Setting Priorities, Meeting Needs: The Case for a National Infrastructure Bank
In its initial fiscal cliff proposal to Republicans, the White House requested additional multi-year stimulus spending, most notably $50 billion in new infrastructure funds for FY 2013 and $25 billion a year for FYs 2014-2018. While rejected out of hand by Congressional Republicans, the potential economic benefits of infrastructure investment are considerable, according to William Galston and Korin Davis.
In this paper, Galston and Davis advocate the creation of a National Infrastructure Bank (NIB) and offer recommendations on its structure, mission and financial powers and responsibilities.
Galston and Davis note how badly American infrastructure has suffered over the past decades: The World Economic Forum’s 2011-2012 Global Competitiveness Report ranks the U.S.’s infrastructure at 16, down from its seventh place ranking just four years ago. And the U.S. has slipped in every category: roads, ports, railroads, and—most precipitously—in air transport and the quality of the electricity supply. Indeed, the reliability of the U.S. electric grid is now ranked 32nd, seven spots behind China.
Galston and Davis argue that government should use scarce public resources strategically to improve American infrastructure, specifically to perform functions for which the private sector lacks adequate incentives, to leverage private sector participation, and to close gaps between the rate of return the private sector requires and the revenues that private users of infrastructure are willing to provide.