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National Infrastructure Bank

As Geithner Touts Infrastructure, Skepticism Persists on $4B ‘I-Fund’ Plan

Treasury Secretary Tim Geithner, considered a skeptic of transportation stimulus spending by some lawmakers, yesterday joined two other White House economic advisers in endorsing new infrastructure investment as a means to
jump-start the economy.

geithner448.jpgGeithner (l.) said that there is "a very good economic case" for infrastructure spending. (Photo: WaPo)

But the president's proposed $4 billion fund aimed at attracting private capital to public works projects met with skepticism from a key House Democrat, raising the specter of an internal dispute over crafting a national infrastructure bank.

Spending on the built environment is "good policy for the long run and it's very good policy for the
short run, because it's one of the most employment-intensive forms of
government investments that we can make," Geithner told the House Appropriations Committee yesterday during broader testimony on the state of the economy.

"We've got to do it, though, in a way that's fiscally responsible," Geithner added, describing the White House's 2011 budget request as a step in that direction.

That budget plan seeks $4 billion from Congress for a National Infrastructure Innovation and Finance Fund (I-Fund) that would be used to promote more public-private partnerships on big-ticket transportation projects. The I-Fund is often likened to a National Infrastructure Bank (NIB) but differs from congressional efforts on that topic in one major respect -- the White House would house its fund within U.S. DOT rather than make it an independent entity.

Rep. Rosa DeLauro (D-CT), the lead House sponsor of NIB legislation, has previously resisted the lack of independence for the White House I-Fund and reiterated that skepticism yesterday. DeLauro told presidential budget chief Peter Orszag and Council of Economic Advisers Chairman Christina Romer:

With all due respect, $4 billion in the Department of Transportation is not a nationalinfrastructure development bank under the Treasury Department that hasthe ability to borrow in the capital markets and so that we canleverage private funds. We are not going to get serious investment forthe long-term future of this country until we do what the Europeanshave done in setting up a European investment bank.

Orszag defended the administration's approach, describing the full-scale European-style approach as "something that we continue to explore" and the I-Fund concept as "a first step in that direction."

But DeLauro, a longtime ally of White House chief of staff Rahm Emanuel and House Speaker Nancy Pelosi, aired specific qualms with the notion of an I-Fund located at U.S. DOT when pressing needs exist in the areas of "water systems, energy, environment, broadband and telecommunications." She is not alone in stressing the value of an NIB separate from the federal government; pro-transport reform thinkers have raised similar concerns.

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