WSJ.com - Bank of Political Works

Before you decide in favor of the newly proposed infrastructure bank, read this article.

 

WSJ.com - Opinion: Bank of Political Works

 

[The proposed infrastructure bank] is the Fannie Mae model applied to public works. The new bank would be a government-sponsored enterprise, or GSE, whether or not anyone admits it.

Such an outfit will inevitably be politicized, as similar examples have been all over the world.

No one disputes that American public works need improving, and government has been spending huge sums to do so. As the nearby table shows, between 2001 and 2011 federal "public physical capital investment outlays" more than doubled to $330 billion from $142 billion. Every major area of infrastructure—transportation, Army Corps of Engineers, energy—is up by at least 75% in a decade.

The scandal is that we buy so little brick and mortar with all this money. Earmarking has wasted billions and is an inevitable byproduct of a system that collects federal taxes and allows Congressmen to send it back to their districts. The bank is supposed to eliminate earmarking, but the Members will surely find a way to influence the bank's lending too.

Instead of a Washington-centric bank that picks winners and losers, Congress would be wise to move in the opposite direction: devolving most public-works decisions to the state and local levels so users decide whether they want to finance a new school, bridge or water system. The feds can focus on maintaining the interstate highway system and then let states and localities choose what to fund.