The prospect of a federal infrastructure bank has been kicked around the Beltway since 2007. It may be President Obama’s last chance at real results on job creation, and even those results would be insufficient to save his political hopes, as I will explain. Even so, it may be an fairly effective way to fund related projects around the country – which, paradoxically, seem to be left aside until after the economic straits become dire.
The bank would serve as a lender for private investors, local and state governments and public-private partnerships who wish to fund large-scale building and transportation projects. The bank’s directors, who would be independent of the government, would review loan applications for cost-effectiveness, and would not provide more than 50 percent of the needed money. But it would be enough to create a few jobs.
Under normal circumstances, this would be lauded as a sensible model for avoiding funding these badly needed efforts on an ad hoc basis. Forbes would still not be impressed, citing Japan’s example, which is rife with corruption and cronyism. (In Japan? I’m floored.) It’s a legitimate concern, although not one that would persuade me to disavow the notion. However, I would hope that someone had an idea to safeguard against it.
But don’t think this would be the economic silver bullet Obama has been searching for. The jobs that come with these projects would be, by their nature, temporary. Certain areas of the country would have a much shorter window to take advantage of the loans based on climate. That’s not counting the governors who fear the political fallout of accepting them from the eeeevil feds.
If there is enough support for a federal infrastructure bank, it should be encouraged. This is one area of the economy that deserves constant attention, not just convenient attention, as broken bridges continually demonstrate. It may even satisfy the economists who encourage more stimulus, without a stimulus package. This is no substitute for a formula that ensures permanent, full-time, well-paying jobs.
While I am not positive that any sitting politician can be trusted to devise one, I know Obama cannot. I’ve encouraged patience and a holistic view of his political, constitutional and economic roadblocks. But he has not proven an ability to overcome them in what is now a fair amount of time. That was his most important task as president, and he has failed at it.