At this point, many people, including former Fed Chair Alan Greenspan, argue that the stimulus spending wasn't administered as effectively as it might have been. For such an enormous amount of spending, more jobs were expected to be created. And while some, including President Obama, have proposed more stimulus spending, any further expenditures must be more effective. The question is even less whether more infrastructure jobs might be good for the economy than whether the government can be trusted to administer the associated spending. Felix Rohatyn, special advisor to the CEO of Lazard Frères & Co. LLC suggests something that might help in a Wall Street Journal op-ed today: why not create a national infrastructure bank?

At first, this might sound like a wacky socialist concept -- a bank created to spend taxpayer money on infrastructure projects. But it's a pretty practical proposal. Its purpose would be to circumvent politics so that taxpayer money could be more effectively spent on projects, instead of squandered as it so often is by Congress. Here's how Rohatyn explains it:

A national infrastructure bank could begin to reverse federal policies that treat infrastructure as a way to give states and localities resources for projects that meet local political objectives rather than national economic ones. The bank would evaluate prospective infrastructure projects on consistent terms. It would be able to negotiate with state or local sponsors of a project what their cost shares should be. The bank also could help groups of states come together for regional projects such as high-speed rail and better freight management. Such consolidation would improve project selection.

This is an important point. If Rep. Smithers of some state wants his vote contingent on his district getting a $125 million bridge to nowhere that will mostly pad the pockets of his biggest political supporters, then he often will get it. But if there was a bank in place to evaluate projects in terms of their economic effectiveness, then such pork barrel spending will be harder to get through.

A national infrastructure bank could change the way federal funds are spent on infrastructure. For example, instead of creating a $100 billion "infrastructure spending" package full of nonsense, Congress would provide $100 billion for the infrastructure bank to spend as its financial analysis dictates. It would evaluate the various projects that states say are necessary and pick those which would create the most jobs and do the most to strengthen the nation's infrastructure while controlling costs.

Rohatyn goes on:

The bank also could ensure that states and localities consider all other options--from wetlands preservation to implementing tolls--before structural options are funded. It would create an avenue for private investors to put risk capital into new projects and bless their involvement with the bank's own participation. In short, it would treat infrastructure like a long-term investment, not an expense.

In other words, it might also help make even valuable infrastructure projects cost taxpayers less if there are ways for private investors to be involved. Of course, they will also care more about economic viability than the average politician would.

So a national infrastructure bank could potentially act as a way for taxpayers to get more for their money and make projects more efficient. Sounds great, right? But, of course, there are some obstacles.

The first, and most obvious, is that smaller and less populous states would almost certainly fight it. If a project isn't likely to benefit as many people, then it will be very hard to get the federal government to pick up the tab. But at some point you have to ask: if we agree to allow the federal government to spend money on projects, shouldn't it do so from a national perspective that seeks to do what's best for the country on a whole?

Second, while it seems plausible that the national infrastructure bankers would be less susceptible to political influence than Congress, it's doubtful they would remain completely untainted. Presumably, you would need to have its management appointed by each incoming administration. As a result, whatever party is in power might have the ear of those bankers, and continue to influence spending.

Still, it's hard to see how the possibility of political influence is worst than the current system that guarantees it, since Congress now authorizes this spending directly. Organizations like the Federal Reserve and the Federal Deposit Insurance Corporation serve as examples of government enterprises that manage to stay relatively untainted by politics, despite having their leadership appointed by Presidents. The bigger fear, of course, would be that a national infrastructure bank would more closely resemble the failed mortgage companies Fannie Mae and Freddie Mac. But if its charter is clear, and its projects limited to only whatever money is allocated, then it should refrain from taking on any additional risk.

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