Black People : Is the New Stimulus Another Bail out for the Rich?

Ankhur

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Around laborday this year, the president of the United Staes of America, made this statement in his speech regading the new Stimulus to aid the down riding economy

“It sets up an Infrastructure Bank to leverage federal dollars and focus on the smartest investments.”

Infrastructure Bank? Smartest investments?

.

For a historical perspective, we need to look back to August 2007 during the Bush administration when S.1926 was introduced (National Infrastructure Bank Act of 2007) by Sen. Chris Dodd (D-CT) and Chuck Hagel (R-NE).

The failed bill provided for an independent government entity (think FDIC, for instance) with a five-member board appointed by the President and confirmed by the Senate.

In 2009, the Obama Administration promoted similar legislation introduced into the House as H.R.2521 by Rep. Rosa DeLauro (D-CT) to,

"facilitate efficient investments and financing of infrastructure projects and new job creation through the establishment of a National Infrastructure Development Bank, and for other purposes."

The Administration was so certain that this would pass (it has not) that the 2010 budget included appropriations for a National Infrastructure Bank. (See Investing for Success, Brookings Institution, p.11)

Dodd himself called S.1926 a,

“unique and powerful public-private partnership” that would offer a “fresh solution to the challenge of rebuilding the nation’s infrastructure.”

It was originally to be funded by a $60 billion bond issue which would be then leveraged with private capital. Obama’s new twist is to forget the bond and just give $50 billion of taxpayer money directly to kick - start the NIB.

A public-private partnership in this context is reminiscent of the World Bank's Public-Private Partnership in Infrastructure program (PPPI) whose objective,

"is to provide capacity building to help client governments create the proper environment to develop successful and sustainable PPPs, as well as to provide technical assistance to client countries in issues related to PPP program design, development, and implementation."

However, the World Bank explains their agenda more fully:

"The program initially focuses on core infrastructure sectors - energy, water, transport, and telecommunications - and will progressively cover the main social sectors such as education, health and housing."

This may suggest the intended meaning of "other purposes" mentioned above in H.R.2421. Obama made no mention of NIB revenue bonds that would be used to pay back loans with by tolls, fees, etc.



Most importantly, all infrastructure spending/lending/appropriations would circumvent Congress forever more. In fact, the whole affair would be off-agency, meaning that the accounting for it would not show up in the national budget, but would potentially create a huge contingent liability for taxpayers down the road.

So, who were the policy wonks behind the NIB and S.1926 in 2007? (You know it wasn’t Dodd or Hagel!)

Fortunately, the press release on Dodd’s own website gives full credit:

“Last year, Senators Dodd and Hagel signed on to a set of ‘Guiding Principles for Strengthening America’s Infrastructure’ developed by the Center for Strategic and International Studies (CSIS) Commission on Public Infrastructure,” said CSIS President and CEO John Hamre.


“These principles were established to recommend changes to rebuild America’s decaying infrastructure. CSIS is proud to have helped stimulate this important initiative.


The current CSIS board is stacked with notorious Trilateral Commission members like,

Zbigniew Brzezinski

William Brock

Harold Brown

Richard Armitage

Carla Hills (architect of NAFTA)

Henry Kissinger

Joseph Nye

James Schlesinger

Brent Scowcroft


www.bibliotecapleyades.com
 

Ankhur

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Progressive and Economist; Michael Hudson

The Obama transport plan is like a Fannie Mae for bankers, based on the President’s guiding mantra: “Let’s help Wall Street put Americans back to work.” The theory is that giving public guarantees and bailouts will enable financial managers to use some of the money to fund some projects that employ people – with newly created, non-unionized companies, presumably.

Here’s the problem. Transportation projects will make real estate speculators, the construction industry and their bankers very rich unless the government recovers its public spending through windfall site-value gains on property along the right-of-way.

What’s the point of a party having a constituency, after all, if not to sell it out? Is not the Democratic Party’s role to deliver labor, the minorities and the large cities hog-tied to Wall Street?

Hollywood surely has made enough movies along these faux-populist lines. The banker of a Western town manages to grab property along the railroad tracks coming through, to make a killing. The local mobster pays off a state legislator to build a highway by his property, making his land much more valuable. Mortgages will be refinanced in much larger sums. At least, this seems to be President Obama’s hope as he positions himself to become America’s Tony Blair. The role of Britain’s New Labor, after all, was to ram through economic programs so far to the right than no Conservative government could get away with them. In the United States it falls to Obama’s New Democrats to shepherd through proposals that Democrats would vote down if the Bush-Cheney Republicans had tried to enact them.

What President Obama did not acknowledge is a basic principle that every transportation economist is taught: Transport investment normally can pay for itself, simply by a windfall-gains tax enabling cities or other jurisdictions to recapture the higher rent-of-location and site value along the right-of-way.

www.counterpunch.com
 

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