Banks accept money from depositors and lend that money out to borrowers. The difference between the interest paid to the bank by borrowers and the interest paid by the bank to depositors provides the funding to operate the bank.
As faithful Antiplanner ally Ron Utt points out, most proposals for a so-called infrastructure bank would work differently. The federal government would borrow money at current rates of around 4 percent. Then it would give that money away. Of course, that is most of what the federal government does anyway; all that is new is that Obama and Congress want to dignify it by calling it a bank.
Arguments in favor of an infrastructure bank all start out the same. There is a mention of the Minneapolis bridge collapse (which was due to a design flaw, not to deteriorating infrastructure). The number of bridges that are “structurally deficient and functionally obsolete” is raised (without mentioning that the number has been steadily declining for decades). This leads to the erroneous conclusion that there is a “gap between our economy’s need for functioning infrastructure and what is being invested in it.”
