Reply #108: Jobs Programs/Infrastructure

[goodhue]

http://www.kucinich.us/issues/issue_jobs.htm

Kucinich Proposal: Employ the Jobless to Rebuild America's Decaying Infrastructure
(Labor Day, Sept. 1, 2003)

Our country is facing twin crises: high unemployment and a decrepit infrastructure. Dennis Kucinich has developed a means to solve both problems, and put the unemployed to work rebuilding America's infrastructure.

Unemployment stands at 6.2% nationally. Long term unemployment has become a persistent problem. Nearly 2 million Americans have been looking for work unsuccessfully for over six months, while over 9 million Americans are unemployed. According to the Economic Policy Institute, there are three unemployed people for every job opening.

Ironically, at the same time so many Americans can't find work, there is much work to do. The crisis of our decaying infrastructure is something we see every day when we sit in traffic bound by orange barrels that line our highways. It is something that schoolchildren experience at their desks, crowded together under leaking roofs. In cities, municipal sewer systems overflow into rivers, streams and estuaries. These events occur with increasingly regularity as systems age. Infrastructure problems threaten our productivity, our economy, our environment and our health.

Nationally, it would take more than $1 trillion to bring our country's roadways up to speed, according to a report released a couple years ago by the American Society for Civil Engineers. It would take $127 billion to repair and renovate our schools, according to the National Center for Education Statistics. And in a study completed by the Water Infrastructure Network, it would take $1.3 trillion over 20 years to build, operate and maintain drinking water and wastewater facilities.

With work that needs to be done, and people needing to work, what America needs is a way to put unemployed Americans to work rebuilding America's neglected infrastructure.

The Kucinich plan will make that happen:
The Kucinich plan calls for the creation of a low-cost federal financing mechanism to administer $50 billion in zero-interest loans every year to localities for infrastructure projects for ten years. Twenty percent of these funds would be targeted for school construction and repair.

State and local governments would continue to issue bonds to finance infrastructure projects. But the Kucinich plan would authorize the federal government to buy those bonds. States would have to repay the principal, but unlike normal municipal borrowing, these bonds would pay zero interest. So the cost of borrowing for infrastructure improvement would be reduced by half.

The federal government would hold these bonds in the Federal Bank for Infrastructure Modernization (FBIM). The bank, as an extension of the Federal Financing bank under the Treasury, would administer the loans. The loans would bear a small fee of one-quarter of one percent of the loan principle to cover the administrative costs of the FBIM. In order to provide the money for the loans, the FBIM would hold a portion of the Treasury securities that the Federal Reserve normally holds. The Fed currently holds about $300 billion in Treasury securities. By transferring about $50 billion annually to the FBIM, it would still allow the Fed to operate as it does now to add liquidity to the system. The Fed, instead of buying securities, would buy the mortgage loans of the states. This way the FBIM's finances would be integrated by the Federal Open Market Committee so as not to disrupt its ability to promote economic stability.

In his February, 2001 testimony, Fed Chairman Alan Greenspan supported a very similar type of transaction. Already, the Open Market Committee conducts repurchase agreements in mortgage-backed securities guaranteed by the agencies. Greenspan stated: "The FOMC asked the staff to explore the possible mechanisms for backing our usual repurchase operations with the collateral of certain debt obligations of U.S. States and foreign governments." This plan would follow that approach by providing the tool for the FOMC to integrate the mortgage loans of the states.

This amount would be varied so the funds could be used as a tool to foster stable economic growth. During times of economic slowdown, the FBIM would make more loans available to spur investment. During times of economic boom, the FBIM would make fewer loans available.

The Kucinich plan will put Americans back to work. Two million Americans would find jobs in such enterprises as rebuilding schools, designing roads, refurbishing environmental projects, manufacturing steel for water systems. And the Kucinich plan will increase the quality of life in America, by making highways safer, water cleaner, and schools more conducive to learning.

Related News:

On Labor Day, Bush Taking New Jobs To Ohio, Associated Press, 9/1/2003