Editor's Note: This column originally appeared as part of a Wall Street Journal series asking top political and business leaders "How would you spend $10 billion of American resources (either directly or through regulation) over the next four years to help improve the state of the world?"
To be given $10 billion over four years to spend in a way that would best help humanity is a challenging proposition. The problems of the world -- from hunger and disease to terrorism to environmental degradation -- all are worthy projects for investment. But the best way for the United States to improve the condition of the world is to invest the $10 billion here at home in the long-term infrastructure needs of the country.
Let me explain. Only an economically vibrant America can help solve some of the vexing problems around the globe. But the American economy is suffering a downturn. Until we turn it around and produce a long-term economic recovery, we will not be as effective in leading the world to solve the larger global challenges.
The best way to begin restoring our economy is to spend the $10 billion over the next four years on strategic investments in building up our public infrastructure -- our airports, roads, bridges, ports, nuclear power plant security, broadband networks and environmental technologies.
Public infrastructure investment not only creates well-paying jobs, but it also generates a healthy multiplier effect throughout the economy by creating demand for materials and services. New roads, for example, can increase the number of new homes, offices and other businesses. Ports link up towns to trade, and airports connect people to other economic centers within the global economy.
The U.S. Department of Transportation estimates that spending $1 billion on building roads helps generate more than $6.2 billion in economic activity. Thus, if only the $10 billion were spent on roads, it would generate over $60 billion worth of economic benefit.
The multiplier effect is just as powerful when it comes to investing in technology. American leadership in space led to investments in satellite communications, and the invention of the Internet led to Yahoo, Google, Amazon and thousands of other online businesses. Investing in the basic research of nanotechnology, life-sciences technology and new environmental technologies would create high-paying jobs in the worlds of engineering and sciences, and address potentially life-threatening challenges such as epidemics and global warming.
Because the $10 billion is dwarfed by the infrastructure needs of the country, we will need to make sure that the money is spent in a way that will leverage the highest public return. To achieve maximum benefit for the investment that is made, we could create a National Infrastructure Bank (NIB) that would provide loans and loan guarantees for worthy projects. Funding the NIB with $10 billion in seed money would enable it to make loans and loan guarantees some five times its initial capitalization. Thus, it would be able to finance $50 billion in new projects, greatly expanding the amount of financing available for infrastructure investment.
The NIB should also be allowed to pool, package and sell public infrastructure securities in the capital markets. With this authority, the NIB would be able to channel private finance into public infrastructure almost immediately. The ability to tap financing from pension funds, insurance companies, sovereign wealth funds and other large institutional investors would allow the NIB to raise additional capital beyond the initial $10 billion and further maximize the public benefit.
To ensure that the fund did not become a vehicle for random pork-barrel projects, it would be necessary to set up an advisory committee that would develop clear standards and priorities to be used when the NIB considered project requests. Exacting metrics would be applied to every infrastructure request to make sure that they provide the maximum amount of economic return for the investment made.
A $10 billion investment in our nation's infrastructure, if spent wisely and leveraged aggressively, could help fund new environmental technologies to address global warming; new energy technologies to replace fossil fuels; new electrical technologies to charge electric cars; expanded and upgraded roads, bridges and airports; and new technologies like Internet II and the extension of online access to low-income and rural Americans.
To lead in the 21st century, America will need to make strategic investments at home. To remain competitive in a global world and enhance our national security, it is an imperative. To work with our allies to create progress and prosperity in countries that have been left behind, there is no other way.
