Infrastructure “bank” a good idea, or earmarks for White House?

We often say that this administration has no Plan B, and Barack Obama’s latest economic proposals make that painfully clear.  His “new” ideas include tens of billions of dollars in infrastructure spending, when the White House still hasn’t spent the $105 billion it got last year from Porkulus.  Obama also offered tax credits in R&D and business capital investmet, which got some initial praise, but wants to pay for them in higher business taxes for American multinationals, a proposal that flopped last year when Obama first offered it.  Finally, Obama wants to create an infrastructure “bank,” a mechanism to approve federal infrastructure spending that will supposedly take the politics out of the process.  The Miami Herald sounded optimistic about the idea, if not the timing, earlier this week:

That’s unfortunate because under ideal circumstances, the infrastructure bank Mr. Obama proposed at a Labor Day rally is a promising idea that could reform the way the federal government spends money for transportation projects and upgrading bridges, rail transit and airport runways.

Instead of funneling infrastructure money to those states and districts represented by members of Congress with the most political clout, this plan would create a panel of experts to approve projects on the basis of merit. Experts say this would spur innovation and provide the biggest bang for the buck. It would put money where it makes the most economic sense, not where political influence dictates.

By unveiling his plan in a largely political setting, however, Mr. Obama undermined his own goals. The Labor Day rally, on the traditional start of the campaign season, puts the initiative in a political context hardly designed to win the kind of Republican support Mr. Obama will need to pass this measure in Congress — even if Republicans were inclined to help.

First, this won’t change how transportation dollars get allocated.  Transportation bills (which fund the kind of roads, bridges, and runways to which Obama referred in his infrastructure proposal) are notorious havens for pork-barrel projects.  Here in Minnesota, Rep. Jim Oberstar notoriously uses millions of dollars for walking paths and visitor centers in his district.  Nothing about an “infrastructure bank” would change the earmarking process in Congress unless Congress voluntarily gave up those earmarks.  What is the likelihood of Congress doing that, especially only for “infrastructure” spending?  About as likely as Nancy Pelosi becoming a Milton Friedman acolyte.

Congress will continue to pork up transportation bills, making the first premise of the Herald and the Obama administration moot.  So why have an infrastructure bank at all?  Well, it fits right into the governing philosophy of Obama and the Left: rule by “panels of experts.” Basically, it’s ObamaCare for roads and bridges.  Whatever money doesn’t get earmarked will be given in a bloc grant to the Department of Transportation and the executive branch, which will then have an unaccountable board make unappealable decisions on which projects in which states get funded, and which ones don’t.  That makes the system less responsive than what we have now, not more, and more political instead of less.

It also gives the President a way to earmark funds in competition with Congress, through his appointments to the “panel of experts.”  Who will get appointed to this board?  Obama’s appointments to the debt-reduction commission are instructive.  They’ll be filled by political cronies like Andy Stern, the former union president and lobbyist, and assorted power brokers from current and previous administrations like Erskine Bowles, who will know where to put money for the best political outcome.

The true path to reform would be to (a) ban earmarks in Congress, and (b) keep transportation funds in the states in the first place.  The latter will be easier to accomplish than the former, but if the latter gets accomplished, earmarks won’t present as large a problem as they do now.  Rather than take money out of the states to redistribute it for transportation projects, let the states keep it from the start and have them fund their own transportation projects.  That allows the citizens of each state to have more accountability on those projects and keeps the decision making power on priorities in the hands of those most affected by the choices.

We don’t need yet another “panel of experts” with no accountability handling taxpayer money and making choices outside of normal democratic accountability.  We need the federal government to reverse the trend of national government over the last several decades and keep the money in the states, where citizens can make those decisions themselves.  That’s what used to be known as self-government in an era before Hope and Change.

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