Infrastructure Bank Will Not Aid Economic Revival

In response to the United States’ credit downgrade by Standard & Poor’s in August, the grim reports on the state of the economy and the collapse of the stock and financial markets in the week after the downgrade, President Barack Obama has re-engaged with the issue of America’s faltering economy. While it is possible he may propose a serious and detailed plan during his much-anticipated jobs speech this week, so far his response has included policies that both Democrats and Republicans have rejected in the past, says Ronald D. Utt, the Herbert and Joyce Morgan Senior Research Fellow at the Heritage Foundation.

The president’s proposal for an infrastructure bank is one idea that he and other progressives have been flogging for the past few years. Although several infrastructure bank proposals have been introduced in Congress, all involve the creation of a new federal bureaucracy that would provide federally funded loans and grants to approved infrastructure proposals submitted to the bank by eligible entities. Funds to provide these loans would either be borrowed by the bank or provided by appropriations, depending on the proposal. But an infrastructure bank would do little to spur the economic recovery.