Future Infrastructure budget cuts are inevitable – We must locate other means of investment to rebuild and innovate
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- Speeds up projects
- Political Insularity/Jurisdiction
- Massive Transportation bills strap Congress’s ability to adapt to necessary infrastructure needs
- Rational Decision Making/Budgets
- Revenue-Based Good
GeneralEurope EmpiricsFelix G. Rohatyn 2008, Co-Chair on the Commission on Public Infrastructure, Speech delivered to the U.S. Senate Banking Committee Senator Christopher Dodd, Chairman March 11, 2008 Mr. Chairman, our commission also applauds Senator Hagel and you for proposing an Infrastructure Bank whose financial governance, project selection and delivery would be focused on funding those projects with the highest economic returns. Right now, road, water, airport and other funding candidates are evaluated using widely disparate assumptions for capital costs, discount rates and other characteristics, if they are evaluated at all. And many projects are funded using fixed cost shares that don’t reflect different local conditions. Moreover, the Bank has the prospect of being unencumbered by earmarks that benefit localities but neglect national and regional priorities. The Bank would, therefore, be modeled after modern investment banks, or, in fact, the European Investment Bank, whose financing of public projects has created a superb and efficient European infrastructure, including a high-speed rail network that is a model of efficiency.
William J. Mallett, Specialist in Transportation Policy, Steven Maguire, Specialist in Public Finance, Kevin R. Kosar, Congressional Research Service, December 14. Analyst in American National Government Once established, a national infrastructure bank might help accelerate worthwhile infrastructure projects, particularly large projects that can be slowed by funding and financing problems due to the degree of risk. These large projects might also be too large for financing from a state infrastructure bank or from a state revolving loan fund.44 Moreover, even with a combination of grants, municipal bonds, and private equity, mega-projects often need another source of funding to complete a financial package. Financing is also sometimes needed to bridge the gap between when funding is needed for construction and when the project generates revenues.
An NIB is best, it crosses jurisdictions and is political insularWilliam A. Galston, , September 7, 2010 9:59am, “Infrastructure Bank Proposal Would Spur Economic Growth” http://www.brookings.edu/up-front/posts/2010/09/07-infrastructure-bank-galston On Monday, President Obama advanced several steps to boost economic growth and job creation, including a national infrastructure bank. In doing so, he resuscitated a proposal, initially offered during his campaign, that enjoys substantial support among legislators in both the House and Senate as well as from workers, firms, and organizations involved in transportation, communication, and construction. This move reflects, I suspect, the president’s recognition that traditional demand-side stimulus runs up against limits in downturns sparked by financial crises. If individuals and households are burdened with excessive debt, they are more likely to use additional resources from tax cuts and transfer payments to pay down that debt than to make purchases they otherwise would have foregone. And if businesses do not foresee rising consumer demand, they will be reluctant to hire additional workers. In these circumstances, stimulating new investment in infrastructure represents a promising alternative strategy.
The president’s proposal faces an uncertain fate. With the mid-term election campaign in full swing and political polarization at its highest level in more than a century, cooperation across party lines will be hard to achieve—even though the initial senate bill was introduced with bipartisan support just a few years ago. In the longer term, a bank structured to reduce politically motivated earmarks and to expose proposed infrastructure projects to a market test might attract a broader base of support than is now in evidence. But whatever its immediate prospects, President Obama’s proposal offers a welcome new direction in an increasingly shrill and decreasingly productive economic debate. It shifts the focus toward the kinds of public action that can help build a more efficient and competitive economy in the long run. And it recognizes a key reality: the consumer-led model of economic growth on which we have depended for decades has hit a wall. It’s time for investment to lead the way, with new partnerships between the public and private sectors. Done right, the infrastructure bank would represent not only a new institution, but also a new paradigm.
NIB resolves politicization with rational calculus that results in completed worthwhile projectsEverett Ehrlich 2010, Ehrlich served in the Clinton Administration as under secretary of commerce for economic affairs, president of ESC Company, a Washington, DC-based economics consulting firm. Senior vice president and research director for the Committee for Economic Development, and assistant director of the Congressional Budget Office, “A National Infrastructure Bank: A Road Guide to the Destination,” Progressive Policy Institute, October 2010 Consistency may be the hobgoblin of little minds, but it is the foundation of rational investment calculation. In infrastructure, this means, at a minimum, consistency in the assumptions made for future economic growth and its constituents: inflation, the cost of capital and the discount rate, and the value of human life and the time lost to delay. The public financing of infrastructure also requires a consistent approach to such policy measures as environmental degradation, the fiscal carrying capacity of states and localities, the level (if any) of second-round employment and output multiplier effects, and the treatment of such diverse variables as the distribution of income and ancillary homeland security benefits. Federal agencies are now obliged by the Office of Management and Budget (OMB) to use consistent values in their project analysis and capital allocation decisions, but their obligation to do so is ultimately not binding. These are opt-outs and, ultimately, the invisible but decisive weighting given to projects with political sponsorship. The driving idea behind the National Infrastructure Bank is that we can do much better than that. It would be utopian to believe that the Bank’s presence would wipe the blight of political interference from the process. But it is possible to hope that projects above some threshold of federal involvement be publicly and visibly evaluated and ranked by the Bank, so that their relative merits can be known. And it is not impossible to imagine that rational funding decisions be the rule rather than the exception. The closer we get to such a rule, the better off we are, and the more rapidly so. Replacing a project anointed by a non-rational mechanism that has, let us charitably assume, zero economic return with a positive rate of return above some threshold (related to the cost of capital) produces a mathematically infinite improvement in project benefits. Rational project selection maximizes the effectiveness of spending. It also delivers better budgeting decisions and economic information. For one, it leads us to spend the next dollar on infrastructure on the project with the highest available return. It also allows us to understand far more accurately the level of net investment in infrastructure by improving the value we assign to both the creation and depreciation of public wealth. And it allows us to more easily monitor our progress against the backlog of viable infrastructure projects. This may be unduly idealistic or utopian as well, but no policy should be put in place without some idea of its ongoing success and when its job may one day be done. Revenue-Based GoodRevenue-based models of infrastructure investment insures long term development and upkeepRichard Little, Director, Keston Institute for Public Finance and Infrastructure Policy, April 5, 2011, “Infrastructure Investment and U.S. Competitiveness” http://www.cfr.org/united-states/infrastructure-investment-us-competitiveness/p24585 The massive network of seaports, waterways, railroads, and highways we built in the nineteenth and twentieth centuries were designed to unlock the nation's natural resources, agriculture, and manufacturing strength and bring these products to market. Today, despite a dynamically changing economy, these sectors along with trade and transportation still account for more than a quarter of U.S. GDP or $3.5 trillion, but many transport linkages have become bottlenecks due to long-delayed repair and replacement. The entire U.S. economy, as well as consumers, would benefit from a more efficient and resilient supply chain. Unfortunately, for far too long, Americans have been lulled by their political leadership into a false sense of entitlement. Faced with the prospect of raising taxes or charging fees to cover the cost of maintaining these systems, they have chosen to do neither. As a result, our highways and bridges decline at alarming rates. Most of the other systems vital to our interests suffer the same fate. Fixing this is well within our control, the challenge will be to muster the will to do so. Without a move to revenue-based models, necessary renewal of critical infrastructure will be long delayed, if provided at all. The first step in addressing this problem will be to ensure that adequate revenue streams are in place. Whether this revenue comes from the fuel tax, tolls, or other mechanisms is less important than having the funds to work with. Without a move to revenue-based models, necessary renewal of critical infrastructure will be long delayed, if provided at all. We can show that we value these systems by agreeing to pay for their upkeep or own both the responsibility for economic decline and its consequences. Directory: files files -> Answer True False 2 points Question 2 files -> Integer programming and game theory files -> 4 Integer Programming files -> Bpa vehicle Window Repair Scenario #1 task: Procure vehicle window relacement. Objective files -> Pop Warner History files -> North Carolina Inclusion Initiative Mapping Where Children with ieps are Being Served Purpose files -> Fall 2013 Spring 2014 Program Data: Standard 1 Exhibit 4d files -> Hanban – asia society confucius classrooms network 2010 request for proposal files -> Northern England’s set-jetting locations Download 1.29 Mb. Share with your friends:
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