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September 12, 2011
Infrastructure Bank: A Bailout By Any Other Name
The night after a verbal trashing on his handling of the economy from the GOP presidential debate, President Obama took the stage in a Joint Session of Congress to reveal a new jobs initiative aimed at putting "Americans back to work."
Gee, where have we heard this before?
Included in this jobs plan rests the holy grail of liberal spending: an Infrastructure Bank. According to the teleprompter-in-chief, the Bank will provide "billions" to improve our roads, bridges, ports, and electric grids.
Easy translation: "We are going to throw more money at the economy and hope it works. Please believe in Keynesianism one more time."
In an effort to forget one failed stimulus effort, the President is hoping to co-opt both sides of the political aisle to back him on another government enterprise.
Unlike his effort to bring the unemployment rate down, Obama is succeeding on this front.
Both the AFL-CIO and Chamber of Commerce are backing the Infrastructure Bank. Since construction workers and large financial institutions benefit from this spending, both organizations see a prime opportunity to fill their coffers. And here in lies the true motive of the President's proposal. Like ObamaCare, Stimulus I, "cash for clunkers," and emergency loans to General Motors and Chrysler before it, the Infrastructure Bank is another bailout under the guise of "job creation."
When the financial crisis and Great Recession set in, state and local governments faced large shortfalls in tax revenue. President Obama and the Democrat controlled Congress came to the rescue with billions of direct financial support. With consumption down as many held their cash balances due to an uncertain job market, two of the big three of Detroit rushed to Washington in private jets to grovel for taxpayer money.
Who knew buying United Auto Worker votes cost a measly $80 billion?
The coup de grâce came when rising health care costs posed such a threat to the health care industry that our elected leaders decided to gift us by mandating the purchase of insurance. As former presidential candidate and expert primal screamer Howard Dean explained, "this is an insurance company's dream, this bill (Obamacare)."
Despite the calls of socialism, Obamanomics has always revolved around a collusion of big government and big business. With business reluctant to spend sufficient amounts of money, Obamanomics relies on bureaucrats to allocate capital who have no stake in profit or efficiency. Many times, they have no real experience even running a business. Just take a look at how wonderfully successful Solyndra, Obama's pet "green energy" project, has been with its recent bankruptcy.
Albert Einstein had a word for attempting the same thing over and over again expecting different results. But even insanity doesn't explain this administration's harebrained schemes for economic growth.
With the Infrastructure Bank, President Obama is looking to seduce two interest groups with one $60 billion cocktail. Wall Street will have a new mechanism to feed on taxpayer dollars. As Reuters points out, "private money is interested in being used for loans to infrastructure projects and guaranteed by the federal government and taxpayers. It's almost identical to senior bondholders who loaned money to too-big-to-fail banks. It's the best setup for private money because there is no loss."
Thanks to the Davis-Bacon Act which ensures prevailing wages for federal public works projects, unionized construction workers get to join the party. To wealthy special interests, the Obama administration has become the gift that keeps on giving. In the end costs go up, taxpayers lose out, campaigns are financed, and votes are purchased. Crony capitalism has a name: Barack Obama's presidency.
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