It is an article of faith among liberals that one of the best ways the federal government can reduce unemployment is to borrow billions of dollars and spend it on infrastructure projects.
For example, at a recent press conference President Obama made his case for creating an “infrastructure bank” that “could put construction workers to work right now, rebuilding our roads and our bridges and our vital infrastructure all across the country.”
Let’s put aside, for the moment, that Obama should have already learned the lesson that infrastructure spending is not a path to immediate job creation. It was just two months ago that, Obama jokingly told his own Council on Jobs and Competitiveness, “Shovel-ready was not as … uh .. shovel-ready as we expected.”
But even over the long term, the job-creating prospects of politically directed infrastructure spending is highly doubtful. Infrastructure projects can be good a investment for a community, but only when their long-term benefit outweighs their initial costs.
These decisions are best made at the most local level possible. When they are made at the federal level, politics, not cost-benefit analysis, dictates what gets funded. Just look at Obama’s favorite infrastructure program: high-speed rail.
Obama’s failed stimulus included $8 billion in spending for high-speed rail projects including $3 billion for a California project, $2 billion for a Florida project and $1.2 billion for projects in Ohio in Wisconsin.
When the governors of Florida, Ohio and Wisconsin all determined that their state’s high-speed rail projects were not worth state taxpayers’ dollars, Obama rejected the governors’ pleas to let them keep the federal funding for other infrastructure spending. Instead, Obama doubled down on his faith in high-speed rail and sent all the money to California.
So how is that California high-speed rail project going? When California voters first approved state funding for the project, they were told it would cost $33 billion to build a line from Los Angeles to San Francisco.
But last Tuesday, the California High-Speed Rail Authority released new cost estimates showing the initial section of track between Merced and Bakersfield will cost $13.9 billion alone. The cost of that stretch had been originally pegged at $6.8 billion.
Extrapolating that cost increase out for the whole project and the final price tag could reach $87 billion. California only has one-fourth of that total on hand and no plan for where to find the rest. Enter Obama’s infrastructure bank.
The first thing to note about this proposal is that it’s not really a bank. Banks use deposits from some customers to fund loans to other customers, and they make money by charging interest to borrowers at higher rates than they offer to depositors.
Obama would run his bank a little differently. Instead of forcing borrowers to pay money back, Obama’s National Infrastructure Innovation and Finance Fund would “directly provide resources for projects through grants, loans, or a blend of both.” Another word for “grant” is “gift,” so basically Obama’s infrastructure bank would be just giving money away.
But then how would Obama’s bank stay in business? Simple. Congress would give it $5 billion to spend every year. And, of course, Obama would be in charge of hiring the 100 new employees who would decide which projects were worthy of those Obama “bank” funds.
Considering the left’s demonstrated obsession with high-speed rail, how much of the infrastructure bank’s “grants, loans, or a blend of both” will go to boondoggle’s like California’s high-speed rail project? How much of that money will taxpayers ever see again?
Conn Carroll is a senior editorial writer for The Washington Examiner. He can be reached at [email protected].
