UniDev LLC

Rebuilding America can create jobs See POLITICO Article here By: Marion Goldin and Mike Curzan December 29, 2010 04:32 AM EDT

What would it take finally to get serious about rebuilding America? Another Minnesota bridge collapse, with 13 lives lost? Another gas-line explosion in San Bruno, Calif., with an entire community decimated? Another colossal levee failure, like the one that devastated New Orleans? While America falls apart, successive administrations fiddle. Officials wring their hands over our deteriorating infrastructure but profess powerlessness in the face of the monumental task. There is, however, a smart way to approach this enduring problem — a bold and comprehensive plan to attack our crumbling bridges, railroads, dams, and water, sewer and power lines as well as our energy grid. All funded by new, special-issue Rebuilding Infrastructure Bonds. This program could put America back to work. It could create more than 315,000 meaningful, long-term jobs in its first full year — with the number increasing each year, as additional projects are brought on-line. Over the life of this program, we estimate that more than 1 million jobs would be created, assuming that each project ran an average of three years. The strength of this plan is that it is long term. It would extend at least 10 years, offering real, stable jobs — not temporary, make-work ones. It would be financed by a variation of a currently unauthorized federal financing program that can honestly be called Build America Bonds. Those taxable bonds would be issued by participating states, localities and regional government entities, under federally subsidized interest rates. These new Rebuilding Infrastructure Bonds, which our proposal calls for, would have a term of at least 30 years, carrying interest rates of about 5 percent. Like U.S. savings bonds, they could be purchased by investors as well. Local governments would control the funding and timing of their own projects, subject only to long-term approval by the federal government. However, something as critical as rebuilding an interstate railroad network or constructing a new energy grid would remain Washington’s responsibility. Somewhat akin to the “race to the top” in education, each city, state and regional entity will be evaluated not only on the basis of their proposals, but on the state of their financial condition. Those with the healthiest fiscal profile would be expected to contribute 15 percent of the debt service needed to fund their projects, with the federal government providing 85 percent. Those with a less favorable balance sheet could receive up to a 95 percent federal subsidy. In light of the 10-year time frame — with new bonds issued each year — spending approximately $5 billion annually for 30 years would trigger more than $100 billion on new and refurbished infrastructure projects. Over 10 years, both numbers would increase 10-fold. So an annual outlay of $50 billion would yield $1 trillion in new and restored infrastructure. When the outlays for those bonds are discounted back at 5 percent, the assumed borrowing costs would be only a fraction of the annual dollars spent. On a cash outlay basis, this program should have little negative effect on the deficit, because the federal government does not guarantee the bonds, but uses only $5 billion each year to cover debt service. This proposal is also different from President Barack Obama’s supplemental stimulus program. That calls for another $50 billion for infrastructure relief, does so on a dollar-for-dollar cash outlay basis and implicitly rejects serious planning, because it is just a one-year government effort, expiring just as it is about to take effect. There has been lots of talk these last few years about nation-building and rehabilitating  infrastructure. However, all this discussion has focused on far-off lands — such as  Iraq and Afghanistan. Isn’t it time for serious and sustained nation-building here at home? Myron P. Curzan is the chief executive officer of UniDev LLC. He served as a legislative assistant for the late Sen. Robert F. Kennedy. Marion Goldin won an Emmy as producer for “60 Minutes.”