National Infrastructure Bank Legislation Makes Progress

By Nancy Spannaus*

Jan. 31, 2024—While the dominant discussion in the U.S. Congress centers around budget cuts, immigration, and war, there are a growing number of national legislators who are exemplary in taking their Constitutional responsibility to provide for the general welfare seriously. These are the 25 Democratic members of Congress who have signed on as co-sponsors to Illinois Rep. Danny K. Davis’s 2023 legislation to create a National Infrastructure Bank. (HR 4052)

National Infrastructure Bank Legislation Makes Progress
Rep. Danny Davis announces his new bill on a video release June 15, 2023.

This progress is due to the concerted efforts of the Coalition for a National Infrastructure Bank, a growing group of private citizens, many of whom have been campaigning for the establishment of a new Hamiltonian bank for more than five years. Over those years, dozens of civic organizations, cities, counties, and houses of state legislatures have debated and registered their support for this concept.

On the local level, this support has been bipartisan, as many Republican legislators have cosponsored memorials of support.

The NIB legislation would create a $5 trillion public deposit bank devoted specifically to upgrading and/or replacing the decrepit national infrastructure of the United States. Tens of billions of dollars are required just to replace the poisonous lead water mains and pipes still in use in many major cities; a shocking number of bridges are substandard and in danger of collapse; the electric grid is woefully inadequate to handle the anticipated jump in electricity use in transportation; our passenger rail system is an international embarrassment – one could go on and on.

National Infrastructure Bank Legislation Makes Progress

When removed from the heated partisan atmosphere of political campaigning, Americans from all parts of the political spectrum and the country agree that fixing and/or replacing basic infrastructure is an urgent priority. The co-sponsors of HR 4052 come from states all around the country: California (5); Illinois (4); Michigan (3); New York (3); Pennsylvania (3); New Mexico (2); Ohio (2); Maine (1); Rhode Island (1); and Washington state (1).

Major cities in some of these states – New York City, Seattle, San Francisco, and Detroit – have also passed resolutions endorsing the legislation.

In the Hamilton Tradition

Rep. Davis reintroduced the legislation for the National Infrastructure Bank in June of 2023. Two days later, he released a six-minute video explaining the urgency of action on this legislation. With an eloquence all-too-rare in today’s political discourse, Rep. Davis showed not only the need for much more massive investment in the nation’s infrastructure than recent legislation provided, but also the way this can be done by repurposing current debt – just as Alexander Hamilton did in creating the first Bank of the United States.

A Hamilton painting

The opening section of the legislation provides a good idea of its scope:

SEC. 2. FINDINGS.

Congress finds the following:

(1) Throughout our Nation’s history, national banks have played a crucial role in financing most of our Nation’s public infrastructure. The largest banks included: The First (1791–1811) and Second (1816–1836) Banks of the United States, President Lincoln’s national banking system, and President Franklin Delano Roosevelt’s Reconstruction Finance Corporation (1932–1957).

(2) These national banks were enacted with broad bi-partisan support, and financed the construction of: roads, turnpikes, bridges, and canals; the Transcontinental Railroad; the Hoover Dam; rural electrification; manufacturing start-ups; and rail, school, and farm improvements in every corner of our country. Investments created the conditions for improved productivity, economic growth, and job creation; helped lift us out of the Great Depression; and contributed to our victory in World War II.

(3) The American Society of Civil Engineers (hereinafter referred to as “ASCE”), in its 2021 Report Card and Failure to Act Series, estimates that $6,109,000,000,000 (expressed in 2019 dollars) is needed over the next ten years (2020–2029) to meet all of our country’s infrastructure needs. Of that amount, $3,483,000,000,000 is expected to be financed by: the Federal government through its normal budget appropriations process; and by States, counties, cities, utilities, and port and airport authorities through their general revenues, special taxes, user fees, and borrowing. Even with this spending, however, a financing gap of $2,626,000,000,000 remains. To close this gap, our nation will need to increase investment, by all levels of government, from 2.5 percent to 3.5 percent of GDP by 2025.

(4) ASCE further estimates that the added $2,626,000,000,000 (expressed in 2019 dollars) needed over a ten-year period to bring systems up to a state of good repair is broken out as follows (amounts in parentheses):

(A) Roads, bridges, and transit ($1,035,000,000,000).

(B) Drinking water, wastewater, and stormwater systems ($801,000,000,000).

(C) Schools ($250,000,000,000).

(D) Electricity generation, transmission, and distribution ($197,000,000,000).

(E) Aviation ($111,000,000,000).

(F) Dams, levees, inland waterways, and ports ($109,000,000,000).

(G) Passenger rail ($45,000,000,000).

(H) Public parks and recreation ($78,000,000,000).

(5) Expanded investment of at least $2,374,000,000,000 (expressed in 2019 dollars) is also needed for—

(A) new affordable housing ($720,000,000,000);

(B) a 17,000-mile high-speed rail network ($1,074,000,000,000);

(C) affordable and complete broadband access ($100,000,000,000);

(D) major water supply projects ($400,000,000,000);

(E) a new grid overlay to transport renewable energy ($80,000,000,000); and

(F) incorporated in each of the categories described in subparagraphs (A) through (E): science and technology drivers; accommodation of population growth; energy savings; and improvements in rural, urban, and low-income areas that the public and private sectors are not currently serving.

(6) Although Federal grant programs, along with matching State and local funding, should continue to play a coordinating role in financing infrastructure in the United States, current and foreseeable demands on existing Federal, State, and local budgets exceed the resources to support these programs by a wide margin. In addition, a sharp bout of inflation in 2021–2022, and postponement of a robust 10-year spending plan to 2024–2033, requires a 40-percent increase above real costs to ensure adequate funding in nominal dollars.

(7) The establishment of a United States public deposit money bank would provide direct loans and other financing of up to $5,000,000,000,000 for qualifying infrastructure projects without requiring additional Federal taxes or deficits. Such funding would be adequate to finance all of the United States’ unfunded infrastructure needs, in all parts of the country, according to well-developed strategic plans. At the same time, it would return the United States to its most recent “golden age” when a National Infrastructure Bank was in place (1933–1957), during which time total factor productivity advanced by 3.5 percent per year, the economy grew on average 5.5 percent per year, income inequality fell by one-third, and Federal and State tax receipts rose dramatically.

Too good to be true?

It is not unusual for people to respond to an explanation of this NIB as “too good to be true.” The bank would be capitalized by private investors who hold existing government debt, who would get only a small premium to incentivize their investment from a designated revenue stream. Thus, there would be no need for a tax increase or huge government outlay, and the current debt could be put to work in loans that would improve the productivity and livability of the U.S. economy – an action that would increase tax revenues over time. (Historically, that is what has happened.)

National Infrastructure Bank Legislation Makes Progress

The question is not whether the NIB will work; it’s whether enough citizens mobilize to get their Congressional representatives to do what is essential to building a prosperous future for our nation. To find out more about how to do that, you can click here.

*Nancy Spannaus is the author of Hamilton Versus Wall Street: The Core Principles of the American System of Economics, and the just-released Defeating Slavery: Hamilton’s American System Showed the Way. For more information, click here.

(function() { window.mc4wp = window.mc4wp || { listeners: [], forms: { on: function(evt, cb) { window.mc4wp.listeners.push( { event : evt, callback: cb } ); } } } })();