Saturday, October 18, 2008

Yarmuth Wants "Federal Infrastructure Bank"

Congressman John Yarmuth yesterday sent a letter to a constituent who had written him about the two proposed bridges in Louisville. That constituent forwarded Yarmuth's reply. Yarmuth responded with a forceful argument on why Louisville needs two bridges; he's right about that.

Money, however, is a problem, Yarmuth wrote -- so much so, that Kentucky may be on the hook for 98 percent of the cost:

While I am pleased that our state leaders are working hard to identify funding sources for this project, I am saddened that our community was mislead into believing that much of the funding for this project would come from the federal government. That was never the case. In fact, over the last 11 years, only 2 percent of the funding needed for Kentucky to complete this project has been secured through the federal appropriations process.

Yarmuth proposes this solution:

I recently sent a letter to the Speaker of the House of Representatives urging her to create a national infrastructure bank to accelerate billions of dollars in long-overdue transportation projects. This bank would help communities like ours finance mega-projects with price tags that have quickly outpaced the financing capability of their communities.

The federal government has a long history of overcoming challenges with the establishment of innovative public-private partnerships. Just as previous generations led the development of the National Interstate Highway System and the creation of the Erie Canal, we have the opportunity to transform the way our country meets its infrastructure needs. A federal infrastructure bank, modeled after the Federal Deposit Insurance Corporation, would combine the guarantee of the federal government with the resources and innovation of private investors. This bank would implement a new system to identify, evaluate, and help finance infrastructure projects. It would leverage public and private capital to create government-backed financing packages that could include a variation of direct subsidies, low-interest loans, tax credits, and infrastructure bonds.

Six months ago, this sort of "public-private partnership" would have sounded like a good idea. Indeed, using the private sector to achieve efficiencies for the government almost sounds conservative. Then we met Fannie and Freddie. "Public-private partnership" became a code word for the waste, corruption and mismanagement that necessitated the bailout. The public-private partnerships" of Fannie and Freddie reveal that we cannot take the private motive of the private sector and remove the risk of failure by guaranteeing that taxpayers' will come to the rescue.

Unlike a bank, if a bridge fails, people die. I will not drive over any bridge that is built with a "public-private partnership" that removes risk rather than simply rewarding it. More is at stake than just the spectre of another bailout.

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