Obama Includes Infra Bank in His Jobs Push; Mica Rejects It Out of Hand

Last night, President Obama addressed a joint session of Congress to present his new jobs plan, a bill he’s calling the American Jobs Act. He relied on the well-worn appeal to people’s patriotic competitiveness by pointing out that China is improving its infrastructure while the U.S. is sitting idly by. Without mentioning the dollar figure (psst… it’s $50 billion) he said he’d get construction workers back on the job rebuilding transportation infrastructure and schools:

And to make sure the money is properly spent, we’re building on reforms we’ve already put in place. No more earmarks. No more boondoggles. No more Bridges to Nowhere. We’re cutting the red tape that prevents some of these projects from getting started as quickly as possible. And we’ll set up an independent fund to attract private dollars and issue loans based on two criteria: how badly a construction project is needed and how much good it will do for the economy.

And without ever saying the words “infrastructure bank,” he made his push for one:

This idea came from a bill written by a Texas Republican [Kay Bailey Hutchison] and a Massachusetts Democrat [John Kerry]. The idea for a big boost in construction is supported by America’s largest business organization and America’s largest labor organization. It’s the kind of proposal that’s been supported in the past by Democrats and Republicans alike. You should pass it right away.

He would capitalize the bank with an initial $10 billion, just as Sens. Kerry and Hutchison had proposed. Obama’s own earlier proposal called for a $30 billion investment.

Obama’s written plan also pledges investments in TIGER and TIFIA – good news, since the 2012 transportation budget passed by a House subcommittee yesterday zeroed out TIGER entirely. It also builds on his instruction to agency heads to identify projects that deserve federal help – if not funds – for streamlining the process.

Transportation reform advocates praised the bill, with James Corless of Transportation for America calling it “both ambitious and pragmatic.”

House Transportation Committee ranking Democrat Nick Rahall sat next to Chair John Mica during the speech, and afterward, Rahall said, “We may have walked out of the chamber with different views on the President’s proposals, but I remain committed to working together in a bipartisan fashion.”

We’ll see if they can find anything they both agree to work on. The statement Mica issued after the speech was a quick repudiation of everything the president had asked for:

While the President reconfirmed that our highways are clogged and our skies are congested, his well delivered address provided only one specific recommendation for building our nation’s infrastructure.

Unfortunately, a National Infrastructure Bank run by Washington bureaucrats requiring Washington approval and Washington red tape is moving in the wrong direction. A better plan to improve infrastructure is to empower our states, 33 of which already have state infrastructure banks.

Key interests who have supported the general notion of infrastructure investment in the past won’t necessarily fight for Obama’s specific proposal. The U.S. Chamber of Commerce issued a statement saying that infrastructure spending – even paired with all the tax cuts Obama proposed – wasn’t enough if it didn’t include de-regulation or a commitment to free enterprise instead of bigger government.

Democrats lined up in Obama’s defense. EPW Committee Chair Barbara Boxer called the president’s plan “both inspirational and specific” and pledged to work “on a bipartisan basis to pass the American Jobs Act.” House Minority Leader Nancy Pelosi, meanwhile, called on all House Committee ranking members to urge their chairmen to schedule immediate hearings and action on the legislation proposed by the president.

One of the first things Obama said in his speech is that “everything in this bill will be paid for; everything.” But again he’s leaving the details to Congress.

When the President unveiled his ambitious $556 billion transportation agenda last February, he let his Transportation Secretary twist in the wind as Congress demanded to know how the thing was going to be paid for. All LaHood would say, for months, was that he looked forward to working with Congress on it.

This time, Obama’s leaving the funding question to the bipartisan “super committee” formed as part of the debt ceiling/deficit reduction deal this summer, which just started work and is already beginning to fracture. That committee is already tasked with finding $1.5 trillion in cuts, which was a tall order for a group that can’t seem to agree on what to order for lunch. Now Obama’s asking them to find more.

5 thoughts on Obama Includes Infra Bank in His Jobs Push; Mica Rejects It Out of Hand

  1. I realize it’s not ideal, but why not cut off Mica’s argument at the knees by increasing the Infrastructure Bank money back to $30 billion and disbursing it to the states in proportion to their populations? Tell them it has to be spent on infrastructure. Some states will cheat and use the grant for transportation infrastructure and transfer their existing transportation funding to shore up other things (education, Medicaid, etc.), but it still helps the state budgets and will increase employment in one field or another. Stimulus is stimulus.

  2. Disagree with Shane.  Simply dumping money into the economy isn’t going to address the structural problems which are leaching jobs across the border.  This isn’t 1930 where you spend $1 and it gets respent over and over — now after very few transactions it goes to creating jobs not here but in China or elsewhere.  Consider: 1930 you invest in a road and everything with the road is made here, the cars which drive on the road are made here, and the gas the cars burn is pumped here.  The positive feedback snowballs.  Doesn’t work that way in 2011.

  3. djconnel,

    That’s certainly more true now than it was in 1930, but what do you propose instead? Jobs go to places with lower labor costs. The answer isn’t to stop trying to provide jobs for people, especially when they’re jobs doing useful things.

    Your argument is well taken that the impact may not be as great as it once was, but you’re completely discounting the actual benefit of that spending. Whether it’s as stimulative as we hope is a side issue: we still need the infrastructure. In a time when we simultaneously have millions of people out of work who desperately want to find jobs, and have a massive backlog of infrastructure repairs and improvements that need to be made, this is absolutely the time to be spending money to employ people to do this work. Just because some of that money doesn’t go to the US is irrelevant, because that’s going to be just as true whether we recover from the recession in two years or twenty. Either way we need to fix the infrastructure at some point, so why not do it now when people need work, borrowing and labor costs are at record lows, and people need work now more than ever?

    In the mean time, a portion of the money those construction workers (or teachers, or whoever) make gets re-spent in the US economy to support still more service jobs, who then also have more money, and so on. And instead of paying those people to do nothing, we get a long-term benefit in the form of public works, educated citizens, and people who actually get to feel productive rather than depressed about being unemployed.

    The world is different than it was in 1930, but it’s not as if everything is completely reversed. We still need roads and bridges, and we still have to employ people to build them.

  4. As has been documented here our problem isn’t too little infrastructure, it’s too much of it in maintenance-heavy roads.  If any of this money goes into new roads it just digs us deeper into a long-term obligation which then sits on top of the financial obligation of paying back the accrued debt.  Reduce the subsidy for cars and you increase demand for and therefore investment in more sustainable modes. 

  5. Loss of jobs is a symptom of our hollowed out economy, not the cause. What we’re experiencing isn’t transitory.  A temporary monetary band-aid to get us through a bad time won’t work. Yes, we can spend as much money as we want because the odds are very high that we (or our children or our grandchildren) will never pay it back.  But although money courtesy of the Federal Reserve is almost infinite (until our reserve currency status goes away) energy and resources are not. Since eventually Americans need to learn to adapt to the new economic reality at hand rather than continually try to squirm our way out by spending enormous amounts of money because it’s the only thing we know how to do, the sooner we begin to live within our means, the better off we’re going to be.

    We are at the point we need to consider triage. We need to put our resources into things that will help us in the future, that will actually return benefit. There are plenty of things to do, ways to spend money. We can keep pumping money via the Federal Reserve into the stock market, ensuring bankers make huge bonuses.  That seems to be our top priority. We can keep killing people and blowing things up in other countries. We seem to really like that too. However, these are both luxuries we can’t afford any more. The commodity inflation and the great enmity they engender are highly imprudent as well.

    Where we should put our limited energetic and material resources is against the infrastructure we will need to survive and even prosper in the lower energy future that awaits us. Expanding and improving our rail network, both freight and passenger, is the smartest thing we can do. Double-stacked electrified freight is highly energy efficient and will allow us to have a relatively robust national trade. Our ports will still be useful for the more limited international trade we’re likely to have. Passenger rail of whatever speed we create in the next ten years is likely what we’re going to be stuck with for the next forty.  Upgrading our electric grid so that more of our energy needs can be served by electricity would also be wise. Creating infrastructure so that communities can easily transition to low energy methods of walk aingnd bicycling for the bulk of their short-distance transportation is also cheap and would create enormous economic returns both in lowering our trade deficit and lowering our health care costs. Beginning to defend our sea-level cities such as New York, Charleston and New Orleans against storm surge flooding is also a good idea, unless all of us are content to just write these places off. All of these things will employ people; the difference is these people will be doing useful, necessary work instead of putting their energy towards economic and societal dead ends akin to pouring money into a black economic hole.

    Building more roads for cars makes about as much sense as blowing things up in the Middle East. Sure it will employ people, but it just makes the world worse and does nothing to create a future financial return. To create a sound, workable economy with high employment let’s a) reform the parasitical financial sector (re-implement Glass-Steagall) so it ceases to suck up so much of the American economy (currently 41% of all domestic corporate profits are in the financial sector versus 16% 30 years ago), b) exit the wars, cut military expenditures in half, and c) use the finite resources left to us to prepare for the future.

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