So one politician says to another,
“Hey wouldn’t it be great to have cheaper and guaranteed financing for government planned projects?”
“Sure would create alot of jobs”
Poof the idea of an Infrastructure Bank. A government sponsored entity, GSE, created under the premis of rebuilding America’s dated infrastructure.
An Opinion piece in today’s Wall Street Journal explains that this is merely a way for the government to take out more debt and spend it on potentially wasteful, political projects. This would make them look good, it would create jobs, things would get built. The reality is that capital would be wasted, Bastiat’s parable of a broken window. Our government would be incurring more debt, this time off balance sheet debt as implicit guarantor of a GSE. They would fund it with $30bln, leverage it to $300-$600bln and voila, a stimulus program that’s not on the government books.
The government needs an auditor for its spending, not a dose of steroids.
Many have compared our current economy to that of Japan’s experience over the last 20 years. An infrastructure bank would provide the vehicle for us to build our own Bridge to Nowhere, and this Japanese analogy would become a bit more accurate.
Read the whole article here: http://online.wsj.com/article/SB10001424053111904140604576498542439217056.html?mod=WSJ_hps_sections_opinion