In yesterday’s speech before a joint session of Congress, President Obama called for new spending to help get the economy going again and to get Americans back to work. Putting aside the debate on how to truly fix the economy and how much of the fixing ought to be legislated by government, let’s take a look at one of the items the President offered as part of his overall solution: a national infrastructure bank. As he said:
"And we’ll set up an independent fund to attract private dollars and issue loans based on two criteria: how badly a construction project is needed and how much good it would do for the economy."
Such a bank is no new concept. Besides inclusion in the President’s proposed FY 2011 budget, four pieces of legislation have been introduced in the 111th and 112th Congresses to establish government borrowing entities for transportation, water, and energy projects. While a bill introduced by Congresswoman Rosa DeLauro (CT-3) would create a wholly-owned government bank is worth noting, the President specifically mentioned a “Massachusetts Democrat”-supported bill, likely the BUILD Act, sponsored by Senator John Kerry (MA). BUILD would authorize $10 billion in new borrowing authority for infrastructure ventures, with a $2 billion real cost to taxpayers in start up expenses and loan guarantees. BUILD was highlighted in the July 26th edition of the Taxpayer’s Tab. According to information provided by the White House, the bank under the President’s proposal would cost $10 billion over an undefined period of time. One would hope everyone will have a better idea of the timetable once the bill is released to the public. However, it appears, the President’s new infrastructure bank proposed would require a greater infusion of federal dollars than the plans supported by any member of Congress, be it Democrat or Republican-controlled.
More to the President’s point, he touted the immediate need for the provisions he outlined in his American Jobs Act, saying “right now” seven times in the address. Yet the establishment of a new bureaucracy to exclusively funnel public and private dollars into projects creating and improving roads and dams is no easy task. There are several steps to follow. Once the government is authorized to create the bank (no small feat in the current political environment), personnel would have to be hired and offices set up, rules would be drafted, and money would have to be allocated and transferred to dedicated accounts. THEN planning and loan applications would have to be submitted and approved or denied with appropriate time tables of conducting further administrative actions, contracting of construction and design companies, and buying of building and support materials and machinery. Rather than “right now,” “near future” would be more accurate timetable under the best of circumstances.
It would be foolhardy for Americans -- employed or otherwise -- to assume infrastructure jobs would be immediately available. Massive construction projects take years to plan, let alone implement, start, and finish. The jobs that would come would be turned out just as slowly. As Obama joked about the first “stimulus,” “shovel-ready was not as shovel-ready as we expected.”