of money being considered for this bank is quite small (the Obama proposal has only $30 billion). It is likely that only part of most projects would be funded by the federal bank, leaving private investors to work with the substantial remaining balance. Everyone would make more money, more quality projects would be built, and less money would be wasted on politically useful transportation “improvements.”
This seems like an idea worth supporting, no matter what role you feel government spending should play in the economy.
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