July 15, 2015
By Reihan Salam
There were many passages from Hillary Clinton’s recent address at the New School that I wasn’t crazy about, but for now I’ll just focus on one of them. In the course of describing the many ways she hopes to revitalize the American economy, Clinton turned to infrastructure:
Then there are the new public investments that will help establish businesses and entrepreneurs, create the next generation of high-paying jobs. You know, when we get Americans moving, we get our country moving. So let’s establish an infrastructure bank that can channel more public and private funds, channel those funds to finance world-class airports, railways, roads, bridges and ports. And let’s built those faster broadband networks and make sure there’s a greater diversity of providers so consumers have more choice.
I’m not necessarily averse to the idea of establishing an infrastructure bank. But does Clinton really want to establish an infrastructure bank and not an infrastructure slush fund? Back in 2011, Matthew Kahn and David Levinson released an excellent report on the future of the Interstate Highway System, and they contrasted their proposal for a new Federal Highway Bank with widespread calls for a National Infrastructure Bank. Kahn and Levinson noted that the Obama administration’s proposal for a National Infrastructure Bank failed to make a clear distinction between loans and grants, which raised the risk that it would simply offer “handouts without any clear mechanism or necessary requirement for direct repayment of loans.” If new infrastructure is to be financed with private capital, investors are going to expect spending discipline and, eventually, a meaningful return. Will this return be extracted from taxpayers or from users of the infrastructure service in question? The Obama administration, to its credit, supports allowing state government to collect tolls on their Interstate highway segments if they choose. Would Clinton favor giving states the freedom to make greater use of user fees? If so, she deserves our praise. If not, she’s blowing smoke...
Read the full article at National Review: What Hillary Clinton Gets Wrong About Infrastructure