A Closer Look at the Infrastructure Bank

The highly anticipated "job speech" by President Obama this evening will address, among other issues, the infrastructure bank. Michael Likosky argues that it is the only possible revenue stream for the nation's $600 billion infrastructure projects.
September 8, 2011, 12pm PDT | Jeff Jamawat
Share Tweet LinkedIn Email Comments

The idea behind the infrastructure bank (I-Bank) is straightforward. Upon the creation of a federal agency that oversees the financial arrangements of infrastructure projects, the government would provide incentives in the forms of loans and loan guarantees just enough to attract private investors who would pick up the tab and finance the rest.

But the legislation faces three major hurdles, according to Likosky. Unlike other economic stimulus measures, the I-Bank does not deliver instant results. This makes it a tough sell among politicians with impatient constituents. Additionally, the initial investment of $5 billion per year for several years lies on the high end of the spending gamut relative to the budget deficit.

Then there is the inherent political gridlock in Washington estranged of bipartisanship. Deploring federal involvement in just about every proposed legislation, congressional Republicans prefer the state-run alternative like the California Infrastructure and Economic Development Bank. "[C]onservatives don't like government's involvement in the I-Bank, even as facilitator. They think it will merely add more bureaucracy," notes CNN Money reporter Chris Isidore.

Full Story:
Published on Wednesday, September 7, 2011 in CNN Money
Share Tweet LinkedIn Email