Senator, Financier Want 'National Infrastructure' Bank

On first reading this sounds good to me... will have to think about it some more
Margie
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Financier Felix Rohatyn and former Senator Warren Rudman are urging the establishment of a national bank to fix the country’s aging infrastructure — roads, bridges, schools, water pipelines, ports, air control systems, dams and railroads.

They figure the spending on infrastructure should be $1.6 trillion over the next five years.

Rohatyn is credited with saving New York City from bankruptcy in the 1970s, and Rudman made himself famous as the co-author of a budget deficit reduction bill in 1985. The $1.6 trillion figure comes from the American Society of Civil Engineers.

With the economy apparently entering a steep recession, the timing is perfect to "improve the country’s crumbling infrastructure,” the duo wrote in the Financial Times this week.

"A government-backed, long-term infrastructure investment program might provide some of the belief in our economy that has been under pressure as a result of the credit crisis,” Rohatyn and Rudman maintain.

These improvements would be paid for with borrowed private capital rather than new government spending, the duo argues, hence the need for a $60 billion national infrastructure bank.

Effectively, the bank idea would at least partially privatize many now public properties.

"Although the infrastructure bank’s initial ceiling to issue bonds would be $60 billion, it would bring in billions of additional dollars from outside investors,” Rohatyn and Rudman wrote.

"The bank would have any number of ways to finance itself, such as government guarantees and access to potential revenue streams as well as the sale of government assets.”

The bank should be able to issue bonds with maturities up to 50 years, matching the actual spending on the infrastructure with the benefits that spending creates, the pair recommend.

Repayment of bonds should eventually make the bank self-financing.

In terms of fighting off recession, the bank would ultimately produce hundreds of thousands of private sector jobs, according to Rohatyn and Rudman.

They support the National Infrastructure Bank Act authored by Senators Chris Dodd (D-Conn.) and Chuck Hagel (R-Neb.). The bill was introduced last year, the same day that a bridge collapsed in Minneapolis, killing 13 and injuring hundreds.

The bank would be modeled in part on the Federal Deposit Insurance Corp. (FDIC), keeping it free of congressional interference in the form of earmarks.

"The American people deserve railways as good as Europe’s, ports that work as efficiently as modern Asian port facilities and public schools that are not in ruins,” Rohatyn and Rudman wrote.

While China spends for massive infrastructure improvement, "here, according to the Brookings Institution, congested roads, in 2005 alone, cost $78 billion in lost productivity and higher freight charges,” the pair wrote.