PrintOctober 13, 2010
The Bank of Central Planning
Democrats have designed the financing mechanism to secure the enormous sums needed to complete their transformative central planning initiatives -- the "green" infrastructure projects and smart growth or "livable communities" agenda. It is called the National Infrastructure Development Bank Act of 2009 (HR 2521), sponsored by Congresswomen DeLauro (D-CT) along with 59 co-sponsors.
In a govtrack.us interview, Representative DeLauro explains that the "size of the federal deficit" is prohibiting access to needed funds for what she calls a "national growth policy." It seems this central planning enthusiast has determined that tax increases and federal borrowing will not meet the financing needs of the left's very ambitious agendas, so she has introduced an alternative financing vehicle.
Undeterred by the national debt crisis exacerbated by the record deficit spending DeLauro supported, the congresswoman remains confident that her legislation will "put the US economy on a track for future economic growth and economic security ... for families." However, the poor track record of economic policies she has supported, such as the American Recovery and Revitalization Act of 2009, does raise doubts about her optimistic assessment of her own proposal.
Showing visible concern that her idea of a public partnership with private investors might be viewed negatively by pro-government supporters, DeLauro was quick to emphasize, "I am not talking about privatization. I want to get their capital and use it for building in the United States." It is unfortunate, and symbolic of the pervasive anti-free market attitude in Washington, when a congressional representative is clearly uncomfortable promoting private enterprise.
The fundamental purpose of the Act is to create a self-sustaining, independent, and "wholly-owned government corporation" called The National Infrastructure Development Bank (NIBD). The bank will facilitate a "public-private" investment partnership and establish a revolving pool of capital to fund infrastructure projects. Private capital will be accessed by issuing and selling debt securities and public benefit bonds and direct borrowing from the global capital markets. The bank will then distribute all the necessary funds to bank board-approved projects.
The Obama administration has already announced plans to use $50 billion to fund and launch a new infrastructure bank. As an apparent proponent of a government-controlled economy combined with Obama's public support of this initiative, HR 2521 will undoubtedly be put on the fast track. If the Democrat leaders decide to rush through a series of bills during a lame duck session, then it is conceivable that HR 2521 could reach the floor for a vote before the end of the year.
Although the concept may seem appealing at first glance, it is important to remember that central planners have a long tradition of presenting only the short-term benefits of their government programs and not fully accounting for costs or foreseeing the long-term unintended consequences. All too often, social and economic justice experiments snowball into "unexpected" busts which are then exploited to initiate even more intrusive and expensive corrective measures. The housing market calamity is the most recent example of a grand government scheme that led to a boom-and-bust cycle.
So what can possibly go wrong with creating a national infrastructure bank?
The bank is scheduled to sunset after fifteen years. Like most government programs, once created, it will become nearly impossible to kill. AMTRAK, a government-owned corporation formed in 1970, was originally intended to be a short-lived endeavor and end after two years. It seems highly unlikely that an ambitious undertaking such as this bank could ever be phased out. After fifteen years, the size and scope of the bank will certainly grow to a point where it will become an integral part of a new centrally planned economy. Legislators will have no more success shutting down this megabank than they had trying to end Freddie Mac or Fannie Mae.
Most of Congress's infrastructure spending authority will be ceded to the executive branch. The Act establishes a board of six directors nominated by the president. This board will determine what projects will be approved and funded. The concentration of spending authority into fewer hands will undoubtedly have dire consequences in the future. The governing system established by the founders may seem cumbersome to statists, but that was by design. The founders understood that dispersing power amongst the three federal branches of government and giving the largest congressional body spending authority lessened the risk of tyranny. Past experiences with similar arrangements since the New Deal era should serve as a warning flag to all citizens.
The statements "Job creation, including work force development for women and minorities, responsible employment practices, and quality job training opportunities" and "Poverty and inequality reduction through targeted training and employment opportunities for low-income workers" are repeated four times in the Act as factors that "shall" be considered prior to funding projects. Any claim that the corporation's board will remain independent and face little political interference does not pass the laugh test. Political agendas are built right into the proposed legislation and will be used to assess the board's performance. It is well-known that Fannie and Freddie were forced to abide by HUD's social and economic justice agendas and the Community Reinvestment Act's racial quota requirements, so it is implausible to imagine that the NIDB board will not succumb to the political whims of legislators or the president.
As expected, oil, gas, and coal investments are completely omitted from the Act. DeLauro is focused solely on expanding "renewable energy, including hydroelectric, solar, and wind" as part of a carbon emissions reduction plan. Unfortunately, most of these energy technologies depend on heavy subsidization and will cause real energy costs to dramatically rise. Environmentalists seem willing to do irreparable damage to the economy in order to implement their anti-fossil fuel programs.
Perhaps the most disturbing aspect of DeLauro's proposal is the deliberate abandonment of free market forces to organically shape infrastructure development. Just thirty years ago, no one could have imagined how computers, the internet, and cell phones would change our lives. It seems rather naïve to assume that a group of central planners would have anticipated the infrastructure needs for the technologies of today.
Finally, the prospect of another big-government program is disheartening to all those who believe the federal government has grown far beyond its originally intended scope of authority. Fear that the massive growth of the federal government will stifle technological innovation, harm the economy, and limit individual freedom is well-founded. Every society that has relied on central planning has suffered with a stagnant economy, limited mobility, and a low standard of living. Sadly, DeLauro's proposal appears to lead us farther down that path.
