New move to woo private capital for public works
Kai Ryssdal: I know out here on the West Coast there’s been a lot of attention paid the past couple of days to disaster preparedness, how we might manage in an earthquake like Japan’s. Substitute a different natural disaster, and the same question applies to most of the rest of the country: How infrastructure would hold up.
The White House says improving roads, pipelines and even broadband networks is a priority. That’ll mean money and lots of it, which is why Washington, in this case, is going to have to make nice with Wall Street. Our New York bureau chief Heidi Moore reports.
Heidi Moore: This week, Marketplace has learned Massachusetts Senator John Kerry is likely to introduce a bill to create a national infrastructure bank. The bank would be seeded with government money. But — and this is unusual — its primary purpose would be to get Wall Street to pick up part of the bill for future construction projects.
That’s a good move, according to Michael Likosky. He wrote a book called “Obama’s Bank: Financing a Durable New Deal.”
Michael Likosky: What an infrastructure bank at its core is about, it’s about building new things and bringing private capital in to build new things.
Here’s how it might work: The government would put in as much as $50 billion. Wall Street would add to that and it would have a say in investment decisions. The profits would be split proportionally. Bernard Schwartz, a long-time executive, says that $50 billion could quadruple once professional investors add their own funds.
America needs $2 trillion just to fix its old roads and water systems. Previous plans to boost public works spending have called on the government to pay for everything — which it can’t afford.
Schwartz, like other supporters of this idea, sees the infrastructure push as a solution to the nation’s unemployment problem.
Schwartz: For every billion dollars of transportation infrastructure that’s invested, it’s estimated that about 46,000 people are put back to work.
Schwartz believes that several million Americans could get off the unemployment line if Washington and Wall Street can work together on the new bank.
In New York, I’m Heidi Moore for Marketplace.
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