Toward a New Federal Role in Infrastructure Investment: Using U.S. Sovereign Wealth to Rebuild America

In order to overcome years of chronic underinvestment, annual investment in public and quasi-public infrastructure systems of 4% to 6% of GDP ($500-$700 billion) will probably be necessary for the foreseeable future. However, no funding source is projected to have the capacity to generate funds sufficient for this level of investment. At the same time, there is an urgent need for public and institutional pension funds to invest in instruments that can generate stable, long-term, and low-risk returns on equity. This paper attempts to weave together the concurrent needs for infrastructure investment and improved returns to U.S. pension plans and begin a dialogue on a conceptual approach that could have the capacity to supply significant additional capital for infrastructure while at the same time addressing the needs of U.S. retirement systems to obtain higher returns with minimal risk. The core idea of the proposal is to use a combination of public and institutional pension funds, individual retirement accounts, and other private investment capital, together with Social Security Trust Funds to capitalize a National Infrastructure Bank that would provide senior debt to fund projects and programs supported by user fees or other reliable and sustainable revenue streams. Although this proposal is preliminary and incomplete, it could offer a novel approach for raising the massive amounts of capital needed for improving U.S. infrastructure systems.

Language

  • English

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  • Accession Number: 01155666
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Apr 21 2010 1:26AM