Goal: To rebuild America, build the new highways of the 21st Century, and create long-term competitiveness and job growth.
Rationale: It is estimated that every $1 billion of public infra-structure investment generates 23,000 well-paying jobs and New America’s plan to spend $1.2 trillion over 5 years is estimated to create over 5.52 million jobs each year. It has also been projected that an investment of $10 billion into both broadband and smart grid infrastructure would create 737,000 jobs. The CBO estimates that every dollar of infrastructure spending generates on average a $1.6 increase in GDP, and noted economist Mark Zandi estimates that $300 billion in infrastructure spending would raise GDP by nearly $480 billion (close to 4 percent). The CBO has said that we are investing 75 percent less in infrastructure than we should be in economic terms. As New America points out, the American Society of Civil Engineers estimates that the United States will have a $1.2 trillion shortfall over the next five years to meet America’s most basic infrastructure needs. According to Third Way, since 1990, demand for electricity has increased by about 25% but construction of new transmission has decreased by 30%. We are also falling behind internationally. China invests 9 percent of GDP annually in public infrastructure, while we spend well less than 3 percent. Logistics costs for American business are on the rise but are decreasing in Germany, Spain, and France. In short, there is a massive and untapped well of job creation, growth, and private investment available in infrastructure. A recent report from CAP recently argued “we face a growing climate crisis that will require us to rapidly invest in new energy infrastructure, cleaner sources of power, and more efficient use of electricity and fuels in order to cut global warming pollution. There is much work to be done in building smart solutions at a scale and speed that is bold enough to meet this gathering challenge. It is time for a new vision for the economic revitalization of the nation and a restoration of American leadership in the world.
Infrastructure Bank: Adopt the Third Way plan to create a national infrastructure bank to issue loans and guarantees to leverage private capital. Estimates have placed the amount of private capital readily available for infrastructure development at $400 billion. Like the Green Bank, this institution would be independently run but subject to federal government appointment and oversight. The focus should include roads but more significantly include 21st century broadband and electric grid infrastructure.
Bonds: Adopt the New America plan to tap private capital markets by issuing Reconstruction and Build America bonds for projects under the auspices of the U.S. Army Corps of Engineers (USACE) and mostly through private sector contracting. These bonds would take advantage of historically low interest rates and would bring state and local plus private financing together.
Private Sector Incentives: Give multinational businesses an opportunity to repatriate a portion of profits from abroad with no additional taxes if they invest dollar for dollar in the infrastructure bonds. Expand public-private partnerships in the electric grid, telecommunications, and road/rail.