What could a $10 billion investment in infrastructure spending mean to the commercial construction industry? According to the American Society of Civil Engineers (ASCE) for every $1 billion spent of infrastructure improvements it creates or save roughly 30,000 jobs. So $10 billion could potentially create 300,000 construction jobs. That’s not a huge number but what if that $10 billion were used to capitalize a National Infrastructure Bank that in turn could leverage hundreds of billions in private investment. A National Infrastructure Bank has the potential to create millions of construction jobs and boost the economy.
It should come as no surprise that the issue of failing infrastructure in the country is only going to get worse. The ASCE’s 2013 report card for U.S. infrastructure has an overall grade point average of a D+. Roads, public schools, drinking water, wastewater, and transit all got a D. Energy did slightly better with a D+ and bridges and rails both got a C+. Grades like that would have landed me in hot water back when I was in school and should be unacceptable for our nation. Current infrastructure spending and funding is woefully inadequate for current and future needs.
There is an estimated $1.1 trillion in infrastructure funding shortfall between now and the year 2020. In addition the ASCE predicts that businesses could see a $1.2 trillion increase in costs by 2020 due to losses in electrical service, water main breaks and transportation delays. The idea for creating a National Infrastructure Bank has been bandied about in Congress for the past six years but as yet no legislation has been passed to create such a bank. The current proposed structure would require a $10 billion initial investment to set up the bank. Selected projects would have to have an estimated cost of $100 million for urban projects and $25 million for rural projects and present a clear benefit to taxpayers. Loans by the bank would only be made to cover 50 percent or less of the total project cost and would have to generate some type of income once completed in order to pay back the loan. That revenue would most likely be generated by user fees or tolls depending on the type of project.
Clearly a National Infrastructure Bank won’t be able to fix all our infrastructure deficiency troubles but it could go a long way in fixing and improving larger projects that are at or near the end of their life cycle. Get Congress to approve it commission and fund the $10 billion initial seed money to set up and open the bank. Establish is as an independent government-owned corporation and allow it to succeed or fail on its own without any additional federal funding. Set it up so it prioritizes project that have the largest regional impact with the most immediate needs for improvement. You could even set it up to sell infrastructure bonds much in the same way that the government sold war bonds during World War II. Instead of war bonds call them Rebuilding America Bonds or Investing in America’s Future Bonds. As stated earlier the loans would eventually have to be paid back to the bank so in the first couple of years only the projects with the highest potential revenue generation should be funded until confidence in the bank is established.
Yes, the idea of a National Infrastructure Bank is a bit of a radical solution but radical solutions are probably necessary to solve the nation’s infrastructure deficiencies. A prime example was the fact that the impact and devastation of Superstorm Sandy was exacerbated by an outdated and inadequate infrastructure system. The mindset of infrastructure needs to shift from putting off repairs and improvements to aging infrastructure after it fails to proactively identifying failing systems and repairing or replacing them with more resilient systems. In order to do that new funding solutions are going to have to be established and a National Infrastructure Bank could be one of the many viable solutions to the nation’s crumbling infrastructure.