Finance fund details to be hammered out

It’s the season for sniping about the budget (and the huge annual deficit), against the backdrop of measures that will nudge unemployment away from the psychologically demoralising 10% number.

As the politicians search for solutions, a mini-debate has ensued, even among Barack Obama’s Democratic party, where short term measures (such as temporary holidays on certain taxes) are pitted against solutions of the longer term kind – where the government spearheads continued demand through spending on projects, through its own spending, or through encouragement of the private sector.

A detail of importance to port interests is the request for $4bn to fund a new Transportation Infrastructure Bank, actually “The National Infrastructure Innovation and Finance Fund” (NIIFF), included in the 2011 Federal budget proposals.

With the NIIFF, the Federal government could issue loans and grants for projects against a demonstrated economic justification- on both large and small scales. At the same time, the old mechanism for financing many surface projects – the Highway Trust Fund (with a mini deficit in its own right), tied to gasoline taxes, gets a one year pass.

Besides the much needed job creation, one important plus in analyses of costs and benefits of transportation related projects is “mobility” (usually for people, but increasingly for freight), which means relief of costly congestion. Port-related projects like access roads and railway connectors are potential projects that could be supported by NIIFF. But, in true Washington, D.C. style, the cat fighting has already started about where the new bank, and the NIIFF, would be placed on the organisation charts.

It’s important to move the new entity far away from the US Department of Transportation, out of the Executive Branch, towards the private sector. Infrastructure finance, though championed by firms like Goldman Sachs and Deutsche Bank, is far removed from the distaste reserved for most Wall Street bankers. It would be a shame to create an entity like the NIIFF and then ensconce it within an often non-functional (dare I say “broken”?) political process.