Congress and the Obama administration would be wasting an opportunity to revive infrastructure if they set up a national infrastructure bank and its investment-selection process the same way that existing programs are structured, an economic analyst said here Friday morning.
“It’s a waste” if the NIB is used to redouble the efforts of existing programs, according to Everett Ehrlich, president of consulting firm ESC Co. and former undersecretary of commerce in the Clinton administration. “We have focused on shovel-ready instead of shovel-worthy,” he said. “Perhaps we should start thinking about what is bond-ready instead of shovel-ready.”
Ehrlich made the remarks at an infrastructure forum sponsored by the Progressive Policy Institute and CG/LA Infrastructure LLC that took place about one month after President Obama announced a skeletal infrastructure bank proposal. Obama said he wanted to frontload a multi-year transportation bill with $50 billion and create a national infrastructure bank, but did not say what portion of the $50 billion would be used to capitalize the bank.
Ehrlich said the bank’s creators must be cautious not to drain funding or policymaking energy from other programs in the process of creating the bank.
“We don’t want to be in a situation where we do this” and lawmakers’ compromises end up creating a bank that fails to achieve the original goals of an ambitious national bank, Ehrlich said. “We’re going to be sitting with that thing a long time” and Congress will have no energy for revising the bank for years after it is created, he said.
Ehrlich added that the infrastructure bank would help states and localities avoid the problem of having to wait every year to find out if their projects have received earmarks or appropriations. Instead, they could be done as quickly as capital markets would allow, he said.
Rep. Rosa DeLauro, D-Conn., has sponsored legislation that would create a national infrastructure bank to finance projects in transportation as well as water and other infrastructure sectors. The bank would be modeled after the European Investment Bank. DeLauro first introduced a bill to create such a bank in 1994.
She told those attending the forum that Congress and the White House must impress upon the public that creating an infrastructure bank and using federal funds to pay for infrastructure creates economic activity.
“The infrastructure bank can be the centerpiece of the economy,” DeLauro said. “If we’re going to tackle the deficit seriously,” lawmakers need to supplement existing programs to generate long-term results, she added.
But the bank would need to be independent — housed in the Treasury Department instead of the Department of Transportation, DeLauro said. It would have to be immune to earmarks or the parochial interests of lawmakers, she said.
DeLauro’s bill would initially capitalize the bank with $25 billion of congressional appropriations over five years and the bank would provide loans to state, local, and regional projects.