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.”
In fact, as far as transportation goes, there is little or no gap for highways, airports, or freight railroads. The number of structurally deficient bridges has fallen by nearly 50 percent since 1990. Highway pavement condition has improved. The percentage of airport runways in good condition has been steadily increasing.
And still today the idea levitra 20 mg of a morning erection for an adult man is sometimes the subject for jokes, as if this is an immature survival from youth (in fact, it is not true). There are oral medications too, cheapest levitra generic which include Kamagra 1st and other tablets. People taking use buy cialis brand of this medicine must make sure that store this medicine in dry place, and away from moisture and heat to keep the effect of the medicine is going down. It buy viagra without consultation is not an aphrodisiac and stimulation will be needed to produce erection. The only real gap is for urban transit, especially rail transit, but only because Congress has encouraged transit agencies to build unsustainably expensive transit networks. This is because systems that rely on tax dollars, rather than user fees, are likely to suffer from deferred maintenance because maintenance isn’t sexy enough for legislators to fund.
An infrastructure bank wouldn’t fix this problem. If anything, it would make it worse. Obama’s proposal calls for spending 25 percent of the money in the bank on high-speed rail and 12.5 percent on urban transit improvements. In other words, instead of filling maintenance gaps, the infrastructure bank will add to them by creating billions of dollars of future unfunded maintenance needs.
Under almost all of the various infrastructure bank proposals, the system is ultimately driven by politics. Given a chance to “apply” for funds, states will naturally pick big-ticket items so they will all get their “fair share” of the monies. Members of Congress will lobby to have their favored projects funded, and grateful contractors will make campaign contributions to the elected officials who supported the funded programs.
The one sensible proposal comes from faithful Antiplanner ally Bob Poole, who suggests that the infrastructure be a real bank that expects state and local governments to actually pay back the moneys they get, preferably out of user fees.
On the other hand, there are idiots who think we need “safeguards” to make sure that the bank does not fund “only projects they think will make money.” Others argue that there are “merits” to paying for things “from the progressive income tax rather than regressive user fees.” They shouldn’t worry: if Congress creates an infrastructure bank, you can bet that almost none of the projects that it funds will ever make money.
Let the next generations pay for the public debt, which is currently at over $40,000/worker, increasing at $10,000/worker/year (the deficit).
Don’t worry about increasing inflation.
It’s important to buy votes.
Porkulus Package money has been spent in Dem Districts at double.
How can money taken out of the private sector, do better in the public sector?
This does not imply anarchy, but is questioning excess, waste, pork & such.
The Antiplanner wrote:
> Under almost all of the various infrastructure bank proposals,
> the system is ultimately driven by politics. Given a chance
> to “apply†for funds, states will naturally pick big-ticket
> items so they will all get their “fair share†of the monies.
> Members of Congress will lobby to have their favored projects
> funded, and grateful contractors will make campaign
> contributions to the elected officials who supported the
> funded programs.
I have observed that the biggest and loudest support for such projects invariably comes from elected officials who do not have to fund the inevitable operating deficits that start when the project opens for “revenue” service.
> On the other hand, there are idiots who think we need
> “safeguards†to make sure that the bank does not fund
> “only projects they think will make money.â€
That’s easy. Make sure that the “bank” funds rail transit projects, which will not “make money,” at least not in the United States.
> Others argue that there are “merits†to paying for things
> “from the progressive income tax rather than regressive user
> fees.†They shouldn’t worry: if Congress creates an
> infrastructure bank, you can bet that almost none of the
> projects that it funds will ever make money.
In my opinion, a project does not need to “make money” or earn a profit (in the sense of GAAP) in order to have merit. But it should cover all of its operating costs and pay back at least some of the capital costs incurred to construct it.
Now it is probably reasonable to assume that the promoters of rail transit lines consider projects like this to be “money makers.”
Scott wrote:
> Porkulus Package money has been spent in Dem Districts at double.
Care to offer a source for the above?
Consider that Virginia’s Dulles Rail project has long had the enthusiastic support of many of the Old Dominion’s current and former Republic Party elected officials.
“The number of bridges that are “structurally deficient and functionally obsolete†is raised (without mentioning that the number has been steadily declining for decades).”
How is it that these bridges are getting fixed in the first place? The fact that the number has been decreasing means that they are being torn down or are being fixed. Who is fixing them and with what/who’s money?
I don’t disagree with this post, and I think it highlights the overall problem with our debt problems: we keep digging ourselves into a hole with more of it.
On the topic of HSR, I would argue it makes more sense for that money to go towards urban rail projects of heavy rail and light rail or bus systems at the urban level, if anything at all.
Interurban (work) travel is highly overrated, imo, except in the East Coast where everything is more consolidated and much more feasible. Out West, it’s much different story. Technology can replace that need for in person meetings and HSR is not going to compete well enough with roads or air, anyways.
I really don’t see anyone travelling on a train from SF to LA. But that’s just me.
ws wrote:
> On the topic of HSR, I would argue it makes more sense for that
> money to go towards urban rail projects of heavy rail and light
> rail or bus systems at the urban level, if anything at all.
>
> Interurban (work) travel is highly overrated, imo, except in
> the East Coast where everything is more consolidated and much
> more feasible. Out West, it’s much different story. Technology
> can replace that need for in person meetings and HSR is not
> going to compete well enough with roads or air, anyways.
And do not forget the role that high-capacity broadband Internet
service will play in reducing the need to travel by transit or by automobile.
I am fortunate enough to have Verizon’s FiOS service (fiber-optic broadband) at my homes in Maryland.
Unlike nearly all forms of transit, FiOS is not subsidized by highway users. Unlike rail transit lines (“new” and existing), FiOS is new and state-of-the-art.
Hasty generalizations about highway pavement condition notwithstanding, not all highways are improving. And at the same time, traffic on highways is increasing faster than per-capita human population growth, and projections for bridge health do not show improvement under current funding scenarios.
Just because deficiencies are declining doesn’t mean they will continue to do so. And the sheer percentage of deficient bridges will cost a lot of money to fix (making arguments about declines in deficiencies somewhat mendacious, Randal). And as we know there is less money overall going into infrastructure.
Which is why it is an issue and makes one wonder why some flap their hands at the problem.
This is not to say I have great ideas about how we fund this infra imbalance in this time of fiscal FUBAR.
DS
C. P. Zilliacus,
Re: my claim that the Stimulus money is spent at double the rate in Dem areas, sorry, I don’t remember the source. Web searching should find it. Sorry, I won’t do & show. It was many months ago & the spending, per District could have even changed, somewhat, partly since not even close to all of the money has been spent.
Regardless, look at the supposed intent of the spending–to stimulate the economy, in an “emergency” sense, as has been labeled in the legislation. Why would that money not be spent in one quarter & instead take 2 years to spend? It’s big purpose is for votes. Helping local deficits is there too, for irresponsible practices, particularity too high salaries & pensions.
Hey, look at how much the GDP is down–not that much, but public receipts are down much more. Seems strange. Why? Well, part of gov revenue is too dependent on “the rich”. For example, for the Federal Income Tax, the top 5% of earners pay 60% of the total. Is that fair? BO wants theme to pay even more. It won’t work. See Laffer Curve–the rich put investments elsewhere & money is taken out of economy (the private sector).
It’s possible that Dem Districts might need more economic help. Reason? Huh?
Look at most old core cities, which have mostly been losing people & have Dem Mayors (Detroit, St.Louis, Baltimore, DC, most of Ohio).
Basically, the Dems are anti-business, right? How does that generate prosperity?
The public sector gets money from the private sector.
Scott,
Houston has a gay democrat mayor. How do you splain their success, if dem mayors are to blame?
What if we take your method and increase the scale to the state level. Louisiana, Alabama, and Mississippi are not exactly the bastion of blue, nor economic prosperity. Some of our most wealthy states might as well dawn names like “The Peoples Republic of Connecticut.”
I personally don’t believe that democratic mayors or republican governors are solely responsible for their city/states overall crappyness, but apparently the fact that almost every big U.S. city has a democrat in office is enough for you to blame Gary’s, Detroit’s, D.C’s problems on a political party. That’s bad work detective.
Scott wrote:
> It’s possible that Dem Districts might need more economic
> help. Reason? Huh? Look at most old core cities, which have
> mostly been losing people & have Dem Mayors (Detroit,
> St.Louis, Baltimore, DC, most of Ohio).
First, no part of the District of Columbia is included in any congressional district, since it is not part of any state.
There are plenty of wealthy areas that are represented by Democrats, including most of the Maryland and Virginia suburbs of D.C. Some parts of my home county, Montgomery County, Maryland, is rightly known for its large population of “limousine liberals.”
CPZ:“Unlike nearly all forms of transit, FiOS is not subsidized by highway users. Unlike rail transit lines (“new†and existing), FiOS is new and state-of-the-art.”
ws:There’s plenty of subsidies going to broadband service, especially in rural areas. There’s also a new one on the table that will tax people’s current service for further rural broadband subsidization.
This isn’t anything new, really:
http://en.wikipedia.org/wiki/Rural_Utilities_Service
http://en.wikipedia.org/wiki/Rural_Electrification_Act
I would argue subsidization at least paved the way for the advancement of Verizon into the entity it is today.
Logic? What did I say & not say?
There are fallacies made in being Dem & less econ activity.
The correlation is not all Dem Mayors have declining activity.
Nor is it true that all growing core cities have Repub Mayors.
When people cross the lines of logic, & offer cherry-picked samples, I don’t really care to discuss this.
Let me restate my basic thesis, where you find declining cities, you will most likely find Dem Mayors.
The fact that DC does not have a Congressional District, is irrelevant.
It should have been obvious what I was talking about–mainly the spectrum of voters–who they elect, locally or nationally.
Come on C.Z! Pay attention.
BTW, the top 8 cities are big enough to have a minimum of 2 Districts (wholly within) & at most 12, but each, only one mayor.)
It is true that many wealthy areas have Dem Reps. It’s also true that Dem Districts have higher housing prices, on avg. No particular source on that. My own analysis. Here’s what I found, based upon Counties voting for President in 2004. Of the 3,140 Counties, about 80% voted for Bush. One would expect that for housing prices, there would be a similar ratio or even more Repub in the top end. Well, for the most expensive [housing], in the top 12, 10 were Dem (4 times expected). I think, 5 in the extended (12-county) SF Bay Area, & the others in Southern CA, NJ, VA & NY (covering up to top 20). Higher housing prices & lefter spectrum is actually a sidenote.
Scott said:
“Let me restate my basic thesis, where you find declining cities, you will most likely find Dem Mayors.”
Let me restate mine. Where you find any major U.S city, you will most likely find Dem mayors.
Scott also said:
“Of the 3,140 Counties, about 80% voted for Bush.”
Scott, what I think your back of the napkin study shows is that people who choose to live in areas with higher population density, tend to vote for democrats, and those who choose to live in lower density populations, tend to vote republican. Seeing as the market has shown that land value is usually greater towards the city center, it should be no surprise that housing prices can be high in big cities, which are likely to have a Democrat mayor, because they’re big cities.
The blame that I attribute to the leaders of cities like Detroit, does not stem from the fact that they’re democrats. The blame I attribute to the leaders of Mississippi does not stem from the fact that they are republicans. I’m not convinced you follow the same logic.
I particularly liked the part at the end of the Transport Politic post where the author approvingly likened his proposal to public pension systems. Now is probably not a good time to remind him that state and local governments have about $1 trillion in unfunded public pension obligations.
How is it that these bridges are getting fixed in the first place? The fact that the number has been decreasing means that they are being torn down or are being fixed. Who is fixing them and with what/who’s money?
State and local governments are fixing them, and they are doing so with federal money. A lot of it. ISTEA authorized $32 billion in spending over 6 years. More recently, the figure for SAFETEA-LU was $286 billion. The upcoming reauthorization is being pegged at somewhere close to $500 billion (provided they can find a way to pay for it). Even if we had an infrastructure bank it would need to be capitalized. How would we do that? Credit card? Printing press?
bennett, It’s true that most major core cities are Dem.
About Houston, as you mentioned, I should have responded, that it does contradict me earlier statements, as I typed “old cities.” (Western [US] cites are expected to do better, partly because of lower density). Who cares that he’s a fagot? Relevance? Better graffiti or decorations?
Not sure why you want to marginalize my analysis of political affiliation & housing prices, by typing “napkin.” I will gladly send the Excel file.
Mississippi has no big cities. Why did you even mention Mississippi? Please stop your logical fallacies. In other words, I didn’t come close to stating that Repub places are prosperous. I don’t even like many Repubs.
Bottom line–Dems hurt wealth; that includes inflation, in many ways (housing, unions).
See.
http://www.capmag.com/
http://fee.org/
http://mises.org/
Bennett,
Oh, I forgot, for a 2nd time, to comment more about DC.
It’s voters are leftist, right? Regardless of no District.
For its budget, it is not comparable, being a “Federal” city.
Its income is about all “public”, relatively no private businesses, other than retail, within itself. What a great example for a non-poor, but poor city; you brought it up.
DC has a high level of poverty, despite its higher per capita income.
It also has a low graduation rate.
Many minorities too, just saying.
Even if we had an infrastructure bank it would need to be capitalized. How would we do that? Credit card? Printing press?
Yes indeed.
This is why glowing hosannas about temporary improvements in 2/3 of bridges and many roads is misguided.
Increasing VMT and decreasing funds for repair means something. What could that be…what could it be…hmmmm….
DS