Smart policy: Mr. Obama's plan for an infrastructure bank

PRESIDENT OBAMA'S Labor Day proposal to create a national infrastructure bank and accelerate infrastructure spending may or may not be good politics. It certainly would be good policy, both short- and long-term. The proposal, which would require congressional approval, will not create jobs right away, but it has become painfully clear that slow job growth is a problem that will take years to resolve.

Front-loading the spending so that $50 billion would be available quickly is a sensible idea in this environment. In the construction industry, the unemployment rate is 17 percent, almost double the national average, and at risk of growing even higher as stimulus spending peters out. To dismiss this proposal, as did House Minority Leader John A. Boehner (R-Ohio), as "more of the same failed stimulus spending," misunderstands both the effectiveness of the current spending and the particularly useful nature of infrastructure investment, which is not dependent on consumers' decisions to spend rather than pay down their debt. Mr. Obama proposes to pay for this spending by doing away with tax breaks for oil and gas companies.

But even in a rosier economic climate, Mr. Obama's proposals would make sense. The nation's infrastructure is fraying. Improvements -- Mr. Obama spoke of investments in such areas as high-speed rail and next-generation air traffic control -- could strengthen America's global competitiveness. Meanwhile, spending by earmark and formula is a recipe for waste. The current system skimps on long-term planning and is stacked against maintaining existing roadways and other components.

An infrastructure bank, structured with some degree of political independence, could add a welcome degree of rationality to the existing hodgepodge of projects dictated as much by congressional seniority and whim -- see, e.g., the bridge to nowhere -- as by merit. An infrastructure bank could better take regional needs into account and leverage private capital. A companion proposal, to bring a "Race to the Top"-type competition to transportation funding, is also promising.

There are reasons to be doubtful about whether any of this will come to pass. It's not at all clear that Congress is prepared to fork over an additional $50 billion. The president has proposed the infrastructure bank twice before. Perhaps he will, as administration officials argue, have better luck in the context of the broader reauthorization of transportation funding that is now overdue. In addition, as Robert Puentes of the Brookings Institution points out, the president's proposal leaves out one key question: long-term funding. Mr. Obama unwisely has ruled out an increase in the gasoline tax and quashed any talk of an even more justifiable vehicle-miles-traveled tax. Reduced driving and more-efficient vehicles have depleted the highway trust fund, which is fueled by the gas tax. As Mr. Puentes put it, "A jump start now is no good if we stall again down the road."