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level problem/solution***


sq solves 1/3

Status Quo solves

21 creates safer more efficient transportation

Federal Highway Administration, 12,

(Moving Ahead for Progress in the 21st Century Act (MAP
21) A Summary of Highway Provisions

Setting the course for transportation investment

in highways,

Strengthens America’s
highways MAP
21 expands

the National Highway System (NHS)

to incorporate principal arterials not
previously included. Investment targets the enhanced NHS, with more than half of highway funding
going to the new program devoted to preserving and improving the most important highw

National Highway Performance Program
. Establishes a performance
based program. Under MAP
performance management will


Federal highway

programs and provide a means to more
efficient investment of Federal transportation funds by focus
ing on national transportation goal
increasing the
accountability and transparency

of the Federal highway programs, and improving
transportation investment decisionmaking through performance
based planning and programming.
Creates jobs and supports econo

21 authorizes $82 billion in Federal funding for FYs
2013 and 2014 for road, bridge, bicycling, and walking improvements.

In addition,
innovative financing and encourages private sector investment through a substantial increas
e in
funding for the TIFIA program.

It alsoincludes a number of provisions designed to improve freight
movement in support of national goals. Supports the Department of Transportation’s (DOT) aggressive
safety agenda MAP
21 continues the successful Highway

Safety Improvement Program, doubling
funding for infrastructure safety, strengthening the linkage among modal safety programs, and creating
a positive agenda to make significant progress in reducing highway fatalities
. It also continues to build
on other
aggressive safety efforts, including the Department’s fight against distracted driving and its
push to improve transit and motor carrier safety.
Streamlines Federal highway transportation
programs. The complex array of existing programs is simplified, subs
tantially consolidating the program
structure into a smaller number of broader core programs. Many smaller programs are eliminated,
including most discretionary programs, with the eligibilities generally continuing under core programs.
Accelerates project
delivery and promotes innovation.
21 incorporates a host of changes aimed at
ensuring the timely delivery of transportation projects
. Changes will improve innovation and efficiency
in the development of projects, through the planning and environmental
review process, to project


sq solves 2/3

Transportation Infrastructure is getting fixed now with MAP

CDR, 12

Transportation Reform Bill Signed into Law

Highlights of the measure’s transportation program reforms include: Streamlining the Project Delivery

Completing a major highway project can take 15 years, but only a fracti
on of that time involves actual construction. While projects
navigate the approval process, construction costs escalate.
This measure streamlines the project approval process,
adding much needed common sense and efficiency.
Specifically, the measure:
Deadlines: For slow
moving projects, the Secretary must set deadlines to make sure all approvals occur within 4 years, or
agencies lose funding through an automatic rescission
. Sets NEPA Funding Threshold: Mandates a rulemaking to classify
projects with a
small amount of federal funding ($5 million) as a categorical exclusion. Expedites Projects in the
Right of Way:
Mandates a rulemaking for classifying projects within an existing “operational right of way” as a
categorical exclusion
. Expedites Projects Des
troyed by Disaster:
Mandates a rulemaking to classify projects being
rebuilt after a disaster as a categorical exclusion
. State Law Standing in for Federal Law: Requires a study on which state
laws provide the same level of protection as federal law.
am Reform & Consolidation

Since the creation of the
Highway Trust Fund and the core highway and bridge programs, numerous additional federal
programs have been created, diluting the focus of the Trust Fund
. Currently there are more than 100 programs. In
last four years, $35 billion in general fund transfers have been necessary to maintain Highway Trust Fund solvency.
The measure also
consolidates and eliminates programs, and better focuses limited gas tax revenues on critical needs:
Consolidates the n
umber of surface transportation programs by two
. Eliminates dozens of programs and
makes more resources available with flexibility to states and metropolitan areas. Lowers total transportation enhancements pr
ogram funding
by $200 million and gives s
tates the flexibility to use 50 percent of this money on construction projects. Incentivizes, rather than penalizes,
states to partner with the private sector to finance and operate transportation projects. No Earmarks

While the previous surface
tation law contained more than 6,300 earmarks, this is the first surface transportation bill in decades that does not contain

earmarks. The Associated General Contractors of America (AGC) says it is grateful to the efforts its members made in respondi
g to the
association’s legislative alerts and contacting local senators and representatives at key points in the legislative process.
AGC provides a
summary of Provisions in MAP
21 that Impact the highway and transportation construction industry included b
: Funding Provides
funding certainty through fiscal year (FY) 2014 (Sept. 30, 2014) The bill provides current funding levels
plus inflation
. Obligation limit for the federal
aid highway program is $39.7 billion in FY 2013 and $40.25 billion in FY 2014.

Federal transit
programs are provided $10.6 billion in FY2013 and $10.7 billion in FY 2014. Funding Distribution Eliminates equity bonus prog
ram and, instead,
distributes highway formula funds to states based on each state’s share of total highway funds d
istributed in FY 2012.
Every state is
guaranteed a minimum return of 95 percent of its payments into the HTF. Financing/Supplemental
Revenue Increases funding for and expands the Transportation Infrastructure Finance & Innovation
Act (TIFIA) program
. Incre
ases available TIFIA resources from $122 million per year ($244 million total for two years) to $1.75 billion for
this two year period

an amount more than 14 times larger than previous amounts. Enables TIFIA loans to be applied to related groups of
cts, rather than a single project. Allows TIFIA to pay for a larger share of project costs (increased from 33 percent to 49 p
ercent) Expands
opportunities for rural projects Does not penalize states pursuing public
private partnerships (PPPs) involving lea
sing of road facilities to private
companies. New capacity can be tolled on all existing federal
aid (road, bridge) facilities (this eliminates the cap on slots in the interstate tolling
and value pricing pilot programs). No existing untolled lanes can be
tolled, and there have to be as many toll
free lanes as tolled lanes on the
Supports PPPs for public transportation projects, requiring FTA to provide technical assistance
and best practice information to federal transit grant recipients on PPP m
odels and methods to use
private providers for public transit.

Consolidation of Federal Highway Programs Reduces the number
of highway programs by two

Four “core” programs are: National Highway Performance Program

to improve condition
and performa
nce of the National Highway System (NHS). Consolidation of NHS and IM, and aspects of the Bridge program. Surface
Transportation Program

with broad eligibility for any public road suballocated to local governments based on population. Can also be used fo
bridges off of the federal
aid system. Highway Safety Improvement Program

for road infrastructure safety, Includes a set
aside for rail grade
. Congestion Mitigation and Air Quality Program Transportation Enhancements Renames
enhancements as t
ransportation alternatives and lifts the requirement that a state must spend 10
percent of their Surface Transportation Program funding for these types of projects.

Sets aside 2 percent of


sq solves 3/3

CDR ’12 cont’d

each state’s apportionme
nts to be used on eligible transportation alternative projects Transportation alternative funding will be split, with 50
percent provided to local governments and 50 percent to states
States cannot opt out of the transportation alternative
aside entire
ly and use funds for transportation improvements Freight Provides incentives for
states to create freight plans

If a project is on the state freight plan, the federal share would go from 80 percent to 90 percent for
Interstate projects on the plan, and

from 90 to 95 percent for projects on the Interstate system, in order to give states incentives to
prioritize freight mobility projects. Does not create a separate category or program for freight with formula funding. Establ
ishes a national
freight policy

and requires development of a national freight strategic plan and designation of a primary freight network. Authorizes a Proj
of Regional and National Significance program (general funded, requires appropriations). Performance Measures Integrates perf
measures for Metropolitan Planning Organizations and States that will be developed with the U.S. Department of Transportation

(DOT) to
assess the condition of the facilities and operation of roads and bridges and establish performance targets.
Streamlining Contains significant reforms in the environmental review and planning process designed
to reduce project delivery time and costs, including: Expands the number and types of projects that
can be excluded from the federal environmental

review process. Encourages early coordination
between relevant agencies to avoid delays later in the review process and directs DOT to develop
specific review deadlines
. Designates the U.S. DOT as the lead agency for the review and approval of transportat
ion projects. DOT to
encourage deadlines for actions by other federal agencies. Allows for programmatic decisions instead of project by project de
federal National Environmental Policy Act review requirements for projects that are less than
million or where Federal funds are less than 15 percent of the project costing more than $30 million
Expands the category of projects that are automatically excluded from the federal environmental review process, including eme
rgency projects,
many main
tenance projects and reconstruction projects. Provides expedited procedures for approval of projects with minimal environment
impact. Allows for the purchase of right
way and for design to begin prior to final environmental clearance.
Project Delivery

states to use the Construction Management General Contracting (CMGC). CMGC uses a two
procurement process where the CMGC is selected using price and best value. Creates incentives for
states to use innovative contracting practices and use of n
ew technologies
. Work Zone Safety Calls for the use of
positive barriers where workers are exposed to high
volume, high
speed traffic and calls for unit price bidding in most cases. Buy America
Applies Buy America requirements to any project and project se
gments that are funded in part with Federal funds. Clean Construction For
states with PM 2.5 non
attainment areas, requires that 25 percent of state’s Construction Mitigation & Air Quality Improvement funds be used
for projects in those areas that reduce P
M. Projects can include diesel retrofit programs for on and off
road diesel powered equipment
operating on a highway construction project in the non
attainment area. Passenger Rail Does not include the Senate provision creating a new
regulatory regime with
in the Surface Transportation Board that had the potential to stifle the growing passenger rail market.



solves ppp

Status Quo solves

21 promotes PPP

Kessler, Lane, 12

(Fredric W. ,
Mari R.
21: Treatment of Public
Partnerships Under
Surface Transportation Reauthorization

Private Sector Participation.
21 requires the Secretary to develop policies and procedures to (1)
promote public understanding of the role of private invest
ment in public transportation projects and
(2) better coordinate the public and private sectors with respect to public transportation services.

that end, the bill further requires the Secretary to identify impediments to the greater use of public
te partnerships and to address them by developing and implementing procedures similar to those
used in FHWA's "SEP
15" process.
15 process allows the Secretary to waive statutory and
regulatory requirements on a case by case basis in order to incr
ease project delivery flexibility and
promote public
private partnerships.

Best Practices and Model Contracts.
The bill attempts to improve the use and effectiveness of public
private partnerships by directing the Secretary to develop best practices

and "
standard public
partnership transaction model contracts" for the "most popular" types of PPPs for the development,
financing, construction and operation of transportation facilities
. States are encouraged to use those
model contracts as a base tem
. The bill also requires the Secretary to provide technical assistance
on public
private partnership practices and methods upon request of the federal
aid recipient. It
remains to be seen whether the considerable differences in state law that direct
ly affect the type,
structure, terms and provisions of public
private partnership agreements will render such standard
agreements less useful than envisioned.
There is some concern that these provisions may presage a
greater future federal regulatory role

over public
private partnerships.
State and local government
sponsors of PPP projects will need to be vigilant for any signs of such intrusion, and persistently
advocate for a supportive vs. regulatory federal role.


solves ports

Status Quo sol

21 creates better more efficient ports and trade

Dredging Today, 12,(

America’s Seaports Recognized in MAP
21 Surface Transportation Bill


Among the provisions in the bill of most interest to ports and the freight community is establishment
of a
National Freight Policy

that includes development of a National Freight Strategic Plan.
The National
Freight Strategic

along with state
freight plans and advisory committees, will enable freight
projects that improve cargo movement, reduce congestion, increase productivity and improve the
safety, security and resilience of freight transportation
. Among the types of
projects being addressed

are freight intermodal connectors, railway/highway grade separations and geometric improvements
to interchanges and ramps

all of which are often sought by the seaport industry. Also, by continuing
the Projects of National and Regional Significance (PNRS
) program, the bill authorizes funds for large,
multimodal projects that bolster freight mobility in locations that generate national or regional
economic benefits. AAPA has supported this program since its inception.
For the first time in a surface
ortation bill, Congress acknowledges the need for and economic importance of maintaining
federal navigation channels to their constructed dimensions. This legislation points out the disparity
between the money collected from shippers through the federal Ha
rbor Maintenance Tax (HMT) and
the funds requested and appropriated for the purpose of maintaining America’s federal navigation

In “Sense of Congress” language, the bill acknowledges the shortfall in spending for federal
channel maintenance and c
alls on the administration to request full funding consistent with revenue
collected from harbor users for the purpose of maintenance dredging and associated projects.

Fed fails

Bureaucrats gut federal solvency

Bratland 09

[John Brätland, Economist with

the US Department of the Interior, Ph. D. “Capital Concepts As Insights
Into Neglect of Public Infrastructure”, 7/3/2009, mises.org/journals/scholar/bratland9.pdf]

The idea that public infrastructure represents

a form
‘public capital’ is shown to be no
more than
an inapt metaphor by the fact that there is no calculational foundation for its maintenance
. But
other forms of essentially metaphorical ‘capital’ distract from maintenance of public
. Legislators and
bureaucrats maintain of

cal and
bureaucratic capital
.’ These
capital metaphors refer to the time
structured strategies employed by public officials in pursuing their
public and political careers.


both legislators and
bureaucrats, careers become the capital that is maintained or enhanced by
the time structured strategies that they pursue. Maintenance, in this context of career, refers to the
actions undertaken by

legislators and
bureaucrats to maintain their power, infl
uence and job
. A focus on career as a form of ‘capital’ should not necessarily be inferred as an absence of
humanitarian aspirations in the chosen actions of legislators and bureaucrats. The point is that
maintenance of this metaphorical c
apital means that action is directed toward objectives that may
be largely or totally divorced from concerns focused on public
infrastructure maintenance
. In their
pursuit of personally chosen ends, they must husband tools or ‘metaphorical capital goods’ t
o implement
their plans. But what capital goods are employed in the capital maintenance process? The metaphorical
capital goods (as distinct from metaphorical capital) that must be employed by legislators and bureaucrats
depend directly on the constituenci
es that must be ‘served’ to maintain or enhance career prospects.

These capital goods may be intangibles involving subjective judgments about the future and the
actions required to achieve career ends
The argument offered here is that
these actions are

perverse to the interests of maintaining public infrastructure.

Government financing and ownership of transit bad

O’Toole 10

[Randal O’Toole, policy analyst, “Fixing Transit: The Case for Privatization”, 11/10/2010,


America’s experiment with
government ownership of

transit systems has proven to be a disaster
. Since
Congress began giving states and cities incentives to take over private transit systems in

1964, worker

the number of transit riders carried per worker

has declined by more than 50 percent; the amount of
energy required to carry one bus rider one mile has increased by more than 75 percent; the inflation
adjusted cost
per transit tr
ip has nearly tripled, even as fares per trip slightly declined; and, despite hundreds of billions of dollars
of subsidies, the number of transit trips per urban resident declined from more than 60 trips per year in 1964 to 45 in

Largely because of g
overnment ownership, the transit industry today is beset by a series of interminable
crises. Recent declines in the tax revenues used to support transit have forced major cuts in transit services in
the vast majority of urban areas

Transit infrastructure

especially rail infrastructure

is steadily deteriorating,
and the money transit agencies spend on maintenance is not even enough to keep it in its current state of poor repair.
And transit agencies have agreed to employee pension and health care plans that

impose billions of dollars of
unfunded liabilities on taxpayers.
Transit advocates propose to solve these problems with even more subsidies.
A better solution is to privatize transit. Private transit providers will provide efficient transit services that
where people want to go. In order for privatization to take place, Congress and the states must stop giving
transit agencies incentives to waste money on high
cost transit technologies.

Investment fails

Public investment in infrastructure doesn’t solve

Harding 11

[Jeff Harding, writing for The Daily Capitalist, “The Hoax That is the Infrastructure Bank”, 9/18/2011,

Let me be clear:
not one new job will be created by this infrastructure bank

The truth is,
we don’t need it. Our freeways, trucks, railroads, and aircraft do just fine getting around
delivering people and goods
. I’m not arguing that
some things need repair, but that is minor compared to
what this Infrastructure Bank envisions

As we all know,
like all things run by government, they have let
some of our bridges, roads, and schools go into disrepair because they m
anage it incompetently

While I am sure some kids go to run
down government schools, it’s not the buildings that are the problem, it’s the unions. I haven’t heard that our
water supply is unsafe or that anyone has been poisoned by drinking out of the tap (
spare me the occasional example, please).

Our ports
are fine despite the longshoremen’s union.

We don’t need high speed trains because they are
expensive and inefficient and people will fly instead
. Please see Bob Poole’s work at the
Reason Foundation

if you need
confirmation of this fact or on any matter dealing with public transportation.

Here are some things to think about when the politicians spout this

Jobs aren’t
created by government
. That is not to say that government employees or contractors do not work; they
do. What it means is that
government does not create wealth
creating jobs that are self
sustaining as would
a private business. This should be fairly simpl
e to understand. Taxes fund government operations.
Only the private sector creates wealth that pay taxes
. We can have an argument about whether or not government should
provide much of the services that they do. For example, we know that private schools do

a far better job at providing an education because they
are not controlled by unions who control politicians.


that is not the topic here.

2. Government spending known as
fiscal stimulus
, or
Keynesian stimulus, as a cure for unemployment is another

The idea here is that since consumers aren’t spending all we need to do to
revive the economy is to start spending somewhere in the economy and magically things will revive and take off.

Unfortunately such stimulus
never works to “jump start” the e
conomy. It never has and never will. The American Recovery and
Reinvestment Act of 2009 pushed $840 billion into the economy under this theory and it failed.


(especially our politicians)
asks where the money comes from to stimulate the economy. It
comes from
us, whether through taxes today or taxes tomorrow
. And,
the more you take out of the private
economy, the less capital is available for businesses to create real jobs
. Politicians never seem to see this.

now the Keynesians are pushing on
a string with this idea. Until we clean up all the excess houses, commercial real estate and related debt,
amount of spending or tax cuts will work

3. Then there is the “quality” issue. Assuming that such infrastructure spending
worked, the projects
chosen are those favored by government politicians and bureaucrats and we know how well they do competing with the
private sector. Need I mention the $535 million government

loan guarantee to the soon to be bankrupt

These folks shouldn’t
be handi
ng out your money; they don’t know what they are doing.

Solyndra may be the tip of the ice berg. This
selection below is just the first four contracts on the Recovery Act web site that you can bid for. (If you wish to see all o
f them, go


As you can see, as w
ith most of these Recovery Act contracts, it is just another way to pay for things the government needs or want. Nothing here

will create real jobs, the kind that will be market
based taxpaying


It’s a waste of your money.

4. Union workers will be em
ployed for these
construction projects since they are all federal contracts and that requires union workers. No big issue here; we all underst
and this is a payoff to
the Democratic Party base.

5. Then there is
. They
spent trillions on fiscal stimulu
s for much of the same
things that are proposed by the Infrastructure Bank
It was

a huge waste of money there and the
result was 20 years of sluggishness and the highest debt to GDP of any industrialized nation

(225%; we
are at 100%).
Their economy is

still in the doldrums and they stupidly push for even more such stimulus
spending. We are going Japanese with all this spending

with a twist: we have inflation and we
will have more inflation from quantitative easing and more spending.

The Infrastruc
ture Bank is a
hoax. Kill it now before it grows

A2 profit

You’re confused

NIB gives grants

it doesn’t get money back

Utt 11,

Victor Utt is a senior research fellow at Heritage, Infrastructure “Bank” Doomed to Fail,

Why is
an infrastructure bank
doomed to fail? For starters,
it’s not really a bank in the common meaning
of the term. The infrastructure bank proposed in the president’s 2011 highway reauthorization
request, for example, would provide loans, loan guar
antees and grants to eligible transportation
infrastructure projects. Its funds would come from annual appropriations of $5 billion in each of
the next six years. Normally, a bank acts as a financial intermediary, borrowing money at one
interest rate and
lending it to creditworthy borrowers

at a somewhat higher rate to cover the costs incurred in
the act of financial intermediation. That would not be the case here.

Grants are not paid back. As a former
member of the National Infrastructure Financing Commi
ssion observed, “Institutions that give
away money without requiring repayment are properly called foundations, not banks.”

A2 statistics

Their ev is falsified

Edwards 11

Chris Edwards is the director of tax studies at CATO, Infrastructure Projects to fi
x the Economy? Don’t Bank on it,

Looking at the Corps and Reclamation, the first lesson about federal infrastructure projects is that
you can't trust the cost
. Both
agencies have
history of fudging
studies to make
understating the costs and overstating the benefits. And we've known it, too. In the 1950s, Sen. Paul Douglas (D
Ill.), lambasted the distorted
analyses of the Corps and Reclamation. According to Reisner, Reclamation's chief analyst admitted that in the

1960s he had to "jerk around"
the numbers to make one major project look sound and that others were "pure trash" from an economics perspective. In the 1970
s, Jimmy
Carter ripped into the "computational manipulation" of the Corps. And in 2006,

the Corps'
analyses were "fraught with errors, mistakes, and miscalculations, and used invalid assumptions
and outdated data." Even if
agencies calculate
properly, members of Congress often push
with "trash" projects
. Then
senator Christopher Bond of Missouri vowed to make sure that the Corps' projects in his
state were funded, no matter what the economic studies concluded, according to extensive Washington Post reporting on the Cor
ps in
And the onetime head of the Senate committee overseeing the Corps, George Voinovich of Ohio, blurted out at a hearing: "We do
n't care what
the Corps cost
benefit is. We're going to build it anyhow because Congress says it's going to be built."

Econ answers***

A2 e

high already


U.S. economy expanding at a rapid pace

Gross 12

Daniel Gross, American journalist and author and former Senior Editor at Newsweek, “Myth Of Decline:
U.S. Is Stronger and Faster Than Anywhere Else,” April 30, 2012,

On Aug. 5, 2011, when Standard &

Poor’s stripped the United States of its AAA credit rating, it was the latest in a string of economic
humiliations for the U.S. After the failure of Lehman Brothers in the fall of 2008, the globe’s longtime economic leader suff
ered its deepest and

economic contraction in 80 years. Its markets were scythed in half, and Washington’s political paralysis spooked investors. M
distressing were the numbers: annual deficits over $1 trillion, 8.75 million jobs lost, $4
gallon gasoline. Given the magn
itude of the
economic fall, it’s no surprise that declinism quickly emerged as the time’s chic intellectual pose. Left and right, highbrow

and lowbrow,
ideological and pragmatic, historians and futurists

all came to an agreement: the U.S. had a very slim h
ope of recovering from its self
blows. The lion was now a lamb, shorn of aggression and vitality, unable to compete with rivals like China. Much like Japan,
which has endured
two decades of stagnation and misery since its real
estate bubble poppe
d in the late 1980s, the U.S. had fallen and couldn’t get up.

As is
frequently the case
, however,
the conventional wisdom is wrong
The U.S. economy suffered a
wipeout in the Great Recession of 2008

09, much like 1970s icon Steve Austin. Austin, played by
Lee Majors, was an astronaut who crashed to
Earth and then was rebuilt with typical American optimism. “We can rebuild him,” the voice
over for the opening of The Six Million Dollar Man
intoned. “Better than he was before. Better, stronger, faster.”

Like t
he world’s first bionic man, the U.S.
economy has come back

better, stronger, and faster than most analysts expected
, and
than most of its peers. In fact, the lows of

March 2009 marked the beginning of an unexpected

not the beginning of an era of
irreversible stagnation.

The U.S. economy
went from shrinking at a 6.7 percent annual rate in the first quarter of 2009 to
expanding at a 3.8 percent annual rate in the fourth quarter of that year

turnaround unprecedented in modern history.

The stock mar
ket has doubled since
March 2009, while corporate profits and exports have surged to records.

The U.S.

has regained its 2007 peak, and
is now growing

a 3 percent annual clip

more rapid pace than any other developed economy.

The crucible of the

recession forged an economic
structure that is more resistant to shocks than the brittle vessel that shattered in 2008. Meanwhile, Europe continues to gra
pple with insoluble
banking and sovereign debt crises, and developing
economy juggernauts like China
and Brazil are showing signs of cracking. It’s clear that
story of America’s recovery

unsatisfying and problematic as it has been

isn’t a Hollywood tale. Rather, it
rests on an
understanding of its core competencies and competitive advantages
attitudes and capabilities
that, even in this age of globalization, remain unique. Contrary to the declinists’ view, global growth has not been a zero
sum game for
America’s economy. A rapid, decisive, and sufficiently effective policy response was the pre
condition for a return to growth. It took the U.S. just
18 months to conduct the aggressive fiscal and monetary actions that Japan waited 12 years to carry out after its credit bubb
le burst. But
America’s recovery since then has been fueled by a resilient
and nimble private sector

Rather than sit around and wait for salvation, U.S. companies quickly moved to restructure operations and debt. Business bank
ruptcy filings
spiked from 28,322 in 2007 to 60,837 in 2009

an increase of 115 percent in two years. In
2009 a record 191 U.S. companies, with a combined
$516 billion in debt, defaulted on their bonds. But

financial failure in the U.S
. gets worked out much more
quickly than it does elsewhere
GM and Chrysler each spent a mere 40 days in Chapter 11 after fili
ng for bankruptcy in the
spring of 2009. In their brief sojourns in Chapter 11, they ripped up contracts, shucked benefits, lopped off $109 billion in

liabilities, and
established new, profitable business models. The third member of the Big Three, Ford, wa
s more impressive

and exemplary. Eschewing a
bailout, Ford ground out a recovery by embracing foreign markets, aggressively cutting costs, investing for growth, and payin
g down billions of
dollars in debt. After hitting a nadir of $1.59 in February 2009, i
ts stock rallied to $18 in January 2011

an 11
fold rise. By the end of 2011, Ford
had reinstituted its dividend and stood on the cusp of regaining an investment
grade rating. Rather than sink deeper into a financial morass, the
American private sector emer
ged better: better equipped to meet obligations, to save, to invest, to spend, and, ultimately, to grow. Pretax

A2 Economy

high already 2/

Gross ’12 cont’d

corporate profits rose from $1.25 trillion in 2008 to $1.8 trillion in 2010, and to $1.94 tr
illion in 2011. And rather than throw in the towel and
surrender to Chinese competitors, U.S. companies figured out how to get more out of existing resources. From the fourth quart
er of 2008 to
the fourth quarter of 2009, productivity rose 5.4 percent. And

it rose an impressive 4.1 percent in 2010. At businesses big and small, memos
went out about using fewer paper clips, printing on both sides of the paper, and canceling newspaper subscriptions. Thanks to

the work of
seeking engineers, UPS squee
zed more deliveries out of existing resources by eliminating left turns from trucking routes. The typical
passenger car sold in 2010 averaged 33.9 miles per gallon, up from 30.1 in 2006. Companies that made a business of helping ot
her people save
money thr
ived during the recession. BigBelly Solar, a startup in Newton, Mass., manufactures solar
powered trash compactors that send text
messages when they’re full. They enable cities and colleges to cut costs on garbage collection by up to 75 percent. Sales of
he $4,000 units,
which are made in the U.S., doubled every year between 2008 and 2010.For U.S. companies, focusing on efficiency and productiv
ity has been
the equivalent of a runner strengthening her core. But companies now run farther and faster because o
f their ability to engage external forces.
Declinists believe that

the structural forces transforming the global economy
are arrayed
against us. But in fact, many of them
work in America’s favor
The U.S. remains the
largest, richest, most secure market in

the world, full of valuable resources.

U.S. economy not in decline

Yetiv 12

(Steve Yetiv, political science professor at Old Dominion University, “8 reasons America is not
in decline,” 2012,

1. US still has most competitive major economy in the world. The stakes in the debate on
American decline are big. Exaggerated views of demise can create a self
fulfilling prophecy at
home, encourage gl
obal troublemakers, and produce world economic and strategic instability.
Let’s set the record straight.
America has had the most competitive major economy in the
world over the past several years
according to the World Economic Forum
. Only the small
es of Switzerland, Sweden, Finland, and Singapore sometimes eclipse it.
Even the European
Union countries are now looking to America to help them out of their debt crisis
, as ironic
as that may sound. 2.

has world’s best entrepreneurs and most Fortune 5
00 companies. It
the world’s best entrepreneurs and by far the highest number of Fortune 500 companies.

remains at the forefront of the technologies of the future, such as biotechnology and
nanotechnology, and has the advantage in cyberspace, even t
hough it has fallen behind in some
other areas, like green technologies.

A2 Economy

high already

economy gaining sustenance

Rugaber 12

(Christopher S. Rugaber, AP Economics Writer, “Economy Recovering More Strongly
Than Economists Expecte
d: AP Survey,” March 6, 2012,


The U.S. economy is improving faster than economists had expected.

They now
foresee slightly stronger growth and hiring

than they did two months earlier

trends that would help President Barack
Obama's re
election hopes. Those are among the findings of an Associated Press survey late last month of leading economists. The economi
think the unemployment rate will fall fr
om its current 8.3 percent to 8 percent by Election Day. That's better than their 8.4 percent estimate when
surveyed in late December.
By the end of 2013, they predict unemployment will drop to 7.4 percent
down from their earlier estimate of 7.8 percent,
according to the AP Economy Survey.

The U.S. economy has
been improving steadily for months. Industrial output jumped

in January after surging in December
the most in five years
. Auto sales are booming. Consumer confidence has reached its highest point
in a year. Even the housing
market is showing signs of turning around. "The economy is finally starting to gain some steam, with consumers and businesses

more optimistic
about prospects in 2012," said Chad Moutray, chief economist at the National Associati
on of Manufacturers. On Friday, the government will
issue the jobs report for February. Economists expect it to show that employers added a net 210,000 jobs and that the unemplo
yment rate
remained 8.3 percent. The AP survey collected the views of two dozen

private, corporate and academic economists on a range of indicators.
Among their forecasts: _ Americans will save gradually less and borrow more, reversing a shift toward frugality that followed

the financial crisis
and the start of the Great Recession. _

Obama deserves little or no credit for declining unemployment. Only one of the 19 economists who
answered the question said Obama should get "a lot" of credit. They give most of the credit to U.S. consumers, who account fo
r about 70 percent
of economic gr
owth, and businesses. _
The economy has begun a self
sustaining period in which job
growth is fueling more consumer spending, which should lead to further hiring.
_ European
leaders will manage to defuse their continent's debt crisis and prevent a global r
ecession. But the economists think Europe's economy will shrink
for all of 2012. _
The economy will grow 2.5 percent this year, up from the economists' earlier
forecast of 2.4 percent. In 2011, the economy grew 1.7 percent.
The brighter outlook for jobs fo
llows five
straight months of declining unemployment. Employers added more than 200,000 net jobs in both December and January.
unemployment rate is at its lowest level in nearly three years.
One reason the rate has fallen so fast is that
fewer out
ork Americans have started looking for jobs. People out of work aren't counted by the Labor Department as unemployed unless
they're actively seeking jobs. Many economists have been surprised that the stronger economy hasn't led more people without j
obs to
looking for work. If many more were looking, the unemployment rate would likely be higher. Manufacturers have been hiring mor
e consistently
than other employers. Moutray expects factory output to rise 4 percent this year, better than in 2011. Manufac
turers will have to continue hiring
to keep up with demand, he said. That will help lower the unemployment rate to 8 percent by Election Day, he predicts. "Manuf
acturers are
relatively upbeat about production this year," Moutray said. That will require exp
anding factories and buying more machinery. "All that plays
into a better year than some people might have been expecting," he added.
The economists forecast that employers will
add nearly 1.9 million jobs by Election Day,

up from their December projection

of nearly 1.8 million. But Mike
Englund of Action Economics is among those who noted that the declining unemployment is due, in part, to fewer people seeking

work. Millions
of those out of work remain too discouraged to start looking again, or, in the cas
e of many young adults, haven't begun to do so. "Most of this
recent drop in the unemployment rate is due to a mass exodus" from the work force, Englund said. The economy still has about
5.5 million fewer
jobs than it did before the recession began in Dece
mber 2007. Still, the falling unemployment rate appears to be raising the public's view of
Obama's economic stewardship. In an Associated Press
GfK poll last month, 48 percent said they approved of how Obama was handling the
economy, up 9 points from Decem
ber. And 30 percent of Americans described the economy as "good"

a 15
point jump from December and the
highest level since the AP
GfK poll first asked the question in 2009. The U.S. economy remains under threat from Europe's debt crisis. But those
ns have eased, the AP survey showed. Several economists credited the European Central Bank's move to provide unlimited low
loans to banks with helping prevent an international crisis "Time fixes all wounds," said Marty Regalia, chief economist at
the U.S Chamber of
Commerce. "Europe didn't come apart at the seams, and
we haven't fallen into the abyss. Every day ... it becomes a
little less likely that it will happen

A2 e



U.S. economy resilient

Robb 2012

(Gregory Robb, Senior Washington Correspondent at MarketWatch, “Geithner: U.S. economy improving,
more resilient,” May 15, 2012,

WASHINGTON (MarketWatch)

Treasury Secretary


on Tuesday
said the
U.S. economy is gradually

getting stronger
with areas of strength broadening
. "We are doing a lot
of the really tough work you need to...dig our way out of the mess that caused the crisis
and I think
growth now looks more broad
based and resilient
," Geithner said at a conference
sponsored by the Peter G. Peterson Foundation. Geithner said J.P. Morgan's $2 billion
trading loss was a failure of risk management. He said it made a "very powerful case for
financial reform

the reforms we have ahead and the reforms we have already put
place." Geithner said he has not talked to Jamie Dimon since the J.P. Morgan Chase &
Co's (US:jpm) CEO announced the loss late last week.
The test of financial reform is to make
sure bank mistakes don't put the economy at risk
, Geithner said. "
We are go
ing to work very hard
to ensure that these reforms are tough and effective


not just the Volcker rule

but the
broader complement of reforms on capital and liquidity and derivatives markets," he

Economy is resilient

recent disasters prove

Ottawa C
itizen 3/29

(Ottawa Citizen, a division of CanWest MediaWorks Publication Inc. March 29,
2011“A resilient economy” l/n)

world economy has been tested

recently but


That bodes well
for the future

r in Arab nations
rising oil prices

nuclear woes in Japan
, and
debt crises in

European nations could

have collapsed stock
markets and sparked a recession
, instead,
world economies withstood that
stock markets recovering


that came out of the Debt Crisis

, for all the pain it
had a cleansing effect
on the economy
particularly in the U.S.

consumers capped

decades of
accumulation with a ru
sh to buy homes

at unrealistically high prices.
Too much

of the
capital was being spent on housing
, artificially
driven up in price

by wrongheaded lending
practices. Now the recession has cleared much of that up, at great and rightful cost to the fo
lenders, but also to borrowers.

Fortunately, many of
disasters have worked their way through
the system
. U.S. gross domestic product growth is likely to run between three to four per cent, albeit
from a very low place. Sadly, the giant U.S. hou
sing market continues to decline as foreclosures drag
down the sector.

Even with problems in housing, the U.S. economy, the largest in the world, continues
to recover
If housing prices reach bottom, and normal growth in that sector returns, that could tak
e a
drag off the U.S. economy and help the world recover
will happen

it just depends on how
far the decline has
yet to go and how long that will take.

A2 economy

resilient 2/2

Even if we hit a recession, fed and treasury policy would c

unlimited funds.



(Chris, CNN Money, “No bailout? Here's Plan B”,

A day
after the

House's surprise
defeat of a $700 billion financial rescue bill,
talk is growing

about alternative


that could help battered credit markets and stave off br
oader problems in the economy.
Among the proposals


discussing: Change rules t
ease the capital burdens
on banks; make more FDIC insurance available

to bank customers; and
cut short
term interest rates

little bit helps," said Lyle Gramley, a former Federal Reserve governor who is now with policy research firm Stanford Group
. "When you're in a situation we're in now, you use any tools that might work." In fact,

the first changes came

Tuesday afternoon in announcements by
two principal agencies.

The Securities and Exchange Commission



Federal Accounting Stan
dards Board issued new
guidance to companies about how to value securities when the market for them vanish
The issue

how to put a value on assets
that nobody wanted to buy

is central to the credit crisis.
Banks and securities firms have written down $
500 billion worth of mortgage
backed securities as home prices fell and foreclosures rose
. According to the new guidance issued Tuesday,

when the market for
such securities dries up,
companies can value them based on their estimated future cash flow
. Some

experts blame
the previous rules, known as mark
market, for the credit crisis. "The SEC has destroyed about $500 billion of capital by their continued insistence that mortg
backed securities be valued at market value when there is no market," said
William Isaac, a former chairman of the
FDIC. "It's way below their economic value. And because banks essentially lend $10 for every dollar of capital they have, the
y've essentially destroyed $5 trillion in lending capacity." But others argue the accounti
ng change will come at a cost. They say without those strict rules,
investors would be more reluctant to invest in banks

and make it even tougher for the banks to attract new capital. "Does that make you less attractive as a public company? Abso

said Art Hogan, chief market analyst at Jefferies & Co. The SEC wasn't the only regulator
busy taking action on Tuesday. The Federal Deposit Insurance Corp. proposed raising the cap on bank deposits insured by the F
DIC. "
A temporary broadening of the FD
IC's guarantee will

some additional needed

in the marketplace," said Sheila Bair, FDIC chairman. Presidential candidates Barack Obama and John McCain had called for ra
ising the limits earlier in the day

The current limit

$100,000 in

has been unchanged since 1980 despite inflation. It protected as much as 82% of deposits in 199
1 but today it only covers 63%.

Raising the cap could stem a potential run on
deposits by

bank customers, particularly
, who fear
losing their money. Such fears led to the collapse of
Washington Mutual

(WM, Fortune 500)
and Wachovia Bank

Fortune 500) in the past week.
Kicking the tires on other fixes The SEC and FDIC changes announced Tuesday are not the only ideas being
ed in Washington and among economists.
Some others:
Change federal requirements that force banks to keep a certain level
of cash on hand for every dollar they lend out. Give banks the chance to exchange loan notes for FDIC
, which be more valuable an

the banks more

to make loans.

on a massive scale
backed securities

issued by finance giants Fannie Mae and Freddie Mac.
Extend limits on short sales of financial sector
stocks. Cut the fed funds rate


the Federal R
eserve's target for short
term lending

perhaps all the way to zero, or in coordination with rate cuts by other central banks around the globe.

controversial $700 billion
bailout package


which would give the Treasury Secretary authority to
buy distressed assets

is not the only way to unfreeze troubled credit

A2 economy

no war

Economic decline doesn’t cause war

heir chain of causation is backwards.


(Niall, prof. of history, Foreign Affairs, “The Next War of the World”, lexis)

Nor can economic crises explain the bloodshed. What may be the most familiar causal chain in
historiography links the Great Depression to

the rise of fascism and the ou
tbreak of
World War II
. But


simple story
leaves too much out. Nazi Germany started the war

in Europe
after its economy had recovered. Not all the countries affected by the Great Depression

were taken
over by fascist regimes, nor did all such regimes
start wars

of aggression. In fact,

no general relationship between
economics and conflict is discernible

for the century as a whole.
Some wars came after

periods of
growth, others were the
s rather than the consequences of economic catastrophe, and some

economic crises were
not followed by wars

***spending answers***

A2 spending good

faulty economics


Government spending fails, hurts the economy in trying to help

Barron 10

[Patrick Barron, teaches Austrian economics at University of Iowa, “C + I + G = Baloney”, 6/29/2010,

The key fallacy embedded in Keynesian economics and the GNP equation is the idea

that government spending adds
to an economy's health. In reality, the opposite is true
: government spending

from an economy's health.
The real economy is the private economy

there is no other. Government spending must come out of the
private economy.

In olden days,
no one would have accepted the argument that the king could help his
nation's economy by incre
asing his spending
. The king's spending was funded by taxes from the people.
It is the
same today, notwithstanding the eyewash of central bank manipulations of its manufactured paper money

All government spending is parasitical
. The less government we ha
ve the better off we are.
No one would claim
that an increase in crime (thus making more police necessary) or an increase in international tensions
(making a larger military necessary) would be good for an economy
. We are all better off when people are
est and other nations are friendly so that we do not need to provide resources for more police and a larger army.
We would much prefer that our sons and daughters produce goods and services that improve the quality of our lives
rather than standing sentry
on America's frontiers at our expense.

Government programs that do not provide
essential security services are especially illogical. For example, paying people not to work, which is the consequence
of unemployment insurance, must come out of funds that wo
uld have otherwise employed people. Indeed,


programs are funded by the private sector and do not, as the Keynesian equation might
imply, add to the nation's wealth. The funds for these programs come out of the private economy and fur
stifle its ability to increase the nation's wealth by reducing capital formation.

White House Keynesian stimulus fails

spending trades off with
other jobs

, PhD, 5/6/

; “Wapo Admitting Keynesian Stimulus Failed?”; Heritage;

. DS

Does unprecedented d
spending such as on highways stimulate the economy?

For the last few years,
some have argued it

Some have argued it might.

Some have argued it would if done right. We have consistently argued that
deficit spending on
highways or anything else intended to lift aggregate demand, and therefore jobs, mu
st and would fail.

The economic evidence that
we were right has now been joined by the illustrious trio of The Washington Post, the Associated Press, and the esteemed Alic
e Rivlin,
former director of the Congressional Budget Office and the Office of Manage
ment and Budget. Monday’s edition of the Post carries a
story sourced to the Associated Press entitled, “Highway bills pitched as by lawmakers as job creators, but are they really?
say no.” Notice especially the subject of the piece: federal hig
hway spending.
If ever there was a sympathetic topic for stimulus, it is
infrastructure spending, especially highway funding. Remember, these were some of President Obama’s “shovel
ready” projects that
turned out to be not so shovel ready, as he later admi
tted. So what went wrong? Why is this not short
term stimulus? The widely
respected Rivlin explained it clearly and succinctly: “Investments in infrastructure, if well designed, should be viewed as i
nvestments in
future productivity growth.” Exactly right

future productivity growth. She went on to say that if investments in infrastructure “speed
the delivery of goods and people, they will certainly do that. They will also create jobs, but not necessarily more jobs than

the same
money spent in other ways.”
xactly right

a dollar spent is a dollar spent. A job gained here, a job lost there. This speaks to a
longstanding flaw of highway spending arguments.
Proponents argue that this spending creates tens of thousands of jobs, and they
are half right. The other
half is the tens of thousands of jobs not created (or saved) by shifting spending to highways from other
areas in the economy.

The valid argument about infrastructure spending is: If done right, it will lift future productivity growth,
not current job grow

The central failing

the essential fiscal alchemy of Keynesian stimulus

is the belief that government can
increase total spending in the economy by borrowing and spending.

Keynesians ignore
that we have financial markets
whose job in good times
and bad is first and foremost to shift funds from savers to investors, from those who have money they do
not wish to spend today to those who have a need to borrow to spend as much as they’d like, whether on new business
equipment, a home, or a car. There
are no vast sums of “excess funds” just sitting around in bank tellers’ drawers waiting for
government to borrow and spend them.

Government borrowing means less money available to the private sector to spend. So
government deficit spending goes up, and dol
dollar private spending goes down.

America’s resources are generally
speaking spent less wisely, and the federal debt is unequivocally higher.

If past is prologue,
the current infatuation with
Keynesian deficit spending as stimulus will fade, just
as it always has in the past, in this country as elsewhere.

Perhaps this simple
WaPo article marks the beginning of the end for the latest incarnation of this fiscal folly.

A2 spending good

faulty economics 2/2

The NIB is useless

wasteful spending
, jobs, Obama strategy, state manipulation

Yost, staff columnist for The Tech 9/20/11

;“Opinion: No national infrastructure investment bank: Infrastructure investment is a state
September 20, 2011;

Last week, President Obama unveiled a $447 billion spending plan. Notice I say “spending plan,” rather than “stimulus plan” o
r “jobs
plan,” because there is a difference.
None of the plan’s components, which consist of roughly $250 bill
ion in payroll tax cuts, $60
billion in unemployment insurance, and $140 billion to fund infrastructure (most of it going to a national infrastructure
investment bank)

can be considered significantly stimulative, and without stimulus, we’re unlikely to se
e many new jobs.

plan’s unemployment benefits and tax cuts are largely extensions of existing measures

our economic situation would be much
worse if the cuts and benefits were allowed to expire, but these half
measures are not going to push us out of

our current,
miserable trajectory.

And the infrastructure bank promises very little spending in the short term; it’s not an institution tasked
with finding shovel
ready, stimulative projects,

even if such things existed.
This is quite plainly a spending p
lan in which Obama
has tied a pet project that he thinks deserves money (the infrastructure bank) to something that Republicans find fairly

As a political matter, the future of the plan seems pretty straightforward: Republicans will strip
out the infrastructure
bits and pass the rest, judging (correctly) that the American public isn’t going to assign blame for the whole economy to the

GOP just
because they blocked one of Obama’s minor economic proposals.
The president probably even prefers
it this way because an actual
infrastructure bank wouldn’t do much in the short term to help Obama keep his job, but the


of an infrastructure bank
could prove useful on the campaign trail.

That leaves just one question: who is right here? Is an infras
tructure bank an idea whose
time has come, or is it a dud?

At first glance,
a national campaign to invest in infrastructure isn’t a bad proposition.

The returns to
investment on infrastructure aren’t very impressive, but with the government able to borrow
money at two percent interest, and
with labor and materials costs at extreme lows, it doesn’t take a very high return to justify infrastructure spending.

On deeper
inspection however,
a national infrastructure bank is a fatally flawed idea, for one simple

forcing the citizens of Texas to
pay for a high speed rail line from San Diego to Sacramento is bad government.
It invites corruption, pork barrel politics, and
misallocation of our society’s resources.

The citizens of, say, Ohio are and will alway
s be in a better position to decide whether it is
worth the money to repair a bridge or school in their state.
Offering to let them pay for their projects with someone else’s money is
not going to lead to better decision

instead, it will lead state
s to cut their own infrastructure spending and turn their
beggars cup to the federal government.

It will incentivize states to represent their infrastructure as worse than it actually is, and
pretend that solutions are cheaper than they actually are
. And
because it isn’t their money at stake, states will have even less
inclination than usual to make sure that the projects are managed correctly
. The real key to a state’s economic success won’t be the
wise decision
making of its leaders, it will be its abili
ty to lobby the federal government for special treatment and trade favors with the
party in power.

Perhaps in a few instances, investment in infrastructure at the national level makes sense.

Air traffic control, or
an interstate network make sense as matte
rs for the national government to manage. But bridges, schools, high speed rail lines,
and the vast majority of the projects Obama touts as within the purview of his national infrastructure campaign are best
managed at the state or local level.

It’s a conc
lusion so obvious that
the idea of national control raises immediate suspicion.

Obama plan to use the bank to bestow patronage on his supporters (particularly labor unions)? Or did he really manage to forg
et that
state governments already have the pow
er to levy taxes and make repairs?

Democratic activists are thrilled with Obama’s supposedly
new “toughness.” But getting tough is only a good strategy if you’ve got an idea that’s actually worth fighting for. Two week
s from
now, every leading Republican i
s going to have worked out the obvious counter
argument to a national infrastructure bank, and two
weeks after that they’re going to have integrated the bank into their stump speeches as yet another example of intellectually

federal overreach.

n’t solve short term economy

Mallet et al. 11

(William J. Mallet,

Specialist in Transportation Policy

Steven Maguire a specialist in
Public Finance, Kevin R. Kosar is an analyst in American Government for the CRS, December 14 2011,
Congressional Research
Service, “National Infrastructure Bank: Overview and Current Legislation”,

Although a national infrastructure bank might help accelerate projects over the long term,
it is unlikely
to be able to provide financial

assistance immediately upon enactment
. In several infrastructure bank
proposals (e.g., S. 652 and S. 936),
officials must be nominated by the President and approved by the
. The
bank will also need time to hire staff, write regulations, send out req
uests for financing
, and complete the necessary tasks that a new organization must accomplish. This period is
likely to be measured in years, not months. The example of the TIFIA program may be instructive. TIFIA
was enacted in June 1998. TIFIA r
egulations were published June 2000, and the first TIFIA loans were
made the same month.45 However, according to DOT, it was not until FY2010 that demand for TIFIA
assistance exceeded its budgetary authority.46

A2 Spending now

already high

on spending levels are already high

O’Toole 10

[Randal O’Toole, policy analyst, “Fixing Transit: The Case for Privatization”, 11/10/2010,

the real problem with

transit is that it has too much money. The

addition of tax
dollars to transit operations led transit agencies to buy buses and other equipment that are bigger
than they need, to build rail lines and other high
cost forms of transit when lower
cost systems
would work as well, to extend service to r
emote areas where there is little demand for transit, and
to offer overly generous contracts to politically powerful unions.

Privatizing transit would solve these problems. Private transit operators would have powerful
incentives to increase productivity, maintain transit equipment, and avoid transit systems that
require expensive infrastructure
and heavy debts. While
private tr

systems would not be immune
to recessions, they
would respond to recessions by cutting the least
necessary expenses
. In contrast,
public agencies often employ the “Washington Monument Syndrome” strategy: they threaten to cut
highly visible programs a
s a tactic to persuade legislators to increase appropriations or dedicate
more taxes to the agenc
y, such as New York MTA’s proposal to eliminate dis

counted fares for

***infrastructure answers***

A2 infrastructure

red tape turn

The NIB takes

away from existing projects

Duncan 11

(John Duncan, Tennessee Congressman, “National Infrastructure Bank Would Create More Red Tape & Federal Bureaucracy”,
October 12, 2011,
, PS

, for one,
do not support setting up a new bureaucracy

in Washington where political appointees would decide which
transportation projects are the most worthy to receive a Federal loan
,” said
U.S. Rep. John J. Duncan, Jr. (R

Chairman of
the Highways and Transit Subcommittee. “
That is why Congress already established the State Infrastructure Bank
. Current law allows a state to use their Federal
aid funding to capitalize a St
ate Infrastructure Bank and provide loans and loan
guarantees to appropriate transportation projects that the state deems most important.

Transportation Infrastructure Finance and Innovation
Act program, or
, was established in 1998 to

ns and
loan guarantees to surface transportation projects
. In
fact, the TIFIA program is so popular it received 14 times the amount of project funding requests in FY11 than the program ha
s available to
Why not give these established programs mo
re funding in order for them to reach their full

This proposal is simply

another distraction

as Congress pushes for a long
term surface transportation
reauthorization bill. The Administration should be focused on helping Congress pass this much overdue legislation and give th
e states some long
term funding certainty that a National Infrastructure

Bank would most certainly not accomplish.”

NIB causes
bureaucratic redundancy

with current financing mechanisms
causing backlog and uncertainty

Utt 11
, Ronald Utt is a Senior Fellow at Heritage, The Limited Benefits of a National Infrastructure Bank,

The Checkered History of Federa
l Finance Facilities
Would It Improve Overall Federal Transportation Policy?

Senator Inhofe makes a very good
point by wondering about what the value added would be of creating another federal transportation program (independent of the

current one
under so
me proposals) when you already have one that has been up and running for more than half a century and, for the most part, has

served the nation well. More specific to some of the infrastructure bank proposals is the emphasis on loans and loan guarante
es as

opposed to
grants, suggesting that the bank will somehow be paid back

a notion about which, as we have seen, we have reason to be skeptical.
Nonetheless, if credit availability is at issue, then a quick review of existing transportation infrastructure
deral credit programs reveals that there are plenty of attractive credit programs including the U.S.
Department of Transportation (USDOT) Transportation Infrastructure Finance and Innovation loan
program (TIFIA), Private Activity Bonds, and State/Municipal
/public authority Revenue Bonds.

passenger and freight rail projects, there is also the USDOT’s Rail Rehabilitation
and Improvement
Financing (RFFI) program. For these concerns, there are questions but not yet any answers.
If grants

were to be provided by the new bank, how would they be different from

or better than

those already
provided through the existing mechanisms in USDOT and the highway program
? If current levels of credit availability for
existing federal transportation cre
dit programs are deemed to be insufficient by some, why not propose that these existing channels be
improved and/or expanded? If spending is thought to be deficient, why not simply provide more grants through the existing me
chanism rather
than going throu
gh the costly and complicated process of setting up and operating a new federal transportation entity, which President
Obama’s budget estimates would cost upwards of $270 million to create and staff?

In this era of fiscal austerity and yawning budget deficits,
wouldn’t there be better uses for this money than a redundant bureaucracy
? Are
the banks’ independent
status, sep
arate board, funding, and approval process designed to circumvent the existing role that state
DOTs and governors have in the allocation of transportation resources
? Would its independent status and separate
board of directors thwart congressional oversig
ht? I don’t think a satisfactory answer has been provided to any of these questions, and
certainly none of the existing proposals have addressed them. But they are certainly valid concerns, and Congress should seek

answers to them
as Members contemplate t
hese many infrastructure bank proposals.

Red tape extensions

The NIB only adds red tape and all of its functions are covered already.

Mica 11

(John Mica, Florida Congressman, Chairman of the Transportation and Infrastructure Committee in the U.S. House of
Representatives, “National Infrastructure Bank Would Create More Red Tape & Federal Bureaucracy”, October 12, 2011,
, PS

“We must use every responsible mechanism possible to move projects and expand our capacity to finance infrastructure maintena
nce a
improvements, but a National Infrastructure Bank is dead on arrival in Congress,” said U.S. Rep. John L. Mica (R
FL), Chairman of the
Transportation and Infrastructure Committee. “ There are several reasons for this. One is that
we do not need to create

federal bureaucracy. In fact, with over 100 separate federal surface transportation programs, we need
less bureaucracy
The federal government also has existing financing programs that serve the same
purpose as a National Infrastructure Bank, such as

TIFIA, RRIF and others
, that we can improve and strengthen.
Another reason a national bank is DOA is because there is already such a bank structure in place at the state level. Thirty
three state
infrastructure banks already exist, and we can ensure finan
cing and build upon this foundation without creating a new level of federal
. If the Administration’s goal is to get people to work immediately, a National Infrastructure
Bank that will require more than a year to create and $270 million to run
is not the answer.

That is
that should be used for infrastructure,

would instead be used to create more red tape
. Unfortunately, the
Administration still hasn’t learned that ‘shovel ready’ has become a national joke. Yesterday, the President an
nounced he would expedite 14
infrastructure projects, but this plan only pushes these projects to the front of the line with current red tape and rules, w
hile it pushes back or
stalls hundreds of other projects pending federal approval. We must expedite th
e review process for all projects, not just a handful.”

It’ll be mismanaged

Utt 11
, Ronald Utt is a Senior Fellow at Heritage, The Limited Benefits of a National Infrastructure Bank,

The Checkered History of Federal Finance Facilities

Previous sections have already touched on the
management challenges confronting any of these banks. If these banks are allowed to borrow on their
own, or if they are funded by a large, one
time appropriation that can be leveraged into more debt and
loan gu
arantees, it seems that Congress and the President would have little say in what they did and
how they did it. Indeed, the nation has already experienced a couple of such incidents, and they are
commonly referred to as Fannie Mae and Freddie Mac. All of
he bills to create infrastructure banks
include many pages of exhaustive detail on the prospective management structure, a pseudo
board, and its duties. Degrees of independence vary from one proposal to another, but the greater the
the more likely it is that the bank may wander away from the changed priorities of future
Congresses and Presidents and instead pursue opportunities that are not necessarily in the public
. In a democratic society where voters periodically get to p
ick the people and policies that
govern them, it might not be appropriate to have entities supported by taxpayers that are not
responsive to the voters. There is also the question of the extent to which some of these infrastructure
bank proposals may be d
esigned also to circumvent existing budget controls and spending caps, as well
as ongoing oversight. How each of these proposals might be scored is beyond the scope of this
testimony, but it is certainly an issue that Congress should carefully review.

ed tape extensions




Utt 11
, Ronald Utt is a Senior Fellow at Heritage, The Limited Benefits of a National Infrastructure Bank,

The Checkered History of Federal Finance Facilities

For some advocates

especially the President

banks are seen as mec
hanisms to propel the economy forward
out of the lingering recession into an era of greater prosperity and more jobs. Sadly, all evidence
indicates that this just isn’t so. As far back as 1983, the
General Accounting Office (now the
ty Office) reviewed an earlier infrastructure
based stimulus program and observed that
although the program was enacted during the worst of the recession, “implementation of the act was
not effective and timely in relieving the high unemployment caused by
the recession
.” Specifically, the
Funds were spent slowly and relatively few jobs were created when most needed in the
. Also, from its review of projects and available data, the GAO found that (1) unemployed persons received a relat
ively small
proportion of the jobs provided, and (2) project officials’ efforts to provide em
ployment opportunities to the unemployed ranged from no
effort being made to work
ing closely with state employment agencies to locate unemployed persons.

based stimulus
programs have been a disappointment, in large part because of time delays in getting progra
ms underway, projects identified and approved,
and money spent. More recently, supporters of the American Recovery and Reinvestment Act (
ARRA) claimed that it would focus
on shovel
ready projects, but USDOT recently reported to this committee that as of Ju
ly 2011

two and
a half years after the enactment of the ARRA

just 61 percent of the authorized transportation funds
had been spent
. Perhaps contributing to this is the fact that the Federal Railroad Administration required 12 months to set up a
mechanism t
o receive, review, and approve rail infrastructure projects authorized by the ARRA. In both of these cases, the stimulus fun
ds were
being spent through existing federal, state, and local channels by departments, managers, and employees with many years of
experience in the
project approval business. In large part, these delays are not due to any particular institutional failing but simply to the
time it takes to establish
guidelines and rules for project submission, for outside parties to complete the reque
st, and for USDOT to review the many requests submitted
and pick the most promising, perhaps with modifications, and fulfill the contractual details of awarding the contract. Once t
he award is made to
state and local entities, they in turn must draw up the

RFP (and perhaps produce detailed engineering plans as appropriate), put the contract
out for bid, allow sufficient time for contractors to prepare bids, review submitted bids, and finally accept the winning con
tract. It is at this
point that money can be

spent on the project, and the time that elapses from the beginning to the end of the beginning can easily exceed a
year or more. In the case of an infrastructure bank, such delays will be much longer

perhaps even double that described above. In the case
the above example, the assumption is that the newly authorized stimulus money would flow through an institutional “infrastruc
ture” of well
established channels staffed by experienced people. In the case of the proposed infrastructure banks, no such admi
nistrative structure exists,
and one will have to be created from scratch once the enabling legislation is enacted. In the case of some of the proposals,

this creation
process could take a while. President Obama’s most recent plan, for example, first requ
ires the selection, recommendation, and Senate
confirmation of a seven
person bipartisan board appointed by the President. The President will also appoint, and the Senate confirm, a Chief
Executive Officer who in turn will select the bank’s senior officers

Chief Financial Officer, Chief Risk Officer, Chief Compliance Officer, General
Counsel, Chief Operation Officer, and Chief Lending Officer

subject to board approval. The Chief Lending Officer will be responsible “for all
functions relating to the develop
ment of project pipelines, the financial structuring of projects, the selection of infrastructure projects to be
reviewed by the board, and related functions.” So once all of this administrative effort is completed and the bank is ready t
o go, then the
cess of fulfillment, as described in the paragraph just prior to the preceding paragraph, would then be in effect. As is obv
ious, dependence
upon this prospective bank will further delay the time in which the project money would be spent, but in the proce
ss, it would also incur
substantial administrative expenses that might better be used for actual infrastructure repair and investment.

Red tape extensions

Every empiric goes neg

Powell 10
Jim Powell

s a senior Fellow at the Cato Institute and author of the forthcoming

Likely To Happen When Government Goes Broke

Now Obama wants to spend another $50 billion of taxpayers' money, so that even more people will be on public payrolls. That's

his idea of
Obama envisions a government
run "infrastructure bank" to overhaul Amer
ica's transportation

This sounds like the kind of grandiose project politicians love to brag about

the modern equivalent of pyramids.
They cost a fortune, they look great, they

increase the number of government employees but do little if
anything for living standards
. When Obama visited Egypt last year, he said the pyramids were "awe
inspiring." Apparently he liked