By Nancy Spannaus
June 10, 2021—As President Biden shifts course from negotiating with the GOP, to counting on a bipartisan “Group of 20” in the Senate to come up with an infrastructure compromise plan, the ideal solution for funding the trillions of dollars required is in plain sight.
As I outlined in the series I kicked off with the post “Funding Infrastructure the American System Way,” lawmakers need only adopt the use of Federal credit by establishing a National Infrastructure Bank in order to achieve the necessary scope of funding, and avoid the rancorous stalemate over major new taxes. It’s our history!
In 2020, Rep. Danny Davis (D-Ill) showed the way when he introduced H.R. 6422 (The National Infrastructure Bank Act of 2020) into the House of Representatives.
In this legislation, Davis and his cosponsors Reps. Seth Moulton (D-MA) and Debbie Dingell (D-MI), took a page from the Hamiltonian tradition of using public credit to finance major infrastructure projects. As with the First and Second National Banks of the United States, U.S. Treasury bonds would be the basis for creating the bank’s capital stock. This means of finance puts the nation’s existing debt to work rebuilding and upgrading the nation’s vital transport, water, and energy infrastructure; permits long-term financing rather than subjecting projects to the short-term appropriations process; and avoids the current radioactive issue of raising taxes to pay for the massive needs the nation faces.
Even more dramatic was the use of Federal credit under the Lincoln and FDR administration. Their infrastructure programs revolutionized our productivity; we still rely on much of it today.
The other major advantage of HR 6422 was its scope. By establishing a spending ceiling of $4 trillion, the NIB would supplement Congress’s current appropriations at the level that would permit the necessary repairs and new projects that are needed in every part of the nation. As the recent Report Card of the American Society of Civil Engineers indicates, the demand for simply carrying out repairs outstrips the levels being discussed in Congress. (And the longer we wait, the more the cost of simple repairs will rise!)
Take just one issue of greatest importance to every American: clean drinking water. There are more than six million miles of lead pipes for our drinking water in the nation, including in major cities such as Newark, New Jersey and Chicago. When he announced his infrastructure plan, President Biden pledged to replace all the lead pipes in the nation; yet an expert analysis shows that even the President’s most ambitious plan falls disastrously short of meeting that goal.
There is also the issue of funding totally new projects at the cutting edge of modern technology, such as a nationwide network of electrified high-speed rail. Many Congressmen, and other legislators who travel abroad, come back painfully aware of how far the United States falls short of other nations with our pathetic transportation system, and virtual lack of high-speed trains. This lack not only hurts our pride; it is devastating to our productivity and quality of life. With a capital base of the size of a Hamiltonian NIB, the key stumbling block to remedying that problem – major long-term funding – finally comes into focus.
The movement for Congress to establish a Hamiltonian National Infrastructure Bank along the lines that the Washington, John Quincy Adams, Lincoln, and FDR administrations did, is working nationwide to meet this goal. You can find reports on its progress, and more on the projected workings of the proposed bank, at www.nibcoalition.com.
Nancy Spannaus is the author of Hamilton Versus Wall Street: The Core Principles of the American System of Economics.