At this point, it's looking like the economy won't fall back into a recession — but it is going to continue its anemic growth pattern. Against the backdrop of this malaise, we have a long-term unemployment problem: uninspiring jobs data is scheduled to be released tomorrow, with our national rate expected to stay around 9 percent and the California rate to remain at or above 12 percent. Can you say "stagnation?"
In Washington, President Obama and Republicans in Congress are playing chicken with legislation that would extend federal transportation funding. Obama says 4,000 jobs are at stake. And this is just an extension of funding that's due to expire on Sept. 30. Another fight looms over the cost of a long-term bill. Democratic Congresswoman Lois Capps of Santa Barbara argues that the parsimonious GOP plan would cost the state 51,000 jobs.
The fight, like much of what's going on in Washington these days, involves the GOP's preoccupation with "fiscal responsibility." When the House Republican transport bill was introduced, its $230 billion price tag was immediately criticized for being far too meager to address the nation's needs, much less provide a significant jobs boost
However, there's a silver lining in this cloudy brinksmanship: a tremendous opportunity for a bipartisan infrastructure solution to be unleashed. In the context of the President's expected call for a national infrastructure bank in his address to Congress next week, the GOP transport bill contains at least one forward-looking, if limited, proposal.
Over six years, it would provide an opportunity for private money to be invested in transport projects. According to the National Journal's Transportation blog, "[t]he measure would dedicate $6 billion to the Transportation Infrastructure Finance and Innovation Act (TIFIA) loan program, which, in theory, would finance $120 billion in projects."
This isn't an infrastructure bank -- the TIFIA program is dedicated to transportation, while the $50 billion infrastructure bank that Obama talked up around this time last year would be able to generate investment in broad range of projects. If Obama revived the proposal, it may only be funded to the tune of $30 billion. That's far higher, however, than the TIFIA program. As I've blogged before, I-Bank funding at this scale would enable a much higher level of private leverage.
Reason Foundation likes both the idea of the TIFIA program and the infrastructure bank, but favors an expanded TIFIA. This is from a report published in April:
At this juncture, TIFIA is a proven program that could play a more significant role if revised in accordance with the recommendations discussed above. The proposed AIFA is an improvement over most previous infrastructure bank proposals, since it incorporates many of the key concepts that have made TIFIA successful. But unless Congress wants to significantly expand the federal government’s role in financing non-transportation infrastructure, it would be wiser to simply improve TIFIA, leaving the focus on transportation.
I like the infrastructure bank plan myself, mainly because it would provide financing options for a wider variety of projects (I think Robert Dove of the Carlyle Group agrees with me, at least if his recent testimony before Congress is a guide). But Reason Foundation is correct in pointing out that, in the current fiscal climate, it could be difficult to get lawmakers to come up with enough money to make it worthwhile.
In any case, both ideas have two great things going for them: bipartisan support; and strong private-sector interest. It's rare to find something that everyone in government can agree on these days. But moving away from grant-based funding, toward carefully financed public-private partnerships to rebuild infrastructure and create jobs, is one of them.
Photo: Wikimedia Commons