Tuesday, February 10, 2015

Bernie's Infrastructure Plan

I may have been pretty busy the last few weeks, but it hasn't been lost on me that Bernie Sanders has a new infrastructure bill. The Rebuild America Act is a proposal to spend $1 trillion rebuilding our infrastructure, from roads, to aqueducts, to our ports. What is intriguing is that he has plausible estimates that rebuilding our roads would be cheaper than the wars in Iraq and Afghanistan. He estimates that by the time the last veteran receives medical care at home, the wars will have cost us $3 trillion.

Here is summary of the bill:

Rebuild America Act - Expresses the sense of the Senate that Congress should:

  • create jobs and support businesses while improving the nation's global competitiveness by modernizing and strengthening our national infrastructure;
  • invest resources in transportation corridors that promote commerce and reduce congestion;
  • update and enhance the U.S. network of rail, dams, and ports;
  • develop innovative financing mechanisms for infrastructure to leverage federal funds with private sector partners;
  • invest in critical infrastructure to reduce energy waste and bolster investment in clean energy jobs and industries;
  • invest in clean energy technologies that help free the United States from its dependence on oil;
  • eliminate wasteful tax subsidies that promote pollution and fail to reduce our reliance on foreign oil;
  • spur innovation by facilitating the development of new cutting-edge broadband internet technology and improving internet access for all Americans;
  • modernize, renovate, and repair elementary and secondary school buildings in order to support improved educational outcomes;
  • invest in the nation's crumbling water infrastructure to protect public health and reduce pollution;
  • upgrade and repair the nation's system of flood protection infrastructure to protect public safety; and
  • invest in U.S. infrastructure to address vulnerabilities to natural disasters and the impacts of extreme weather.

Oh yeah, check that out. Schools are infrastructure, too. I like that. Without educated kids and adults, it's pretty hard for us as a nation, to make informed decisions about our collective fate.

Bernie's proposal would do something else: it will create 13 million jobs, tightening up the labor market and helping to raise wages for everyone else. We are in a huge hole when it comes to the labor market as we still have lost millions of jobs from the meltdown. This bill would help to fill that hole.

I live in a Red State, the state of Utah. But I see construction everywhere. Every major road has something going on so hardly a day goes by that I don't go through a cone zone. I see the guys working on the street, digging big holes, laying foundation, fixing stuff and making it right. That costs money, I know, but you know what? Those guys are going to spend their money, and soon. Every street crew I see means work for me, too. Yes, I work for a large multinational corporation, but they service Utah, too.

There is another effect to consider: when we build things, we have to solve problems. We learn how to innovate here, at home again. Such a bill would revitalize the nation with construction projects and make our roads and bridges safe again and it would teach us problem solving skills that will be forgotten if we don't use them. This is a five year plan that will yield enormous dividends.

But I can hear the deficit hawks again, telling us that we don't have the money to do it. Duh! When you cut taxes to a historical low, what do you expect? When cars become very efficient, you have to raise the gas tax to finance all that construction. We are spending a tiny fraction of GDP on our infrastructure. Europe spends twice what we spend on roads. China spends 4 times what we spend. We have bridges in Downtown LA that are crying out for rebuild as they are more than 50 years old. I know, I've seen the overpasses for 4th, 5th and 6th street.

Who is the biggest user of infrastructure? The people who own the most wealth. The top 20% own 93% of the wealth in this country. They have the means, they can pay the bill. The rest of us are working while they're getting roles on "The Real Housewives of New Jersey". They own stocks, and they own hedge funds that run high frequency trading programs on very fast servers, right next to the trading floor of Wall Street.

The funding solution? A 0.1% tax on Wall Street trading, a financial transactions tax. Many other industrialized nation have one, but we don't. Why? Because it is believed by some, that such a tax would reduce liquidity in the market. To put it differently, such a tax would reduce the margins realized by the traders, and they would trade less. That might drive the price of stock down. But it also would create pressure to hold stocks because the owner believes in company, nothing more. Do we want to encourage speculation or discourage it? Such a tax would discourage speculation and encourage investing for the right reasons.

There is lots of support for such a tax, too. Many well known financial leaders such as Warren Buffet, Bill Gates, John Bogle, founder of the Vanguard Group, and Sheila Bair, former Chair of the Federal Deposit Insurance Corporation all agree that a financial transaction tax on stock trading would create the right incentives to invest rather than speculate.

This a match made in heaven. Rebuild our roads and bridges and finance the work with a tax on speculation on Wall Street. There is no good reason not to do it. There is something in this for everyone.
Post a Comment