As Geithner Touts Infrastructure, Skepticism Persists on $4B ‘I-Fund’ Plan

Treasury Secretary Tim Geithner, considered a skeptic of
transportation stimulus spending by
some lawmakers, yesterday joined two other White House economic
advisers in endorsing new infrastructure investment as a means to
jump-start the economy.

Geithner (l.) said that there is “a
very good economic case” for infrastructure spending. (Photo: WaPo)

But
the president’s proposed $4 billion fund aimed at attracting private
capital to public works projects met with skepticism from a key House
Democrat, raising the specter of an internal dispute over crafting a
national infrastructure bank.

Spending on the built environment is “good policy for the long run and it’s very good
policy for the
short run, because it’s one of the most employment-intensive forms of
government investments that we can make,” Geithner told the House
Appropriations Committee yesterday during broader testimony on the
state of the economy.

“We’ve got to do it, though, in a way
that’s fiscally responsible,” Geithner added, describing the White
House’s 2011 budget request as a step in that direction.

That
budget plan seeks $4 billion from Congress for a National
Infrastructure Innovation and Finance Fund (I-Fund) that would be used
to promote more public-private partnerships on big-ticket transportation
projects. The I-Fund is often likened to a National
Infrastructure Bank (NIB) but differs from congressional efforts on
that topic in one
major respect — the White House would house its fund within U.S.
DOT rather than make it an independent entity.

Rep. Rosa DeLauro (D-CT), the lead House sponsor of NIB
legislation, has previously
resisted the lack of independence for the White House I-Fund and
reiterated that skepticism yesterday. DeLauro told presidential budget
chief Peter Orszag and Council of Economic Advisers Chairman Christina
Romer:

With all due respect, $4 billion in the Department of
Transportation is not a national
infrastructure development bank under the Treasury Department that has
the ability to borrow in the capital markets and so that we can
leverage private funds. We are not going to get serious investment for
the long-term future of this country until we do what the Europeans
have done in setting up a European investment bank.

Orszag defended the administration’s approach, describing the full-scale
European-style approach as “something
that we continue to explore” and the I-Fund concept as “a first step in
that direction.”

But DeLauro, a longtime
ally of White House chief of staff Rahm Emanuel and House Speaker
Nancy Pelosi, aired specific qualms with the notion of an I-Fund located
at U.S. DOT when pressing needs exist in the areas of “water systems, energy,
environment, broadband and telecommunications.” She is not alone in
stressing the value of an NIB separate from the federal government;
pro-transport reform thinkers have raised similar
concerns.