We can expect proposals in the coming weeks aiming for a domestic economic surge, putting Americans back to work. But Americans should be wary of four types of proposals:
- Ones not designed to kick in before a 2013 inaugural address.
- Ones not enjoying broad bipartisan support.
- Ones dramatically increasing public spending.
- Ones not finding ways of moving the sizable amounts of private capital now sitting on the sidelines into physical and social infrastructure, renewables, mining, oil and gas, etc.
Politicians and Voters of All Stripes Support Public-Private Partnerships
Disagreements obviously still exist. An example, though: U.S. Congresswoman Michele Bachmann (R-Minn.), the Tea Party leader, champions the bipartisan public-private partnership bridge project linking Minnesota and Wisconsin, the St. Croix River Crossing, together with Senator Al Franken (D-Minn.), Senator Amy Klobuchar (D-Minn.), Senator Ron Johnson (R-Wis.), Senator Herb Kohl (D-Wis.), U.S. Representative Chip Cravaack (R-Minn.), U.S. Representative Sean Duffy (R-Wis.) and U.S. Ronald Kind (D-Wiss.).
A recent Rockefeller Foundation survey found that 78 percent of all voters support increased public-private partnerships, including 85 percent of Republicans, 84 percent of conservatives, 80 percent of Tea Party supporters, 79 percent of liberals, 78 percent of democrats, 77 percent of moderates, 73 percent of independents, 80 percent of Midwesterners, 79 percent of Southerners, 79 percent of Northeasterns and 75 percent of Westerners. Across the board, a majority of each group favors a National Infrastructure Bank to move this private capital into projects. President Barack Obama, former Alaska Governor Sarah Palin, Warren Buffet and David Koch all favor partnerships.
The Daily, Rupert Murdoch's iPad newspaper, developed with Apple's Steve Jobs, recently published a piece, "Building Consensus: An Infrastructure Bank Is an Idea that Everyone Can Apparently Get Behind," explaining the business case for the proposed National Infrastructure Bank. The idea has broad support, even if we differ -- often sharply -- on specific projects.
The Most Business-Friendly Bipartisan P3 Proposals on the Table
Not all proposals to bring private capital off the sidelines and into our real economy will be equally effective. A multi-sector bank would benefit the entire country. A transportation bank, just like TIFIA, would only benefit a dozen or so states. Most states either don't have a need for that private transportation money or can't compete for federal support effectively.
Many states focus largely on energy or water, where their needs are the greatest. Here is a graphic to give a general sense of which states are competing for federal money in this area. We should be wary of looking for state miracles. States are not lone wolves; they are partners with the federal government. Just look at Texas on the chart: it uses federal leveraging support in order to attract large-scale private investment.
Moreover, if we're trying to bring more private capital to bear on our infrastructure crisis, why shut out investors wanting to help us meet our waste water or energy needs?
The desalination plant at Fort Bliss in El Paso, Tex. fuels folks in El Paso and on the defense base itself. Gamesa Technology manufactures clean energy in its Fairless Hills plant in Pennsylvania, creating orders for steel and concrete. Similar things are happening in Surprise, Ariz.; Cleveland, Tenn.; Columbus, Miss.; and elsewhere. The Coskata cellulosic ethanol plant in Greene County, Ala. reduces dependency on foreign oil.
Transportation-only bank proposals appeal to our wish to increase the pie of capital, but they do not appreciate how leverage and private finance actually work. It's why we should stay away from the single-party proposals, like the Democratic Senate (Lautenberg/Rockefeller) and Republican House (Mica).
The multi-sector bipartisan vehicle proposed by Senators Kerry (D-Mass.), Hutchison (R-Tex.), Graham (R-S.C.) and Warner (D-Va.) makes more finance sense. Neal Peirce's Citiwire column explains some key reasons: it is a step toward making better use of public-private partnerships, although we must supplement it with something to increase the pie of available finance for social infrastructure, health and human services, mining, oil and gas and renewables.
Catalyzing Private Investment at the Start of 2012, Not the Inaugural Speech of 2013
We will issue a set of materials shortly showing what projects and sectors will be impacted by a National Infrastructure Bank. We are now working with several members of Congress on identifying the most suited projects for a National Infrastructure Bank and public-private partnerships.
Unlike most commentators, my view is that an Infrastructure Bank is not suited to high-speed rail. Instead, an Infrastructure Bank can get a lot of water and energy projects done straight away, as well as manageable transportation ones. It can supplement programs, such as TIFIA, that have limited reach.
A workable National Infrastructure Bank could be online early in the new year, and lending. The immediate beneficiaries are likely to be states looking to invest in projects that make water, energy and transportation cheaper, so that manufacturers repatriate more factories and jobs because the cost of doing business is competitive.
We lost American factories over the last several decades because our competitors used banks to do just that. India, for instance, built out its water and energy in order to attract Intel's chip fabrication to their shores. Some U.S. states are learning this lesson and effectively competing for factories and jobs.
An Infrastructure Bank and other public-private partnership initiatives can spur private investment in the physical, social, health and human services, traditional and renewable energy, and mining projects necessary to power and feed factories -- creating jobs.