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Building a U.S. infrastructure bank

We have differences on so many issues. But there’s too much at stake now for political parties to focus narrowly on the next election.

The 21st century can be another American century, but only if we rebuild our nation and do the things that will keep America exceptional for generations to come.

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Americans have always been builders. We built a transcontinental railroad. We built an interstate highway system. We built rockets that let us explore the farthest edge of the solar system and beyond.

Yet when it comes to our nation’s infrastructure, we’re not building for the future. Our roads and bridges are crumbling beneath us. Meanwhile, our competitors are building superior infrastructures that can attract jobs, businesses and capital.

We can construct a world-class infrastructure again. But we won’t by simply throwing money at the problem or applying Band-Aids when major surgery is needed. Instead, we need strategic, comprehensive, long-term solutions — and the resources to implement them.

First, we must pass a comprehensive, multiyear highway and transit bill that is adequately funded, focuses on national priorities, spends money wisely and removes roadblocks to private investment.

Because our infrastructure needs are so great — and our federal budget so tight — we need to leverage every public and private resource available to secure investments that can maintain and improve our system.

That’s why we are joining together to build a new, bipartisan consensus for an American infrastructure bank — one that can help create jobs today and will increase our economic competitiveness tomorrow by financing projects for everything from rail to seaports.

With traditional funding methods, like appropriations and municipal bonds, squeezed by the economic slowdown, a bank would complement limited public investments by leveraging private resources to help get the job done. By channeling large pools of new investments from private sources that don’t currently invest in U.S. infrastructure, a bank could help solve our infrastructure deficit without straining our budget. We need to do more with less federal money.

The bank would operate without political influence to finance projects based on their national and regional importance — not their political value. It would be run transparently by experienced professionals under congressional oversight. It would need to include checks and balances to prevent abuse by both the private sector and political players.

It could serve as a catalyst — not a substitute — for private investment. It wouldn’t stop the private sector from taking the lead when it can and should. This is a practical strategy for prosperity and a pragmatic vision that can be embraced outside ideological or partisan concerns.

How do we do it?

There is $180 billion to $200 billion in private capital available for investment in U.S. infrastructure. Capital is fluid, though. If we don’t make every effort to put these resources to use in our own country, it will flow to our competitors.

The answer is to remove the politics, recognize the reality of the U.S. deficit and acknowledge that the private sector, not the federal government, is the chief economic engine. An American infrastructure bank would then be able to access private capital and revitalize and expand networks that connect us to each other and the world, as well as to the resources essential for business and everyday life.

Reliable, modern infrastructure isn’t a luxury. It’s the lifeblood of our economy — the key to connecting our markets; moving products, people, information and energy; and generating and sustaining millions of jobs for U.S. workers. In the face of global competition, our growth and exports are directly tied to the modernity of our infrastructure.

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Yet for too long, we’ve underbuilt and underinvested. Too much of what we have done has been uninformed by a long-term strategic plan. In 2008, it was estimated that we had to make an annual $250 billion investment for 50 years to meet our surface transportation needs alone.

We aren’t even close to that today.

If we don’t act, we won’t just stand still, and we won’t just fall behind. In an Information Age global economy, choices and consequences come quickly, and inaction could hold us behind permanently as we cede economic opportunities to more disciplined nations.

As we invest too little — and our competitors’ investments grow — it will only become harder to catch up as they become more and more attractive for private investments.

In 2009, China spent an estimated $350 billion on infrastructure — 9 percent of its gross domestic product. Europe’s infrastructure bank financed $350 billion in projects across the continent from 2005 to 2009, modernizing seaports, expanding airports and high-speed rail lines and reconfiguring city centers. Brazil alone has invested more than $240 billion in infrastructure in the past three years — with an additional $340 billion planned for the next three.

These countries are doing what we need to do. Some are racing ahead precisely because they have created infrastructure banks to help them invest more with fewer public resources.

Passing a good highway and transit bill, creating a national infrastructure bank and removing roadblocks to private investment can help us rebuild a world-class infrastructure system.

But we must also recognize that traditional U.S. public funding mechanisms for infrastructure investment are inadequate for the growing needs of our economy, businesses and citizens.

Receipts to the Highway Trust Fund have fallen substantially as cars and trucks improve gas mileage. The Highway Trust Fund’s integrity has been compromised, and its declining resources may be poached for other purposes. We are on an unsustainable path.

The sooner we address this challenge, the sooner we can secure the funding we need to increase our mobility, create jobs and enhance our global competitiveness.

We need to address this not as separate interests but as a nation with a national purpose. The world of the next generation is changing too rapidly for us to try to compete using last century’s bridges, roads, water systems and transmission lines.

Sen. John Kerry (D-Mass.) is chairman of the Senate Foreign Relations Committee. Tom Donohue is president and chief executive officer of the U.S. Chamber of Commerce.


Eric D. Schwerin
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
eschwerin@rosemontseneca.com
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