Obama's Infrastructure Bank--a new way to create "rents"
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and funnel profits to private businesses who do work on public infrastructure. The devils are in the details....
Susie at Suburban Guerrilla posts an article from Reuter's Muniland blog which looks at the details, and it looks like tolls and other user fees will be a requirement for getting money to undertake infrastructure improvements made through Obama's American Infrastructure Financing Authority. (AIFA? I'll use Infrastructure Bank.)
A photo of a half or three-quarters destroyed covered bridge in Vermont heads the Muniland post. Tolls for a historic covered bridge if Obama's Infrastructure Bank is used? Wow.
A bridge gets repaired with Obama's planned "bank"? Tolls will be required to pay off the loan. Same for a highway.
City park? Entry fee?
Schools get built? Well...kids pay a toll to get in????
The essence of the American Infrastructure Financing Authority is to use the full faith and credit of the U.S. government to loan funds at below-market rates to public-private partnerships — in other words, to privatize the cash flows from public assets. (My emphasis)
One of the Republican ideas Obama prides himself on including? Or one of the Big Money crowd's ideas?
Whoa, this guy never misses a beat in privatizing and shoveling profits to private industry.
Say it ain't so, Barry*!
While at Muniland, read through the newer posts, where Obama's plans seem to be get the money to the private side, keep the cost on the public side. Gee, lemon socialism all over again: Privatize gains, socialize losses.
Why that "loan" may be a "bond," but without the oversight and protections of bonds.
Treasury's overseas tax plan, in which corporations would not be taxed on profits brought back to the US.
Obama proposals could shift municipal bond buyers:
The strangest part of the President’s proposal for muniland though was the provision to exempt “private activity” bonds from the alternative minimum tax. From the Bond Buyer:
The legislation also would exempt from the alternative minimum tax all private activity bonds issued in 2011 and 2012 [My emphasis]. The American Recovery and Reinvestment Act enacted in February 2009 exempted tax-exempt bonds issued in 2009 and 2010, but the provision expired on Dec. 31.
Why the President would want to favor “private activity bonds” is unclear. Private activity bonds are a type of municipal bond issued to finance various types of facilities owned or used by private entities [emphasis in original], including airports, docks and certain other transportation-related facilities; water, sewer and certain other local utility facilities; solid and hazardous waste disposal facilities; certain residential rental projects (including multi-family housing revenue bonds).
Overall the President’s proposal seems like a mixed bag of politically untenable proposals. We will be watching for more reaction from various interest groups.
Reading Muniland gives me a sinking feeling in the pit of my stomach. When Obama plays a Democrat on TV, he's working to achieve Corporatist goals of Big Money...and Republicans. (Note that Dodd played the same game, but who noticed all the little in's and out's of economic writing prior the The Big $hit Pile Meltdown?)
As I am so little versed in the area of bonds I would appreciate others with more knowledge taking a look at what Reuter's Muniland blog is reporting. Is it as bad as my sinking stomach says it is?
(Note: I read a diary over at DKos, and it appears there's been a cleansing of members who were accused of "racism" against Barack Obama. The use of "Barry" is considered racist, since it implies treating a grown black man as an immature boy. Use of the color "black" is possibly racist and should be avoided. I can't recall the others, nor the name of the diary. But, crikey!)
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directly I heard about this
I just knew that it would be a privatize the profit socialize the cost kleptocracy project.
This is grotesque
And completely predictable, as soon as its pointed out. What a scam artist.
So I get to pay for the project my own tax dollars created. Nice.
public-private partnership = graft, there is a bipartisan altern
Dennis Kucinich and his fellow Ohioan, Republican Congressman Steve LaTourette sponsored a bill a few years ago that would have funded near-0 interest loans to states to fund infrastructure projects, but it wouldn't have added a penny to the federal deficit. The catch, and its a BIG catch, is since it'd use Congress's seigniorage powers to fund public works instead of giving away corporate welfare to incentivize the "wealth creators", how are Obama's Wall Street buddies supposed to make money off it?
The Kucinich-LaTourette bill would create the Federal Bank for Infrastructure Modernization (FBIM). The bank, as an extension of the Federal Financing bank under the Treasury Department, would establish zero-interest mortgage loans for states and local governments to use to fund specific projects. The loans would bear a small fee of one-quarter of one percent of the loan principle to cover the administrative costs of the FBIM. The bill would not require Congress to appropriate any funds and would effectively double the amount of financing that is available to states and localities for infrastructure investment.
http://www.house.gov/list/press/oh14_lat...
Edit: I added the above quote to the Reuters comment page preceded by this great Thomas Edision quote:
Hmm, why does the name "Thomas Edison" suddenly come to mind, oh yes....
"Look at it another way. If the Government issues bonds, the brokers will sell them. The bonds will be negotiable; they will be considered as gilt edged paper. Why? Because the government is behind them, but who is behind the Government? The people. Therefore it is the people who constitute the basis of Government credit. Why then cannot the people have the benefit of their own gilt-edged credit..."
http://prosperityuk.com/2000/09/thomas-e...
The proper legal term for "public-private partnership" is Major Fraud Against the United States (18 USC 1031). Congress can use its seigniorage powers to fund infrastructure at any time without adding a penny to the deficit (or wasting more billions in corporate welfare to Obama's Wall Street buddies). There was a bipartisan bill offered by two Ohio Congressmen a few years ago to do just that, allowing states to borrow at near-0 interest to fund infrastructure projects....
just the tip of the iceberg
Private activity bonds generate huge profits and the interest income they pay is just the tip of the iceberg. There are fees in their issuance for the bankers (called without a hint of self-consciousness, a discount) for a host of lawyers, rating agencies, insurers, financial advisors, etc., fees in their maintenance, in their continued rating, etc. This will generate serious money for the favored few on Wall Street, even by Wall Street standards. While the interests of the high net worth individuals this sort of instrument attracts is no doubt is a factor in choosing this means to finance infrastructure maintenance, it seems to me much more likely that the the Wall Street crowd is being served a heaping helping of that special crony capitalism welfare.