Longtime Senate infrastructure plan a solution you can bank on
Infrastructure policy has always been tucked into the most wonkish corners of politics. The physical hardware necessary to sustain a country has always been important, but due to the relative ease of highway bills passing in recent history, it has never been a sexy political issue. However, two factors in recent months — Senator Bernie Sanders’ (I–VT) call for a trillion dollar infrastructure spending plan and the kerfuffle over the highway bill that ended in stalemate — have had the positive consequence of making the country care about infrastructure policy once again. The problem is that these two events did not provide a very clear path forward. Despite the detail of his actual proposal, Sanders rarely publicly clarifies his infrastructure stances beyond his desire to “rebuild our crumbling infrastructure” and the highway fight … actually, don’t get me started on the highway fight. The problem is, the importance of detail in infrastructure policy makes these sort of moments the best we can hope for in terms of national discussion on infrastructure. Infrastructure policy puts policymakers in a difficult conundrum. Infrastructure constantly needs to be updated for safety and economic competitiveness, but retrofitting thousands of miles of train tracks, revamping millions of water towers, and filling billions of potholes is incredibly expensive and hard to generate political will for.
Luckily, an idea that has been sitting in Congress for 30 years provides us with a path out of this dilemma.
That idea is none other than the National Infrastructure Bank. The name says it all: the bank would be federally administered and would finance infrastructure projects.
The National Infrastructure Bank would probably be an uphill political battle at first. Even President Barack Obama tried for one in years past. However, if passed, it would help infrastructure spending become free from the consistent problems that have dogged it for decades.
First, the politics of infrastructure spending could be shifted to the market, which has a much more urgent need for infrastructure than politicians who are perpetually focused on reelection. Second, the bank would significantly decrease the need for government investment in infrastructure by making it possible for private companies to undertake the massive necessary projects with federal backing. This would decrease the public cost of infrastructure as well as decrease the costs associated with failing infrastructure, which were detailed in The Tartan last week.
Our current infrastructure politics once relied heavily on earmarking for local infrastructure. Earmarks were basically banned in 2010 (this was probably ill-advised, but that’s another fight for another day), so it is no longer useful for infrastructure money. Even when infrastructure had the easy funding from earmarks, local spending was not great for large, national infrastructure like interstates and railroads.
Since this was our default funding mechanism for so long, things that require national investment like freight lines never got adequate funding and are incredibly subpar. In addition, earmarking is also hard to evaluate and is subject to lots of under the table politics. This means most transportation projects in history have been corporate welfare for local construction companies or bait to get national corporations to build factories in certain locations. Our current system relies on politicians who need to justify trillion-dollar spending programs for an issue that often ends up on the periphery of the public consciousness.
By shifting infrastructure spending away from public arena, the National Infrastructure Bank would make economic need the priority for infrastructure spending. This would make spending more responsive to needs as vital infrastructure projects move to the front of the line.
The bank would also improve the conditions for private infrastructure investment by using the financial muscle of the federal government to allow financing for large projects. Generating private sector spending decreases the tax burden on citizens to fund infrastructure projects. This frees up money for other public projects without losing quality in investment.
If companies were using the bank for financing, it would limit the need for contracting, which can cause problems in spending projects when companies are paid a fixed rate for the job, have it secured, and then cut corners when the government is trying to keep its numbers down.
Infrastructure is a political nightmare. It’s an urgent need, but the price tags associated often get these programs pushed aside. We should create a National Infrastructure Bank to lay the groundwork for America’s infrastructure to support the nation’s economic needs for decades to come.