Three National Infrastructure Bank Plans with Doubtful Financing
Jan. 24, 2017 (EIRNS)—Today Senate Minority Leader Chuck Schumer of New York and a group of seven senior Democratic Senators informed the press that they were unveiling their own $1 trillion infrastructure program, and offered support to President Trump, if he will accept it, to overcome GOP budget-cutters.
Democrats including Schumer, Bill Nelson of Florida, and Bernie Sanders and Patrick Leahy of Vermont released a 10-year blueprint to "rebuild America’s infrastructure and create 15 million jobs" at a Capitol Hill press conference. Their outline includes $75 billion for schools, $210 billion for roads and bridges, $110 billion to repair and replace of water and sewer systems, $180 billion for rail and bus lines, $70 billion to deepen ports and upgrade airports, $100 billion to "update" the nation’s electricity grid, $10 billion for Veterans Administration (VA) hospitals, and $20 billion for broadband installations. Some $200 billion is supposed to be a fund to build the most important national projects, and here the New York/New Jersey "Gateway Project" rail tunnel development is clearly on Senator Schumer’s agenda.
One sticking point is the way the program will be funded. Although the Democrats’ release called for "full Federal funding" rather than public-private partnerships, and talked about financing it by "closing tax loopholes," that is similar to invoking the Wizard of Oz or the "luck o’ the Irish." Based on previous comments by Democratic staff to journalists, the idea may be to grant a business tax rate of just 10% or 15% on alleged trillions of dollars being held abroad to avoid taxation—in other words, opening a large new tax loophole rather than closing any. Nor would this come close to funding a $1 trillion program.
Otherwise, the focus of the Democrats’ plan appears to concentrate fairly heavily on repairs and "shovel-ready" local projects. It might recall the ARRA or "Stimulus Act" of Obama, which stimulated no added productivity whatsoever in the U.S. economy.
The fact that Schumer has made it clear to LarouchePac organisers that he does not support the re-introduction of the Glass-Steagall act, indicates the level of—at best—incompetence in his approach.
Democrats in the House led by Rep. Rosa DeLauro of Connecticut had already presented "National Infrastructure Development Bank" legislation 10 days earlier, also calling on President Trump to support it to reach his own infrastructure-build goals. It relies on a small amount of Federal borrowing but a large amount of borrowing by such a new bank, particularly from pension funds. So while focused more on building new infrastructure, its financing method has never worked previously.
Nor has that of the third, still floating proposal—President Trump’s.