Improving our roads, rails and airports makes common sense and puts people back to work
By Dian Vujovich
I’m a big fan of infrastructure improvements. The collapse of a bridge in Minnesota revealed a need to do so a few years ago. Add to that the current economic mess we’re in and I figure fixing our bridges, roads and rails—even creating a super high-speed cross country train system —would put people to work in each of our 50 states. And, at all levels of employment from the need for common laborers, to manufacturers, high-tech engineers and a myriad of various professions in between.
Plus, it’s not like this is a new idea. In an effort to transport goods quickly and inexpensively a national railroad system was created way back during the 19th century. It put people to work, made it easy to transport goods and travelers across the land and did so quickly and relatively inexpensively. Then there was Ike and the Eisenhower Interstate System built during the 1950s and ’60s.
So I read with interest the speech Assistant Secretary Alan B. Krueger gave today to the Senate Banking, Housing and Urban Affairs Committee.
Here are some of the highlights from it:
•The Congressional Budget Office spent about $140 billion (6.4 percent of total govt spending) on public investment in transportation infrastructure in 2006. Roughly half went to spending by the federal govt and the half local governments. Currently, we are investing 2 percent our GDP in total infrastructure, Europe invests about 5 percent and China 9 percent
• President Obama has announced a six-year plan to renew and expand America’s infrastructure. Analysis from the Congressional Budget Office has found that the spending for the program is “among the most effective policy options for raising output and employment.”
•”The American Society of Civil Engineers (ASCE) estimates that we face a $2.2 trillion need for infrastructure investment over the next five years. We would need to roughly double our current level of investment in order to reach the levels they recommend. While that analysis might not be an authoritative guide for the most efficient investment of public resources, it strongly suggests that additional funding can be put to good use.”
So who will pay for all of this? Us, of course.
According to Krueger, the govt wants to create a National Infrastructure Bank to oversee the program. (Ugh). But, private industry could—and should– get into the act. Then there are Build America Bonds (BABs). They are taxable bonds that the Treasury pays 35 percent to the issuer “in lieu of the traditional extension of tax exempt status.” But, the BAB program is set to expire. That said, hopes to extend it and reduce the Treasury’s subsidy pay portion to 28 percent are in the works.
These bonds, btw, have been very popular. Krueger said:” Between the program’s launch on April 3, 2009 and August 31, 2010, over $126 billion of BABs have been issued by state and local governments in 49 states and the District of Columbia.”
That’s impressive. And could even be a smart investment
The full speech is at: Assistant Secretary Krueger Testimony Before Senate Banking, Housing and Urban Affairs Committee
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