Obama, The Governors And Rebuilding Infrastructure

South Carolina extremists constructing a GOP crazy train

Working on universal health care and basic infrastructure are probably the best areas for Obama's administration to seek to get the country back on the right path. Both are tough issues. Last May we looked at a serious infrastructure roadmap put together by SEIU president Andy Stern and Kansas Governor Katherine Sebelius. With Wall Street's collapse, their suggestion now looks even more brilliant than it was in May, as well as prescient.

At its best, America's infrastructure has powered our economic prosperity, created well-paying jobs, and served the public interest.

Today, however, it has fallen into a dangerous state of disrepair. The Minnesota bridge collapse last summer brought home the urgency of repairing and modernizing our nation's system of highways, bridges, tunnels, power plants, transmission lines, and airports.

But doing so will be prohibitively expensive. Current plans seek to exploit the nation's need for private profit. But there's a better source of capital at hand: public pension funds.

The American Society of Civil Engineers estimates that $1.6 trillion is needed in the next five years alone just to maintain the adequacy of existing infrastructure.

...It would be a monumental mistake to turn the future of America's infrastructure over to the same crowd that brought us the subprime crisis, an economy loaded down with debt, and recession.

We should know better by now than to create a scenario where bridges and highways are sliced and diced like subprime loans into financially engineered "collateralized infrastructure obligations."

America needs a large source of stable, long-term capital to build the system of buildings, roads, and power supplies needed to sustain the country. We need a source of capital that values infrastructure because it provides a reasonable rate of return, strengthens the overall economy, and doesn't burden users with excessive fees.

Enter that source of capital:

Public pension funds, which are responsible for the retirement benefits of more than 18 million Americans, have more than $3 trillion in assets, and a long-term investment approach consistent with the stable returns that infrastructure assets generate.

Pension funds could buy and build infrastructure, putting the profits to work for the retirement of workers, not for the benefit of Wall Street CEOs.

At the time we suggested that they would have to get around Wall Street shill Rahm Emanuel to make their plan work. That same shill is now Obama's chief of staff and today he told reporters that rebuilding the country's infrastructure will be way on the top of the new administration's priority list-- and that the country's governors are united behind the general concept.

Emanuel said both Democratic and Republican governors view these investments as “essential” for economic recovery in their states, adding that the new administration sees it “as essential to the economic recovery for the country.”

“They need those resources, we need those resources,” he stated. “It’s good for the economy; it produces jobs immediately.”

Emanuel said the first half of the meeting between the president-elect and the governors dealt with the need for infrastructure funding and the positive impact it could have on the economy. The “ballpark” amount used for the discussions was about $136 billion.

The Bush administration has repeatedly dismissed the idea of infrastructure spending as a way to blunt the current economic crisis, citing arguments made by the Department of Transportation that the projects would take too long to clear and have little sustainable impact on the economy.

But Emanuel said a number of Republican and Democratic governors with whom Obama spoke at the National Governors Association (NGA) meeting in Philadelphia on Tuesday said that their states have projects that are ready to go and are just waiting for the resources.

There aren't many governors who disagree, but there are a few radical right extremists who will do whatever they can to place obstacles in Obama's way, no matter how much damage they cause the country or even their own constituents. And if South Carolina has given us the most extremist and obstructionist senator in Jim DeMint, they have also given us the most narrow-minded and partisan obstructionist governor, Mark Sanford.

The country's economic woes require a bipartisan approach, Obama said, and he told the Republican governors at the meeting that he was offering "the same hand of friendship and cooperation that I offer our Democratic governors. We have a strong and vibrant democracy. We compete vigorously during an election. But with the end of that season comes the time to govern together-- and that time is now."

Most governors were on board with the infrastructure spending proposal, including high-profile Republicans such as Arnold Schwarzenegger of California.

However, there was an undercurrent of dissent, led by Republican Gov. Mark Sanford of South Carolina. Sanford argued that it might not be possible to solve an economic crisis created by running up too much debt by piling on more government debt.

"There are very legitimate questions by any number of different folks... on whether or not this will indeed make the difference," Sanford said.

The overriding sentiment among the nation's top executives, however, was to begin building, and as quickly as possible.