Politics The US needs an infrastructure bank that models the World Bank
Americans want new infrastructure — and they're willing to pay for it
They believe that those who use infrastructure should pay for it but believe equally that the federal and state governments, through taxes, should also fund our infrastructure. I recently conducted a survey of 1,000 Americans through the Development Research Institute at New York University to examine Americans' attitudes and opinions about key infrastructure issues. Sixty-eight percent reported they were willing to pay more in exchange for safer and more reliable infrastructure.
The that reached the Senate floor on July 28 was missing a key provision - an infrastructure bank.
But that omission may turn out to be a good thing - if it opens the way to the creation of an infrastructure bank in the form we actually need.
The Infrastructure Financing Authority (IFA) that was included in the but was removed from the final proposal, was close to being that - but unfortunately, no cigar. It was the right idea but the wrong execution. The IFA was certainly a welcome concept and had the support of both Democrats and Republicans. Ironically, its removal was more the result of political maneuvering than a decision on the merits - Democrats reportedly they wanted to protect.
Democrats squabble, scramble to meet self-imposed deadline. Why this week is vital for Biden.
Democrats still differ over what to strip out of Biden's budget bill, which is likely to be much smaller than the initial $3.5 trillion Biden pitched.House Speaker Nancy Pelosi, D-Calif., earlier this month, set a new deadline of Oct. 31 for the House to pass a $1.2 trillion bipartisan infrastructure bill and achieve consensus on a bigger budget bill that includes a number of liberal policies like subsidizing child care and fighting climate change. .
This should not be the end of the story. An infrastructure bank should be reintroduced in an amendment as the final bill takes shape, but not as originally proposed. Instead, Congress should seize the opportunity to create an institution independent of government, separate from the appropriations cycle, and capable of bringing large-scale, permanent, long-term funding to bear. That is the way to jumpstart our infrastructure and launch a new era of American productivity.
The Infrastructure Financing Authority could not have achieved these goals. As proposed, the IFA would have been a limited, government-dominated institution, with Congress directly controlling board membership, management structure and compensation. It would have had limited ability to raise and distribute funds - restricted to investment-grade projects, which the capital markets already fund - and would have had no permanent capital base. Instead, it would have been entirely dependent on congressional appropriations - a politically uncertain funding stream with a short-term perspective, mismatched to the long-term nature of infrastructure projects.
Voters oppose holding infrastructure hostage
In the view of those surveyed, if representatives believe that the infrastructure bill is good for Americans, they should vote for it. If they don’t, they should vote against it. The poll results suggest that it will be very hard for both Democrats and Republicans to defend any other position in next year's midterm congressional elections.Keith Allred is the Executive Director of the National Institute for Civil Discourse (NICD) and a former professor of negotiation and conflict resolution at the Harvard Kennedy School. In 2011, the University of Arizona created NICD with founding honorary co-chairs George H.W.
In other words, the IFA would have been a structure- and scope-limited extension of the federal government - not a fully capable financial institution, not a center of innovation and not a magnet for diverse private-sector expertise and experience.
Video: 'Problem Solvers' voice optimism on infrastructure (Associated Press)
Can we do better? We can and we must. To scrap the bank would be a terrible mistake. To build it the right way is critical for the long-term success of any infrastructure plan.
Here is why a better solution is needed. Our infrastructure is in crisis because of chronic underinvestment. For decades, less than 2 percent of GDP in infrastructure - compared to China's 8 percent. Republicans and Democrats want the U.S. to compete with China. The way to start is by investing in our domestic infrastructure for the long term, not just for the coming few years, however large the current bill may be.
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President Biden and other members of the White House on Saturday took a victory lap following passage of the $1.2 trillion bipartisan infrastructure bill, quipping that "infrastructure week" has finally arrived in Washington."Finally, infrastructure week!" Biden said to open his remarks at the White House on Saturday touting passage of the bill. "I'm happy to say that: infrastructure week."The House late Friday passed the bill by a vote of 218-203. Lawmakers sent the legislation to Biden's desk after a weeks-long standoff over Democrats' larger $1.
The funding shortfall is significant not just in contrast to China but on its own terms as well. The leading independent expert group - the American Society of Civil Engineers (ASCE) - estimates that we are currently investing than the amount needed just to bring our existing core infrastructure into an adequate state of repair - that is, without starting any new projects. And if we are serious about climate change, we will need to invest to make our infrastructure greener. That will add significantly to the cost.
The way to close the funding gap is to bring private-sector investment to bear. That should be the infrastructure bank's mission. And the mission should determine its structure.
Rather than being directly controlled by Congress, the infrastructure bank should be not a government-controlled, but a government-sponsored institution. It should extend alternative forms of lending (senior, junior and mezzanine debt financing), and should provide guarantees as well as direct equity investments, exactly like any other development finance institution - The World Bank, for example. The analogy is disturbingly apt - our infrastructure sector is in need of long-term development help, similar to Europe when it needed a in the aftermath of WWII.
Climate change imperils critical infrastructure
The greatest risks are to infrastructure that keeps us safe and healthy, like roads, bridges, hospitals and water treatment systems. While the report doesn't address environmental justice, it clearly shows that the increasing burdens from a changing climate will fall on overburdened low-income communities and Black, indigenous and people of color (BIPOC) communities. © Getty Images Climate change imperils critical infrastructure Reliable infrastructure is essential to the economic prosperity, sustainability and security of communities across the United States.
To provide for long-term strategic infrastructure investment on a national scale, the bank should have $100 billion in equity capital and a $1 trillion balance sheet. That amount can galvanize capital markets and generate funding on a sustainable, long-term basis.
The bank can also play critical roles by removing structural barriers such as arcane procurement processes that have considerably slowed down the execution of infrastructure projects and utilizing planning and project management resources that exceed what existing state and municipal resources can accomplish.
This is the form the infrastructure bank should take. By committing to it, Congress could provide for much more effective infrastructure planning and significantly close the funding gap without any tax increase or increase in the budget deficit. Our infrastructure crisis demands long-term permanent funding solutions. The infrastructure bank is the way to do it.
Sadek Wahba is a senior fellow at the Development Research Institute of New York University. He is also chairman and managing partner of I Squared Capital, an independent multi-billion-dollar global infrastructure investment company. The views expressed in this paper do not necessarily reflect those of the organizations mentioned above.
Who are the 6 House Democrats who voted against the infrastructure bill? .
Rep. Alexandria Ocasio-Cortez and other progressive House Democrats voted against the bipartisan infrastructure bill. Here's why.Their main reason for the down vote: They wanted to pass the bill with its counterpart, a multi-trillion-dollar spending deal called the Build Back Better Act that is still being negotiated in Congress.