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59 IRET Policy Bulletin 1 (1992)

handle is hein.taxfoundation/iretpbul0018 and id is 1 raw text is: November 23, 1992 -No.59 A BRIDGE TOO FAR One of President-elect Clinton's major proposals during the campaign was a $200 billion program to rebuild America's infrastructure, with special emphasis on communication, transportation and environmental systems. His white paper, Putting People First: A National Economic Strategy for America, declared: My strategy puts people first by investing more than $50 billion each year over the next four years to put America back to work... Later, it states: To create millions of high- wage jobs ... we will create a Rebuild America Fund, with a $20 billion Federal investment in each year for four years, leveraged with state, local, private sector and pension fund contributions. User fees such as road tolls and solid waste disposal charges will help guarantee these investments. These sentences have been widely interpreted to mean that Mr. Clinton intends to finance this fund with $20 billion a year in federal money and $30 billion a year derived from state and local sources and the private sector. Since the details of this proposal have not yet been presented to the public and the Congress, the white paper leaves many interesting questions regarding the sources of the non-federal monies and the means of obtaining them. The answers to these questions will be of great interest to those who manage private sector and state and local government pension funds and the current and future retirees who depend upon them, and to banks, insurance companies, and other lenders. What Kind of Fund? What will be the nature of this Rebuild America Fund (RAF)? Will it be a government managed and sponsored agency with appropriated contributions from the federal, state and local governments? Or will the state and local governments contribute through the purchase by their pension funds of bonds issued by the RAF? Will the private sector contributions consist of pension fund, bank, and insurance company purchases of bonds issued by the RAF? Will such purchases be voluntary or mandatory? Will such bonds be backed by the full faith and credit of the government? Who will decide what infrastructure will be built? Will the amount of spending in a state be related to the size of the state's contribution to the fund, making the RAF into a matching fund program such as the interstate highway program and Medicaid? Institute for IRET is a non-profit, tax exempt 501(c)3 economic policy research and educational Research organization devoted to informing the public about policies that will promote on the economic growth and efficient operation of the market economy. Economics of 1730 K Street, N.W., Suite 910 * Washington, D.C. 20006 Taxation (202) 463-1400 * Fax (202) 463-6199 e Internet www.iret.org