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National Infrastructure Bank

Mort Zuckerman, Editor of U.S. News & World Report, has a opinion editorial this morning in the Financial Times entitled: The Free Market is not up to the Job of Creating Work.  In this piece he laments about the horrible job market in the U.S and questions whether the private sector is up to the challenge of filling the sizeable jobs gap.  I am glad someone in traditional media is realizing how bad things really are.  His opinion piece is interesting for what it mentions: a National Infrastructure Bank.

He says something that on its face may sound astounding to some: “This is the only recession since the Great Depression to wipe out all job growth from the previous business cycle.”  This is not very astounding because the reality is job growth in the private sector for past 10 years has been meager to non-existent.  But that aside, Mr. Zuckerman at least acknowledges the huge challenge our economy faces with creating jobs.

This Great Recession has created a huge hole in the jobs market.  According to the Economic Policy Institute:

Since the start of the recession in December 2007, an estimated 8.0 million jobs have been lost.  This number includes both the 7.2 million jobs lost in the payroll data as currently published plus the announced preliminary benchmark revision of -824,000 jobs to last March’s employment level.  And even this number understates the magnitude of the hole in the labor market by failing to take into account the fact that the population is always growing.  To keep up with population growth, the economy needs to add approximately 127,000 jobs every month, which translates into 2.7 million jobs over the 21 months since the start of the recession. This means the labor market is currently 10.7 million jobs below what’s needed to return to the pre-recession unemployment rate.  To demonstrate how large this gap is and the level of growth needed to bridge it, consider the following: in order to fully fill in the gap in the labor market by September 2011, employment would have to increase by an average of 573,000 jobs every month for the next two years straight.

With the employment situation very bleak, consumer confidence low and household debt levels still high, it is very hard to see how the private sector can generate enough new jobs to power a real economic recovery.  So, where will the impetus for job growth and economic recovery have to come from - you guessed it - government programs.  This is a sad reality for Blue Dog Democrats and Republicans. 

The National Infrastructure Bank is one such government program that not only would help address the huge jobs gap but would also address the dire situation regarding our national infrastructure needs.  The National Infrastructure Bank would act like an investment bank that evaluates public infrastructure projects and assemblies the financing for the projects.  The purposes of the National Infrastructure Bank are to help with new job creation and to use federal resources more effectively and to raise additional funding.

The National Infrastructure Bank would work like this:

Any project seeking federal participation over a set dollar threshold would have to be submitted to this bank. (Smaller projects would be left to states, cities, and towns, perhaps with an accompanying federal grant to be used at the discretion of the state or local government.) Rather than receiving grants through pre-set federal formulas or privileged congressional payments, states, cities, or other levels of government would come to the bank with proposals they wished to pursue. These proposals—for, say, a new or improved highway, a subway, expanded airport, or harbor improvements—would outline the investment that state and local governments would be willing to make, what the users of the project would be expected to pay, and what support was wanted from the federal government.

Proposals for infrastructure investment would still come from the state and local governments.  This Infrastructure Bank is mostly about allocation of federal capital dollars more effectively and to streamline the current federal funding process.  Sounds great: allocating resources more effectively and getting people back to work. 

President Obama, during the election campaign, talked about and supported the idea of a National Infrastructure Bank.  Well, progressive minded Democrats are trying to make the National Infrastructure Bank a reality.  On May 20, 2009, Congresswoman Rosa DeLauro introduced H.R. 2521 - National Infrastructure Development Bank Act of 2009.  The bill appears to be stuck in committee - House Financial Services Committee. 

To the chagrin of Blue Dog Democrats and Republicans, we need to make jobs a priority and there should not be anything very controversial about a National Infrastructure Bank.  This needs to happen.  People don’t have any more time to lose.