One of the popular topics that might be included in the planned presidential jobs speech next week is an infrastructure bank. Although multiple different forms of the bank exist, the basic premise is that the bank works to independently fund various infrastructure projects through either grants or loans outside of the normal appropriations process.
Chip recently talked with Conn Carroll, Washington Examiner Senior Editorial Writer, about the details of a possible infrastructure bank. Carroll covered the topic in a recent article for the Examiner.
Below is an edited transcript of the interview:
Chip Lebovitz: A majority of jobs proposals today include an infrastructure bank. Why is the idea so popular?
Conn Carroll: A lot of people when you talk to them, hear the idea of spending money on roads and bridges and think that it’s a good investment. They see projects they like and say that’s one way that the government actually can add value.
Chip Lebovitz: One of the problems cited with an infrastructure bank is that the final price of projects usually exceeds their original price tag. Why does this happen and how could it be fixed?
Conn Carroll: There are a lot of reasons that (extra costs) happen. One of the big ones that you see in so far as delays is due to environmental legislation like NEPA (National Environmental Policy Act), which requires any project that requires government approval to get an environmental impact study, and that (study) can take years of litigation.
If you look at something like the California High Speed Railroad project, that’s going to take lots of environmental impact statements to get through both the San Joaquin delta and the mountains of Southern California. We’re talking tons of extra litigation costs there.
Chip Lebovitz: And how could the problem of needing environmental studies be fixed?
One way is to exempt infrastructure projects from NEPA’s requirements. You saw Republicans try to implement this with the stimulus. John Barrasso of Wyoming put forward an idea to exempt projects. It got bipartisan support from a number of Democratic senators, but ultimately Harry Reid (D-NV.) rejected it and it wasn’t in the final bill.
Chip Lebovitz: Proponents of an infrastructure bank argue that the president’s bank is inadequate and turn to the bank proposed by Senator Kerry and Senator Hutchinson as a superior version because it only requires a one time infusion of $10 billion, leveraging that money for private investment and is self sufficient by providing long term loans instead of grants. Is the Kerry-Hutchinson proposal or the BUILD Act the solution to the historical problems of infrastructure spending?
Conn Carroll: No, because the problem still is when you have people far away at the federal level determining funding for what should be done on a local basis. Any time you have experts in Washington D.C deciding how the money will be spent is a problem. Infrastructure dollars should be turned to the states and the states should be deciding how the money should be spent. That way you don’t have ideological projects like California High Speed Rail taking money away from the rest of the nation.
Chip Lebovitz: Partisan gridlock has prevented most substantive legislation from passing. Is there any chance that an infrastructure bank in any form including one that gives power either to the states or the federal government could pass through Congress?
Conn Carroll: Eventually, yes. Before 2012, no.
Chip Lebovitz: Then along those lines, will we have an infrastructure bank in the next five years or is the idea destined for failure?
Conn Carroll: Five years? I think you can get one in five years. The next election is going to settle a lot of things. You’re going to have one party more empowered and another party feeling out of power, more willing to deal. I do think you’ll be able to see some ideas like an infrastructure bank, especially if it’s one that empowers states, do well.
Want to read more work by Conn Carroll? Click here to see a list of his most recent work. We’d like to thank Conn Carroll for talking to us.
On a completely different note, this week’s Talking Points will be coming out later today after being delayed a bit by Hurricane Irene.