Our nation is in a serious economic crisis. Both political parties dance around each other with varying demands for cuts in entitlement programs, tax increases and a rise in the debt ceiling. It’s a doomsday prospect and the American people are feeling the chill of economic malaise.
The policy response thus far has mainly been to engage in deficit-spending, to give tax breaks, to broaden the social safety net and to print money. It sounds potentially inflationary to me.
It’s time for the political class to stop acting so small and embrace a way to rebuild our nation. It’s time to face the fact that we have a twentieth-century infrastructure at the beginning of the twenty-first century. But building new high-speed transit, offshore wind power, solar power arrays and new energy transmission grids is hugely expensive. Who will pay the cost?
Public infrastructure is a common good and must be financed as such. We can borrow financing models from the private sector but we must look more creatively for solutions. The first and most obvious place to look for public funding is from the defense budget. Diverting part of the money spent on wars to develop alternative energy infrastructure would allow us to begin to break our dependence on foreign oil. This crushing addiction has kept us involved in wars and nation-building in Iraq, Afghanistan and Libya, among other places.
The other place to look for infrastructure funding is the $1 trillion of profits U.S. corporations are storing overseas. American companies are lobbying Congress to repatriate profits earned in overseas subsidiaries at tax rates as low as 5%. Perhaps Congress could legislate a compromise and tax half of returning profits at 0% if corporations loaned the other half of profits to a national infrastructure bank for a term of 10 years and at an annual interest rate of 5%.