Elbert

**__First is declining infrastructure__ --- it is undermining the __foundation__ of the U.S. economy**
====** Donohue, 11 ** --- president and chief executive officer of the US Chamber of Commerce (9/8/2011, Thomas J., Christian Science Monitor, “The highway to jobs - via better infrastructure,” Factiva, JMP)==== As Obama and Congress talk jobs, here's an appeal from the US Chamber of Commerce: Invest heavily in roads, air transport, and other infrastructure. The economy and jobs depend on it. Adopt innovative financing, including an infrastructure bank to leverage private investment. __Throughout America's history, feats in infrastructure____, like the Interstate Highway System, have__ not only __been__ symbols of national achievement but also __conduits for commerce and keys to prosperity__. __Today__, however, __much of this foundation of the US economy is costly, cracked, and crumbling. Roads, rail, airports, and harbors need continual investment to keep pace with demand. Recent research by the US Chamber of Commerce discovered that underperforming transport infrastructure cost the US economy nearly $2 trillion in lost gross domestic product in__ 20 __08____and__ 20 __09__. The chamber's Transportation Performance Index showed that America's transit system is not keeping up with growing demands and is failing to meet the needs of the business community and consumers. Most important, the __research proved__ __for the first time that there is a **direct relationship between transportation infrastructure performance and GDP**__. The index findings also showed that if America invests wisely in infrastructure, it can become more reliable, predictable, and safe. __By improving underperforming transport infrastructure__, __the____U__ nited __S__ tates __could unlock nearly $1 trillion in economic potential__. __Making investments that tackle immediate challenges, like congestion, and that account for growing demand into the future, America would boost productivity and economic growth in the long run and support millions of jobs in the near term.__ Investment in infrastructure would also improve quality of life by reducing highway fatalities and accidents and easing traffic congestion that costs the public $115 billion a year in lost time and wasted fuel - $808 out of the pocket of every motorist. Such an investment would also allow the country to better protect the environment while increasing mobility. __If America fails to__ __adequately invest in transportation infrastructure__, __by 2020 it will lose $897 billion in economic growth. Businesses will see their transportation costs rise by $430 billion__, and the average American household income will drop by more than $7,000. US exports will decline by $28 billion. Meanwhile, __global competitors will surge past us__ __with superior infrastructure that will attract jobs, businesses, and capital__. So how can the US get its infrastructure to go from insufficient and declining to safe, competitive, and productive? An obvious place to start is for Congress to pass core bills for surface transportation, aviation, and water programs - at current funding levels. Congress must move forward with multiyear reauthorizations to restore the nation's highways; modernize air traffic control and improve airports; and maintain American ports, harbors, dams, and levees.Doing so would enable communities to plan projects, hire employees, and prevent devastating layoffs of existing workers. Reauthorizing the Federal Aviation Administration alone would help keep 70,000 workers on the job. Next, America should expand energy infrastructure to support growing needs. A great example is the Keystone XL pipeline to connect Canadian oil sands with Texas refineries. The sooner the project is approved and construction begins, the sooner the US can rake in the benefits of added investment and government revenues, job creation, and more resources to fuel energy needs and keep costs down for businesses and consumers. Likewise, the US can't let a needlessly cumbersome permitting process stand in the way of infrastructure development. The administration should limit environmental reviews to six months and forgo reviews when no significant environmental impact is expected. Duplicative reviews by state and federal governments should be prevented and, when multiple agencies are involved, a lead agency should be appointed to coordinate actions and move things along. Accelerating the permitting process would quickly mobilize construction and hiring from one end of the country to the other. __In this era of tight government budgets, America must adopt innovative financing approaches and spur on public-private partnerships. **A national infrastructure bank must be a part of a long-term investment strategy.**__ An initial government investment of $10 billion could leverage up to $600 billion in private funds.But regulatory impediments must also be removed. They take an estimated $250 billion in global capital out of play. If that private capital were invested in infrastructure projects, it could create 1.9 million jobs over 10 years and spur untold economic growth. As for public investments, sooner or later we'll have to face the fact that the federal fuel tax has not been raised 1 cent in 17 years. The country needs modest, phased-in increase. Comprehensively restoring America's infrastructure and revitalizing the economy are monumental tasks. Fortunately, we are the same nation that built our world-class system in the first place. If anyone is up to the challenge, we are.

**This negatively influences the __entire economy__ --- prevents a __resilient__ supply chain**
====** Little, 11 ** --- Director, Keston Institute for Public Finance and Infrastructure Policy (4/5/2011, Richard, “Infrastructure Investment and U.S. Competitiveness,” [], JMP) ==== __The massive network__ __of seaports, waterways, railroads, and highways we built in the nineteenth and twentieth centuries were designed to unlock the nation's natural resources, agriculture, and manufacturing strength and bring these products to market. Today, despite a dynamically changing economy, these sectors along with trade and transportation still account for more than a quarter of__ U.S. __GDP__ or $3.5 trillion, __but **many transport linkages have become bottlenecks due to long-delayed repair and replacement. The entire U.S. economy, as well as consumers, would benefit from a more efficient and resilient supply chain.**__ Unfortunately, for far too long, Americans have been lulled by their political leadership into a false sense of entitlement. Faced with the prospect of raising taxes or charging fees to cover the cost of maintaining these systems, they have chosen to do neither. As a result, __our highways and bridges decline at alarming rates.__ Most of the other systems vital to our interests suffer the same fate. Fixing this is well within our control, the challenge will be to muster the will to do so. __The first step in__ __addressing this problem will be to ensure that adequate revenue streams are in place.__ Whether this revenue comes from the fuel tax, tolls, or other mechanisms is less important than having the funds to work with. Without a move to revenue-based models, necessary renewal of critical infrastructure will be long delayed, if provided at all. __We can show that we value these systems__ __by agreeing to pay for their upkeep or own both the responsibility for economic decline and its consequences.__

**Confidence is collapsing now and destroying investment --- a national infrastructure bank is the __best short term stimulus__ that __doesn’t drive up the deficit__**
====** Skidelsky & Martin, 11 ** --- * Emeritus Professor of Political Economy at the University of Warwick, AND **macroeconomist and bond investor(3/30/2011, Robert Skidelsky and Felix Martin, New York Review of Books, “For a National Investment Bank,” [], JMP) ==== But could a National Investment Bank also help with the urgent problem of the weak recovery and the exhaustion of the current policy options? We believe that it could. Keynes was skeptical that economies can stage spontaneous recoveries from major slumps because he recognized the //central importance of confidence in a market system//. The //destruction of confidence// caused by a severe recession leads to a //collapse in investment//, which leads to further deterioration in confidence, and hence to further reduction in investment.In a slump , there is no shortage of savings and liquidity in the economy (and this is why further increasing liquidity, for example by quantitative easing, does little good). The problem is that private businesses do not want to borrow and invest — regardless of how low interest rates on borrowing are—because the future is particularly uncertain and they see no clear prospects for future demand. **__The current situation in the US conforms closely to Keynes’s analysis. There is no shortage of savings __** —the proportion of disposable income that American households save has jumped from below 2 percent immediately before the crisis to over 5 percent today, and US banks are sitting on record levels of cash. But there is a //chronic shortage of confidence in future demand// —so these savings are sitting in the most riskless of places—in short-term Treasury bills, and in banks’ accounts at the Federal Reserve. Keynes’s summary of the situation in 1932 still makes sense today, though in less extreme degree: It may still be the case that the lender, with his confidence shattered by his experience, will continue to ask for new enterprise rates of interest which the borrower cannot expect to earn…. If this proves to be so, there will be no means of escape from prolonged and perhaps interminable depression except by state intervention to promote and subsidise new investment. The //central challenge is to restore confidence// on the one hand and on the other to find a way of deploying idle cash to finance the resulting investments. Keynes argued for the direct solution: let the government do both. By increasing fiscal expenditure, it will support demand now and bolster confidence for the future ; and by issuing bonds to finance the resulting deficit, it will put the savings currently hiding in cash and Treasury bills to work. In effect, expenditures sponsored by government would substitute for the lost confidence of the private sector until business regains the confidence needed for future investment.For the time being such a policy is politically impossible, as President Obama has made clear. But the creation of a National Investment Bank provides an alternative solution —and one that has the cardinal virtue, in the current political situation, of not requiring the government to increase its borrowing significantly. As in the classical Keynesian solution, the federal government can //revive confidence// by making clear its support for large-scale, long-term investment programs— programs that will involve tens of billions of dollars of investment and generate hundreds of thousands of jobs. But unlike in the classical solution, the investments will be made by the private sector or by local governments, and the idle cash to fund these investments will be borrowed and deployed not by the federal government but by the National Investment Bank. Of course, the creation of a National Investment Bank cannot be a fiscal free lunch. Congress would need to appropriate sufficient funds to inject the initial capital of the bank. But the essence of banking is the ability to //make loans up to a multiple of several times initial capital//. For every dollar of initial capital from Congress, the National Investment Bank would be able to finance investment up to a sizable multiple of this initial capital by borrowing the extra dollars now languishing in the private capital markets. It would operate in two main ways. In some cases, the bank would offer a partial or full guarantee of repayment on bonds issued directly by investment projects themselves, thereby assuming some or all of the risk of the projects, and so reducing their cost of funding. But for the most part, the bank itself would lend to finance investment projects, and raise funds for lending from the capital markets by issuing long-term bonds carrying a modest premium over the interest rate on government securities. Such National Investment Bank bonds would likely be attractive assets for pension funds and other long-term investors.

**The economy won’t recover quickly or sufficiently enough on its own --- A national bank will stimulate the economy and boost jobs**
====** Skidelsky & Martin, 11 ** --- *Emeritus Professor of Political Economy at the University of Warwick, AND **macroeconomist and bond investor(3/30/2011, Robert Skidelsky and Felix Martin, New York Review of Books, “For a National Investment Bank,” [], JMP) ==== President Obama is in a bind. He knows that the economic recovery is fragile and dependent on continued fiscal stimulus —hence the bipartisan deal on further tax breaks he brokered in December. But he also knows that the tolerance in Washington for deficits of close to 10 percent of Gross Domestic Product is running out. In the short term, the politics of the new Congress will not allow them; and in the long term, the President’s own National Commission on Fiscal Responsibility and Reform has warned against them. The President’s dilemma was on open display in his State of the Union address in January. It is, he said, deficit spending by government that has “broken the back of this recession”; and government-supported investment in innovation, education, and infrastructure that is needed to “win the future.” But while sending to Congress a budget that he promised will produce “countless new jobs,” the President at the same time proposed to cut the deficit by more than $400 billion over the next decade. Overall investment and spending must be maintained by the government in order to support the economy at a time when unemployment remains at unprecedented postwar levels and a quarter of home owners owe more on their mortgages than the value of their property. The Federal Reserve has tried to stimulate the economy through a loose monetary policy, keeping interest rates very low and purchasing $600 billion in Treasury notes from big banks in an effort to make more money available to the banking system—a measure called quantitative easing. But the deficit must also be cut in order to preserve the nation’s creditworthiness. This is the urgent challenge the President knows America is facing. Is there a way to square the circle? Part of the solution, we believe, lies in the creation of //a National Investment Bank that will produce more jobs while not// //seriously increasing the deficit//. Behind this lies solid economic theory. The theory is Keynesian. John Maynard Keynes did not deny that market economies recovered “naturally” from slumps. He argued that //their natural recovery mechanisms were too weak// to bring them back to “full employment” within a “reasonable time” (say, three or four years). When private business confidence has been crushed and private investors’ appetite for risk has been curtailed by the painful experience of a recession, private spending will remain in the doldrums for a prolonged period even though output is well below capacity, resources lie idle, and people are unemployed. This is what occurred during the Great Depression, when the American economy took eight years after 19 29to regain its pre-crash peak output, and unemployment remained over 10 percent for more than a decade.In these circumstances , Keynes argued that the government should run an increased budget deficit to support recovery, because the //government is the sole agency// able to prevent total spending in the economy from falling below a reasonable level of activity and employment. If private spending is depressed the government can restore “aggregate demand”—the total spending and investment in the economy—to a higher level by adding to its own spending or reducing taxes. By contrast, any attempt to reduce the fiscal deficit while large spare capacity exists will only make matters worse. If the economy is severely “underemployed,” government spending that produces a deficit //will not “crowd out” private spending//. It will replace private spending that is not taking place. Few dispute that the US is not enjoying a normal recovery by recent standards. Economists talk about the persistence of the “output gap”—a theoretical concept that captures the difference between what the economy could produce if all available resources were employed and what it actually does. The Congressional Budget Office, for example, estimates in its latest assessment that the economy is still running at nearly 6 percent below potential.1 The man or woman in the street has a more direct measure of the problem: an unemployment rate close to 9 percent three years after the recession began. In the recessions of the early 1980s, 1990s, and 2000s, by this point in the recovery the total number of Americans employed was at, or above, the total number employed before the recession began. At the end of 2010, there were still more than seven million fewer Americans with jobs, full-time and part-time, than in March 2008. In this dismal situation, it is not surprising that Keynes’s diagnosis and his policy prescriptions have had a major revival, and fiscal policy throughout the OECD nations reflected this in the initial period of the global financial crisis. Fiscal stimulus in order to stabilize aggregate demand became the order of the day. As the crisis itself recedes into the distance, however, old dogmas have reemerged. The Keynesian case for deficit spending is challenged by the theory of “expansionary fiscal contraction,” which alleges that deficit spending will, on the one hand, “crowd out” private spending by depressing consumption. This will happen as households save more to pay anticipated higher taxes that will have been increased in order to pay for deficit spending. The public deficit will also constrain investment, since interest rates will have to rise as the government borrows money to cover the deficit. On the other hand, the theory proposes that “fiscal consolidation,” or reduction of the deficit, will increase household consumption, since households no longer anticipate increased taxes, and also investment, by making credit cheaper .The conditions needed to validate this theory are //highly unreal//, and there is //negligible empirical evidence to support it//. 2 But the vague air of moral rectitude that surrounds policies of austerity has reexerted a powerful influence over financial markets, and in its name, most OECD countries have now agreed on four- or five-year plans to liquidate deficits. “Fiscal consolidation” has become the new orthodoxy. The US is no exception. The Simpson-Bowles commission on the deficit has confirmed that the US faces larger long-term fiscal challenges than most other countries, and that major reform is needed. The Republican majority in the House of Representatives has placed cutting government expenditure at the heart of the political agenda for both parties. For the time being at least, the ideological winds have changed, and the President knows that it would be unrealistic to expect any further help from direct fiscal stimulus, despite the lethargic pace of the recovery. So the situation the President faces can be summarized as follows. Aggregate demand is not recovering sufficiently, and continues to need stimulus in order to restore employment to a reasonable level //within an acceptable span of time//. But it has become politically impossible to increase the government deficit; and even the extraordinarily loose monetary policy we have mentioned is not proving sufficiently effective to produce a full recovery. The tall order facing President Obama, then, is to find policies that can maintain demand without expanding the deficit. The creation of a National Investment Bank should be at the top of his list. A National Investment Bank could achieve two goals simultaneously: it could improve the long-term prospects of the US economy for growth by improving its facilities for energy, transportation, water supply, and much else, while offsetting the contractionary effects of orthodox fiscal policy. The first goal is likely to be the least controversial. After all, it was on these grounds that a National Infrastructure Reinvestment Bank was proposed in Congress in 2007 and 2009. On March 15 of this year a bipartisan group of senators headed by John Kerry proposed an infrastructure bank on exactly these grounds. The traditional case for public development banks is that they can incorporate national policy objectives into their lending strategies—and by doing so, avoid short-term “market failures” in private capital markets—failures that result in the lack of funding for projects of long-term value to the national economy. Unlike a commercial bank, a National Investment Bank would appraise such projects for financing not only on the basis of their profitability —though this would still be a necessary condition for approval— but also on the basis of their contribution to national policy objectives—such as the promotion of exports, the repair and development of infrastructure, and the efficient reduction of carbon emissions. Such an appraisal would thus take into account the benefits that such projects would bring to the//broader economy//.

**Studies prove the plan is a __uniquely beneficial__ form of stimulus**
====** Tyson, 11 ** --- Chan Chair in Global Management at UC Berkeley's Haas School of Business (Laura D., “A Better Stimulus Plan for the U.S. Economy,” [], JMP) ==== Although stimulus spending is a politically contentious issue, America is now in urgent need of a national infrastructure bank to help finance transformative projects of national importance. During the coming year I will work with the Obama administration; Senator John Kerry, Representative Rosa DeLauro, and other members of Congress; governors; mayors; and business leaders on legislation to establish and provide the capital for such an institution. I will also foster public support for its creation through speeches, interviews, and opinion columns like this one. //Unlike most other forms of stimulus//, infrastructure spending benefits the economy in two ways: First, it creates jobs — which, because those jobs put money in consumers' pockets, spurs demand. Analysis by the//C// ongressional //B// udget //O// ffice indicates that infrastructure spending is a cost-effective demand stimulus as measured by the number of jobs created per dollar of budgetary expenditure. Second, the resulting infrastructure enhancement supports supply and growth over time. By contrast, //underinvestment// not only hobbles U.S. competitiveness but also affects America's national security as vulnerabilities go unaddressed. In its 2009 report on the state of the nation's infrastructure, the American Society of Civil Engineers gave the U.S. a near-failing grade of D. Perhaps that should not be surprising, given that real infrastructure spending today is about the same as it was in 1968, when the economy was smaller by a third. A 20 08 CBO study concluded, for example, that a 74% increase in annual spending on transportation infrastructure alonewould be economically justifiable. That calculation leaves out additional infrastructure spending needed for other key public goals such as water delivery and sanitation. Realizing the highest possible return on infrastructure investments depends on funding the projects with the biggest impact and financing them in the most advantageous way. Properly designed and governed, a national infrastructure bank would overcome weaknesses in the current selection of projects by removing funding decisions from the politically volatile appropriations process. A common complaint today is that projects are often funded on the basis of politics rather than efficiency. Investments would instead be selected after independent and transparent cost-benefit analysis by objective experts. The bank would provide the most appropriate form of financing for each project, drawing on a flexible set of tools such as direct loans, loan guarantees, grants, and interest subsidies for Build America Bonds. It should be given the authority to form partnerships with private investors, which would increase funding for infrastructure investments and foster efficiency in project selection, operation, and maintenance. That would enable the bank to tap into the significant pools of long-term private capital in pension funds and dedicated infrastructure equity funds looking for such investment opportunities. Crafting the law to achieve these goals is a serious and challenging undertaking, particularly in view of large budget deficits and a contentious political atmosphere. But I believe they are worthy of the political and legislative effort required to realize them. The U.S. must invest considerably more in its infrastructure to secure its competitiveness and deliver rising standards of living. This effort would also put millions of Americans to work in meaningful jobs. The time has come to make it happen.

**This is triggering a major economic crisis --- outweighs the deficit and is best solved by the plan**
====** Tyson, 11 ** --- professor at the Haas School of Business at Cal Berkeley and former chair of the Council of Economic Advisers and the head of the National Economic Council under President Clinton (8/18/2011, Laura D’Andrea Tyson, “What it will take for President Obama and big business to bring back American jobs,” [], JMP) ==== The //immediate crisis// confronting the U.S. economy is the jobs deficit, //not the budget deficit//. Nearly 14 million Americans are unemployed, another 8.4 million are working part time because they cannot find full-time jobs, and yet another 2.8 million want a job and are available to work but have given up an active search. At 64 percent, the labor force participation rate is lower than it has been in nearly //three decades//. The magnitude of this jobs crisis we’re in is best measured by the jobs gap—the number of jobs the U.S. economy needs to add in order to return to its pre 2008-2009 employment level and absorb new entrants to the work force since then. The jobs gap at the end of August was more than 12 million jobs. Even at double the rate of employment growth realized during the last year, it would take more than 12 years for the U.S. economy to close this gap. The U.S. labor market, long admired for its flexibility and strength, is badly broken. Most American jobs are in the private sector, and private sector jobs have in fact been growing for 17 consecutive months; indeed, the private sector added about 1.8 million nonfarm payroll jobs during the last year. This pace of job creation is faster than during the previous recovery in the early 2000s and in line with the recovery of the early 1990s. But there’s one major problem: Private-sector job losses were more than twice as large in the recent recession as in the previous two, and job growth has fallen far short of what is necessary to offset these losses. In addition, public-sector employment has been declining in this recovery—this in contrast to other postwar recovery periods, in which such employment has increased. We’ve lost 550,000 public-sector positions in the last year alone, making the jobs crisis even more severe. Since the private sector creates (and eliminates) most jobs in the United States, and since budget constraints will likely mean more painful cuts in public-sector employment for the foreseeable future, Americans are understandably looking to business for solutions to the jobs crisis. To uncover the business solutions that could work, however, we first must acknowledge the fundamental cause of the problem: the dramatic collapse in aggregate demand that began with the 2008 financial crisis and that triggered huge job losses. Even with unprecedented amounts of monetary and fiscal stimulus, the recovery has been weak because consumers have curbed their spending, increased their saving and started to reduce their personal debt. And they still have a long way to go. Business surveys confirm that for both large and small companies, //the primary constraint on job growth is weak demand, not regulation or taxation//. In the apt words of a small business owner, “If you don’t have the demand, you don’t hire the people.” So what can the business community do to boost demand and job creation? It can convince Congress to establish a National Infrastructure Bank and pass a multi-year surface transportation bill to boost infrastructure investment. And while it’s at it, business can work with the Obama administration to reduce multi-year delays in the approval of infrastructure projects that would otherwise create tens of thousands of good-paying jobs in the next few years. It can partner with the Obama administration to achieve the target of doubling exports, supporting 2 million additional jobs, within five years. Securing congressional passage of the three pending trade agreements, combined with meaningful trade adjustment assistance for workers displaced by trade, would be a major step toward this goal. It can work in partnership with federal, state and local governments to encourage the retrofitting of commercial buildings to improve their energy efficiency—a 20-percent improvement would save business about $40 billion a year on utility bills, money that could be used to hire and train workers. It can finance partnerships with colleges and universities to provide workers with the skills needed for the jobs that are currently available and for the jobs that are most likely to become available as the economy continues to recover. These include jobs that require high levels of science and technology skills, such as engineering jobs that are currently unfilled because of a national shortage of engineers, as well as jobs that require community college training in specialized areas like manufacturing, clean energy, tourism and health care. In his recent column for the Washington Post, Professor Michael Useem challenged business leaders to focus not just on what is required for the success of their own companies but on what is required for the success of the national economy. Members of the President’s Council on Jobs and Competitiveness, a private-sector advisory group in which I participate,, are responding to this challenge. Yet even with innovative ideas and commitment, the business community cannot boost aggregate demand by the amount needed to close the jobs gap. That requires appropriate macroeconomic policies. What should the federal government do? It should extend unemployment benefits and link them to training programs as many European countries do. It should extend the payroll tax cut for employees enacted at the end of 2010 and it should add a payroll tax cut for employers on new hires. Payroll tax relief should be maintained until the unemployment rate falls to 6 percent. The 10-year yield on U.S. Treasuries has fallen below 2.5 percent, the lowest it has been since the 1950s. There are numerous economically justifiable, demand-generating investments the U.S. government should make in infrastructure, research and education that would pay a higher rate of return and would create jobs now, while also laying the foundation for faster growth in the future. With nearly 25 percent of mortgages under water, a record number of foreclosures and historically low mortgage rates, the government should also explore new ways to make it possible for more households to refinance their mortgages. Refinancing could put tens of billions of dollars of spending power into the economy. Additional fiscal measures like these would boost demand and job creation. And yes, they would also add to the fiscal deficit. But the most important driver of the deficit in the short run is weak tax revenues, reflecting weak economic performance; and the //most effective way to reduce the deficit in the next few years would be putting people back to work//. Every one percentage point of growth adds about $2.5 trillion in government revenues. But even strong growth will not solve the long-run deficit problem. That will require a multi-year balanced plan of spending cuts and revenue increases. That’s why Congress should pair such a plan with temporary fiscal measures to boost job creation–and pass both as a package now. Approving a deficit-reduction plan now but deferring its starting date until the economy is near full employment would reduce the danger that premature fiscal contraction will tip the economy back into recession. It would also alleviate investor concerns about the creditworthiness of the U.S. government, concerns that have been aggravated by recent political brinkmanship over the debt limit and the resulting S&P downgrade. Unfortunately, the odds that the United States will get the fiscal policy it needs—a combination of countercyclical support now and balanced deficit reduction later—are low. And the odds that Congressional gridlock will increase uncertainty, undermine confidence and endanger the faltering recovery are high. These odds are not good for business, nor are they good for the millions of Americans who need a job.

**Economic decline triggers worldwide conflict**
====** Royal, 10 ** – Jedediah Royal, Director of Cooperative Threat Reduction at the U.S. Department of Defense, (Economic Integration, Economic Signaling and the Problem of Economic Crises, Economics of War and Peace: Economic, Legal and Political Perspectives, ed. Goldsmith and Brauer, p. 213-215) ==== Less intuitive is how periods of economic decline may increase the likelihood of external conflict. Political science literature has contributed a moderate degree of attention to the impact of economic decline and the security and defence behaviour of interdependent states. Research in this vein has been considered at systemic, dyadic and national levels. Several notable contributions follow. First, on the systemic level, Pollins (2008) advances Modclski and Thompson's (1996) work on leadership cycle theory, finding that rhythms in the global economy are associated with the rise and fall of a pre-eminent power and the often bloody transition from one pre-eminent leader to the next. As such, exogenous shocks such as economic crises could usher in a redistribution of relative power (see also Gilpin, 1981) that leads to uncertainty about power balances, increasing the risk of miscalculation (Fearon. 1995). Alternatively, even a relatively certain redistribution of power could lead to a permissive environment for conflict as a rising power may seek to challenge a declining power (Werner, 1999). Separately, Pollins (1996) also shows that global economic cycles combined with parallel leadership cycles impact the likelihood of conflict among major, medium and small powers, although he suggests that the causes and connections between global economic conditions and security conditions remain unknown. Second, on a dyadic level, Copeland's (1996. 2000) theory of trade expectations suggests that 'future expectation of trade' is a significant variable in understanding economic conditions and security behaviour of states __.__ He argues that interdependent states are likely to gain pacific benefits from trade so long as they have an optimistic view of future trade relations. However, if the expectations of future trade decline, particularly for difficult to replace items such as energy resources, the likelihood for conflict increases , as states will be inclined to use force to gain access to those resources. Crises could potentially be the trigger for decreased trade expectations either on its own or because it triggers protectionist moves by interdependent states.4 Third, others have considered the link between economic decline and external armed conflict at a national level. Blomberg and Hess (2002) find a strong correlation between internal conflict and external conflict, particularly during periods of economic downturn. They write: The linkages between internal and external conflict and prosperity are strong and mutually reinforcing. Economic conflict tends to spawn internal conflict, which in turn returns the favour. Moreover, the presence of a recession tends to amplify the extent to which international and external conflicts self-reinforce each other. (Blomberg & Hess, 2002. p. 89) Economic decline has also been linked with an increase in the likelihood of terrorism (Blomberg. Hess. & Weerapana. 2004). which has the capacity to spill across borders and lead to external tensions. Furthermore, crises generally reduce the popularity of a sitting government. 'Diversionary theory' suggests that, when facing unpopularity arising from economic decline, sitting governments have increased incentives to fabricate external military conflicts to create a 'rally around the flag' effect. Wang (1990, DeRouen (1995). and Blomberg, Hess, and Thacker (2006) find supporting evidence showing that economic decline and use of force are at least indirectly correlated. Gelpi (1997), Miller (1999), and Kisangani and Pickering (2009) suggest that the tendency towards diversionary tactics are greater for democratic states than autocratic states, due to the fact that democratic leaders are generally more susceptible to being removed from office due to lack of domestic support. DeRouen (2000 __) has provided evidence showing that periods of weak economic performance in the U__ nited S tates, and thus weak Presidential popularity, are statistically linked to an increase in the use of force . In summary, recent economic scholarship positively correlates economic integration with an increase in the frequency of economic crises, whereas political science scholarship links economic decline with external conflict at systemic, dyadic and national levels __.__ ' This implied connection between integration, crises and armed conflict has not featured prominently in the economic-security debate and deserves more attention. This observation is not contradictory to other perspectives that link economic interdependence with a decrease in the likelihood of external conflict, such as those mentioned in the first paragraph of this chapter. Those studies tend to focus on dyadic interdependence instead of global interdependence and do not specifically consider the occurrence of and conditions created by economic crises. As such, the view presented here should be considered ancillary to those views.

**Independently, slow growth makes the US uncooperative and desperate – leads to hegemonic wars**
====**Goldstein 7** - Professor of Global Politics and International Relations @ University of Pennsylvania, Avery Goldstein, “Power transitions, institutions, and China's rise in East Asia: Theoretical expectations and evidence,” Journal of Strategic Studies, Volume 30 , Issue 4 & 5 August 2007, pages 639 – 682 ==== Two closely related, though distinct, theoretical arguments focus explicitly on the consequences for international politics of a shift in power between a dominant state and a rising power. In War and Change in World Politics, Robert Gilpin suggested that peace prevails when a dominant state’s capabilities enable it to ‘govern’ an international order that it has shaped. Over time, however, as economic and technological diffusion proceeds during eras of peace and development, other states are empowered. Moreover, the burdens of international governance drain and distract the reigning hegemon, and challengers eventually emerge who seek to rewrite the rules of governance. As the power advantage of the erstwhile hegemon ebbs, it may become desperate enough to resort to theultima ratio of international politics, force, to forestall the increasingly urgent demands of a rising challenger. Or as the power of the challenger rises, it may be tempted to press its case with threats to use force. It is the rise and fall of the great powers that creates the circumstances under which major wars, what Gilpin labels ‘ hegemonic wars ’, break out.13 Gilpin’s argument logically encourages pessimism about the implications of a rising China. It leads to the expectation that international trade, investment, and technology transfer will result in a steady diffusion of American economic power, benefit ing the rapidly developing states of the world, including China. As the US simultaneously scurries to put out the many brushfires that threaten its far-flung global interests (i.e., the classic problem of overextension), it will be unable to devote sufficient resources to maintain or restore its former advantage over emerging competitors like China. While the erosion of the once clear American advantage plays itself out, the US will find it ever more difficult to preserve the order in Asia that it created during its era of preponderance **. **The expectation is an increase in the likelihood for the use of force – either by a Chinese challenger able to field a stronger military in support of its demands for greater influence over international arrangements in Asia, or by a besieged American hegemon desperate to head off further decline. Among the trends that alarm those who would look at Asia through the lens of Gilpin’s theory are China’s expanding share of world trade and wealth (much of it resulting from the gains made possible by the international economic order a dominant US established); its acquisition of technology in key sectors that have both civilian and military applications (e.g., information, communications, and electronics linked with to forestall, and the challenger becomes increasingly determined to realize the transition to a new international order whose contours it will define. the ‘revolution in military affairs’); and an expanding military burden for the US (as it copes with the challenges of its global war on terrorism and especially its struggle in Iraq) that limits the resources it can devote to preserving its interests in East Asia.14 Although similar to Gilpin’s work insofar as it emphasizes the importance of shifts in the capabilities of a dominant state and a rising challenger, the power-transition theory A. F. K. Organski and Jacek Kugler present in The War Ledger focuses more closely on the allegedly dangerous phenomenon of ‘crossover’– the point at which a dissatisfied challenger is about to overtake the established leading state.15 In such cases, when the power gap narrows, the dominant state becomes increasingly desperate. Though suggesting why a rising China may ultimately present grave dangers for international peace when its capabilities make it a peer competitor of America, Organski and Kugler’s power-transition theory is less clear about the dangers while a potential challenger still lags far behind and faces a difficult struggle to catch up. This clarification is important in thinking about the theory’s relevance to interpreting China’s rise because a broad consensus prevails among analysts that Chinese military capabilities are at a minimum two decades from putting it in a league with the US in Asia.16 Their theory, then, points with alarm to trends in China’s growing wealth and power relative to the United States, but especially looks ahead to what it sees as the period of maximum danger – that time when a dissatisfied China could be in a position to overtake the US on dimensions believed crucial for assessing power. Reports beginning in the mid-1990s that offered extrapolations suggest ing China’s growth would give it the world’s largest gross domestic product ( GDP aggregate, not per capita) sometime in the first few decades of the twentieth century fed these sorts of concerns about a potentially dangerous challenge to American leadership in Asia.17 The huge gap between Chinese and American military capabilities (especially in terms of technological sophistication) has so far discouraged prediction of comparably disquieting trends on this dimension, but inklings of similar concerns may be reflected in occasionally alarmist reports about purchases of advanced Russian air and naval equipment, as well as concern that Chinese espionage may have undermined the American advantage in nuclear and missile technology, and speculation about the potential military purposes of China’s manned space program.18 Moreover, because a dominant state may react to the prospect of a crossover and believe that it is wiser to embrace the logic of preventive war and act early to delay a transition while the task is more manageable, Organski and Kugler’s power-transition theory also provides grounds for concern about the period prior to the possible crossover__. __ 19 pg. 647-650

**Growth eliminates the only rational incentives for war**
====**Gartzke 11** – associate Professor of political science at the University of California, San Diego PhD from Iowa and B.A. from UCSF Erik, "SECURITY IN AN INSECURE WORLD" www.cato-unbound.org/2011/02/09/erik-gartzke/security-in-an-insecure-world/ ==== Almost as informative as the decline in warfare has been where this decline is occurring. Traditionally, nations were constrained by opportunity. Most nations did not fight most others because they could not physically do so. Powerful nations, in contrast, tended to fight more often, and particularly to fight with other powerful states. __Modern “zones of peace” are dominated by powerful, militarily capable countries____. These____ countries ____could fight each other, but are not inclined to do____ so ____. __ At the same time, __ weaker developing nations that continue to exercise force in traditional ways are incapable of projecting power __ against the developed world, with the exception of unconventional methods, such as terrorism. The world is thus divided between those who could use force but prefer not to (at least not against each other) and those who would be willing to fight but lack the material means to fight far from home. __Warfare in the modern world has__ __thus become an activity involving weak__ (usually neighboring) __nations, with intervention by powerful__ (geographically distant) __states in a policing capacity____.__ So, the riddle of peace boils down to why capable nations are not fighting each other. There are several explanations, as Mack has pointed out. __ The easiest, and I think ____the best, explanation has to do with an absence of motive.__ Modern states find little incentive to bicker over tangible property, since __ armies are expensive and the goods that can be looted are no longer of considerable value. __ Ironically, this is exactly the explanation that Norman Angell famously supplied before the World Wars. __ Yet, today ____the evidence is abundant that the most prosperous, capable nations prefer to buy rather than take.__ Decolonization, for example, divested European powers of territories that were increasingly expensive to administer and which contained tangible assets of limited value. __ Of comparable importance is ____the move to__ **__ substantial __**__consensus among powerful nations about how international affairs should be conducted____. The great rivalries__ of the twentieth century __ were ideological rather than territorial ____. These ____have been substantially resolved__, as Francis Fukuyama has pointed out. __ The fact that remaining differences are moderate, while the ____benefits of acting in concert are large (due to economic interdependence in particular) means that____ **nations prefer to deliberate rather than fight** __. Differences remain, but for the most part the capable countries of the world have been in consensus, while the disgruntled developing world is incapable of acting on respective nations’ dissatisfaction. While this version of events explains the partial peace bestowed on the developed world, it also poses challenges in terms of the future. __ The rising nations of Asia __ in particular __ have not been __ equal __ beneficiaries in the world political system. ____These nations have benefited from economic integration, and this has proved sufficient in the past to pacify them.__ The question for the future is whether the benefits of tangible resources through markets are sufficient to compensate the rising powers for their lack of influence in the policy sphere. The danger is that established powers may be slow to accommodate or give way to the demands of rising powers from Asia and elsewhere, leading to divisions over the intangible domain of policy and politics. Optimists argue that at the same time that these nations are rising in power, their domestic situations are evolving in a way that makes their interests more similar to the West. Consumerism, democracy, and a market orientation all help to draw the rising powers in as fellow travelers in an expanding zone of peace among the developed nations. Pessimists argue instead that capabilities among the rising powers are growing faster than their affinity for western values, or even that fundamental differences exist among the interests of first- and second-wave powers that cannot be bridged by the presence of market mechanisms or McDonald’s restaurants. __If the peace observed among western, developed nations is to prove durable, it must be because warfare proves futile as nations transition to prosperity.__ Whether this will happen depends on the rate of change in interests and capabilities, a difficult thing to judge. __ We must hope that the optimistic view is correct, that ____ what ended war in Europe can be exported globally. ____Prosperity has made war expensive,__ while the fruits of conflict, both in terms of tangible and intangible __spoils have declined in value.__ These forces are not guaranteed to prevail indefinitely. Already, research on robotic warfare promises to lower the cost of conquest. If in addition, fundamental differences among capable communities arise, then warfare over ideology or policy can also be resurrected. We must all hope that the consolidating forces of prosperity prevail, that __war becomes a durable anachronism.__

**The plan will revive confidence in demand and spur a self-sustaining private sector recovery**
====** Skidelsky & Martin, 11 ** **-**-- * Emeritus Professor of Political Economy at the University of Warwick, AND **macroeconomist and bond investor(3/30/2011, Robert Skidelsky and Felix Martin, New York Review of Books, “For a National Investment Bank,” [], JMP) ==== Such are the principles of our proposal, but what about the practicalities? Could a National Investment Bank operate on a scale that would make a material difference to aggregate demand and employment? And how would the bank operate in practice? A useful example of the scale of what our proposal could achieve is provided by the European Investment Bank (EIB). The//E// uropean //U// nion has an economy of a similar size and level of development to the US —in 2010 the GDP of the EU was around $16 trillion, and of the US around $15 trillion—and the EIB is its public development bank. The EU governments that own the EIB have contributed approximately $50 billion of capital to it; and the bank currently borrows a further $420 billion from the private capital markets to finance a total lending portfolio of some $470 billion. In other words, for a fiscal outlay of $50 billion, the EU governments are able to finance investments worth more than $470 billion. The EIB has funded major infrastructure projects throughout Europe, from the port of Barcelona to the Warsaw beltway, and from France’s famous TGV network to Britain’s new, world-leading offshore wind industry. In doing so, it has consistently turned a profit and maintained negligible delinquencies over five decades. If a US National Investment Bank were established on a similar scale, the investment spending it could therefore finance over ten years at a direct cost of around $50 billion could more than offset the $400 billion of expenditure cuts promised by President Obama in his State of the Union Address and proposed in his recent budget over the same period. The bank would achieve a //more than $400 billion increase in aggregate demand// in return for a $50 billion increase in the federal government’s debt. But the real return would be much greater. By making clear a national commitment to a coherent and rigorously appraised program of economic restructuring and the investment necessary to support it, the bank would also //revive confidence in demand// and so provide the basis for a //self-sustaining private sector recovery//.

** Tyson, 11 ** --- professor at the Haas School of Business at UC Berkeley (6/3/2011, Laura D’Andrea Tyson, NYT Blogs, “The Virtues of Investing in Transportation; Economix,” Factiva, JMP)
__Years of underinvesting in__ __the nation's transportation infrastructure are apparent in congested roads, freight bottlenecks, airport delays and overcrowded or non-existent public transit operations__. Yet the heated debate in Washington about how much and how fast to slash government spending is overlooking how __a significant____, sustained increase in infrastructure investment would create jobs and strengthen the nation's competitiveness.__ Infrastructure spending, adjusted for inflation and accounting for the depreciation of existing assets, is at about the same level it was in 1968, when the economy was one-third smaller. Public investment on transportation and water infrastructure as a share of gross domestic product has fallen steadily since the 1960s and now stands at 2.4 percent, compared with 5 percent in Europe and more than 9 percent in China. Experts differ on how much more is needed but agree the amount is substantial. The American Society of Civil Engineers, for example, estimates that we need to spend an additional $110 billion a year to maintain the transportation infrastructure at current performance levels. The Congressional Budget Office reported in May that simply maintaining the current performance of the system would require the federal government to increase its annual spending on highways by about one-third, while state and local governments that account for about 55 percent of capital spending on the highway system would have to increase their annual spending by similar or larger amounts. Financing highway projects whose economic benefits exceed their costs would necessitate more than a doubling of federal investment on highway infrastructure from its 2010 level of $43 billion. All these estimates apply only to shortfalls in economically justifiable spending on transportation and highways; they do not include other critical infrastructure areas, like water, energy and broadband. __Government spending on infrastructure raises demand____, creates jobs and increases the supply and growth potential of the economy over time.____The C.B.O. says infrastructure spending is one of the most effective fiscal policies for increasing output and employment and one of the most cost-effective forms of government spending in terms of the number of jobs created per dollar of budgetary cost.__ Studies indicate that each $1 billion of infrastructure spending creates 11,000 (estimate of the President's Council of Economic Advisers) to 30,000 jobs (estimate of the Department of Transportation for infrastructure spending on highways) through direct and indirect effects. Most of these jobs are added in construction and related sectors, hard hit by the housing crisis, and most of them are relatively well paid, with wages between the 25th and the 75th percentile of the national wage distribution. Public infrastructure enables the private sector. __A modern transportation infrastructure improves private-sector productivity__ __by reducing production and transportation costs, and facilitating trade, economies of scale and efficient production methods.__ Not surprisingly, __the quality of transportation infrastructure is a major factor affecting business decisions__ __about where to locate production, and the eroding quality of infrastructure is making the____U__ nited __S__ tates __a less attractive place to do business.__ According to the 2010-11 competitiveness report of the World Economic Forum, the United States now ranks 23rd among 139 countries on the overall quality of its infrastructure -- between Spain and Chile. In 1999, the United States ranked seventh. The Obama administration's budget request for $556 billion for the reauthorization of the surface transportation bill over the next six years is an important first step. But how the money is spent also matters. Because of political considerations, a large fraction of federal infrastructure spending currently finances projects aimed at building capacity rather than maintaining existing capacity. Yet recent evidence indicates both that the returns on projects to expand capacity have been falling over time and that projects to maintain capacity often enjoy higher returns. In a time of budget austerity, the allocation of scarce federal dollars for infrastructure must be guided by cost-benefit analysis -- rather than by earmarks and formula-based grants, as is currently the case. That's why the Obama administration is calling for the use of performance criteria and "race to the top" competition among state and local governments to allocate federal spending among competing projects. That's also why both the administration and a bipartisan group led by Senators John Kerry, Democrat of Massachusetts; Kay Bailey Hutchison, Republican of Texas, and Mark Warner, Democrat of Virginia, have proposed the creation of __a national infrastructure bank__. Such a bank __would focus on transformative projects of national significance, like the creation of a high-speed rail system or the modernization of the air-traffic-control system__. Such projects are neglected by the formula-driven processes now used to distribute federal infrastructure funds among states and regions. __The bank would also **provide greater certainty about the level of federal funds for multiyear projects**__ __by removing those decisions from the politically volatile annual appropriations process and would select projects based on transparent cost-benefit analysis by independent experts. The bank would be granted authority to create partnerships with private investors on individual projects, and these would increase the funds available and foster greater efficiency in project selection, operation and maintenance. Such partnerships -- common in Europe and other parts of the world -- often result in earlier completion of projects, lower costs and better maintenance of infrastructure compared with investments made solely by public entities.__ Despite rapid growth in the last decade, __such partnerships are still rare in the____U__ nited __S__ tates. Why? **__Because infrastructure decisions are fragmented, with states, cities and municipalities owning their own assets and applying their own political and economic criteria to potential deals with private investors. Several states do not have legislation authorizing partnerships and no guidelines exist for how decisions will be made.__** One obstacle may be gone: Representative James Oberstar, Democrat of Minnesota and the previous chairman of the House Transportation and Infrastructure Committee, opposed these partnerships and urged state and local officials to avoid them. He lost his seat in 2010, and Representative John Mica, Republican of Florida, who now heads the committee, supports the partnership concept. __Improving infrastructure investment decisions through cost-benefit analysis and public-private partnerships is one way to realize larger returns on scarce investment dollars.__

** Zakaria, 11 ** (6/13/2011, Fareed, “Zakaria: U.S. needs an infrastructure bank,” [], JMP)
President Obama has proposed a number of specific policies to tackle the jobs crisis, but they have gone nowhere because Republicans say that their top concern is the deficit and debt. Those of us worried about the debt - and I would strongly include myself - need to remember that __if unemployment doesn't go down fast, the deficit is going to get much worse. **If you're serious about deficit reduction, the single most important factor that will shrink it is to have more people working and paying taxes.**__ I want to focus on __one of Obama's proposals__ because it actually would add very little to the deficit, it has some Republican supporters and it __would have an immediate effect on boosting employment and growth__. Plus, it's good for the country anyway. __We need a national infrastructure bank to repair and rebuild America's crumbling infrastructure____.__ The House Majority Leader, Eric Cantor, has played down this proposal as just more stimulus, but if Republicans set aside ideology, they would actually see that this is an opportunity to push for two of their favorite ideas - privatization and the elimination of earmarks. That's why Republicans like Kay Bailey Hutchison and Chuck Hagel are strongly in favor of such a bank. The United States builds its infrastructure in a remarkably socialist manner. The government funds bills and operates almost all American infrastructure. Now, __in many countries in Europe and Asia the private sector plays a much larger role in financing and operating roads, highways, railroads, airports and other public resources. An infrastructure bank would create a mechanism by which you could have private sector participation.__ Yes, there would be some public money involved, though mostly through issuing bonds. And with interest rates at historic lows, __this is the time to use__ those __low interest rates to borrow money__ __and rebuild America's infrastructure. Such projects have huge long-term payoffs and can genuinely be thought of as investments, not expenditures.__ A national infrastructure bank would also address a legitimate complaint of the Tea Party - earmark spending. One of the reasons federal spending has been inefficient is that Congress wants to spread the money around in ways that might make political sense but are economic nonsense. __An infrastructure bank would make those decisions using cost-benefit analysis in a meritocratic system__ rather than spreading the wealth around and basing these decisions on patronage, politics and whimsy. Let's face it, America's infrastructure is in a shambles. __Just a decade ago, we ranked sixth in infrastructure in the world according to the World Economic Forum. Today we rank 23rd and dropping. **We will not be able to compete with the nations of the world if we cannot fix this problem.**__ Is it too much to ask that Republicans and Democrats find a way to come together on this? That moment of bipartisanship might actually be the biggest payoff of all.

**The steel industry is growing now, but remains __fragile__ – new transportation infrastructure projects are vital to maintain momentum**
====** Brooks, 12 ** – Foundry Management & Technology Editor-in-chief at IndustryWeek (Robert Brooks, “Domestic Steelmakers are Strong, But Concerned”, IndustryWeek, 4/12/12, [] | AK) ==== The U.S. steel industry is bullish on the progress and trajectory of the manufacturing sector, but its leaders would like some help keeping it going. In a Wednesday conference call, United States Steel Corp. (IW 500/60) Chairman and CEO John Surma and American Iron and Steel Institute president and CEO Thomas Gibson presented the AISI’s 2012 public-policy priorities, heavily emphasizing the ways economic growth is impededby specific federal actions, and inaction. Surma, who is the current chairman of AISI, the primary steel industry’s trade association, began the presentation by noting a recent economic analysis from University of Wyoming Professor Timothy Considine, whose specialty is energy economics. That report concluded domestic steelmakers are playing a significant role in the manufacturing sector’s post-recession resurgence because of its high degree of interrelation with other economic sectors. Surma pointed to the energy, construction, and transportation sectors as examples of the impact domestic steel has had on the manufacturing rebound. “ Every one job in the U.S. steel industry supports seven jobs in the U.S. economy, reflecting its ripple effect on employment ,” Considine wrote, and Surma reiterated. The report found that in 2011, the domestic steel industry directly employed 150,700 people and thanks to its multiplier supported at least 1,022,009 jobs. Surma emphasized that domestic steelmakers contributed more than $101 billion to the U.S. economy. Purchases of raw materials, energy, and supplies, are stimulating economic growth and employment on a wide scale, he said. However, the U.S. Steel chairman stressed the need for the federal government to take steps that would establish more certainty in the economic outlook. He listed several factors inhibiting economic growth : “burdensome” corporate tax rates, uncertain energy costs, inadequate infrastructure investments, increasing regulatory burdens, and foreign unfair trade practices. These are not new issues, Surma noted, but he emphasized that the need to address them is, for domestic steelmakers , “very, very immediate .” Steelmakers are prepared to capitalize on the U.S.’s “abundant and available” supply of energy resources -- notably shale oil, he said -- but those opportunities are limited by federal regulatory policies. The delayed Keystone XL Pipeline project was cited as a singular example of this situation. Surma also said rebuilding the U.S. transportation infrastructure should become a “top national priority.” And, he stated that any tax-reform initiative must proceed from an objective of strengthening the U.S. industrial base by reducing the overall tax burden on manufacturers. “This is an essential issue that AISI is actively discussing with members of Congress,” Surma said. “With manufacturing leading the nation out of the recession, the time is right for tax reform,” he said, “considering that the U.S. now has the highest corporate tax rate of any industrialized nation in the world.” Surma described the investments that domestic steelmakers have made since 1990 to reduce their operations’ energy-intensity (-27% per ton of steel produced) and CO2 emissions (-33% per ton of steel shipped). “Despite these advances, the federal regulatory agencies, especially U.S. EPA, have been aggressive,” he asserted. “We urge the administration to take a step back and delay, revisit, and revise, some of these new rules, so that we don’t make ourselves uncompetitive in the global marketplace,” Surma said. “Some of these rules are actually counter-productive, and would actually increase energy cost uncertainties with little or no environmental benefit.” The example he cited is the Industrial Boiler MACT Rule that in current form, he said, could force coke producers to flair coke-oven gas rather than recover and use it in the industrial process -- a common arrangement in those operations. Surma said the rule would make it cheaper to flair the gas than to comply with the new regulation, and then to buy natural gas as an alternative to coke oven gas, though this would result in no additional environmental benefit. Returning to the earlier point of energy uncertainty, and relating it to the regulatory uncertainty, Surma said the AISI’s position is that individual states are in a much better position to manage regulations governing hydraulic fracturing for natural gas drilling. “Fracking” is a market with considerable economic opportunity for steelmakers. “Federal agencies should recognize this,” he said, “and avoid adding new layers of inefficiency and cost that could harm our competitiveness.” Surma concluded his list of objectives by calling for a “more effective U.S. trade policy to combat foreign unfair trade practices.” He said this matter is one of “particular importance to our AISI policy agenda.” China’s export-protection policies and currency-devaluing practices were his primary example of the ways that international trade injures domestic manufacturing. Gibson said the AISI’s legislative priority would begin with its desire for a resolution to the federal surface transportation authorization bill. The so-called highway bill has been delayed nine times by the U.S. House of Representatives, reportedly because of disagreement between the House Republican leadership and its Caucus. Congress has not agreed on a new transportation-infrastructure funding bill since a six-year program expired in 2009. The U.S Senate passed a new version last month to provide two years of funding, but House efforts to pass a longer-term bill are stalled and so no compromise bill is possible. The impasse forced the House to pass its ninth temporary extension of the old law before its current two-week recess. The extension of funding will last 90 days. Gibson and Surma both expressed understanding for the budget-cutting priorities of some Republican House members who are widely considered the obstacles to a new six-year bill. However, Gibson said the AISI would accept the short-term certainty of two years of funding provided by the Senate version of the bill, rather than a tenth extension of the 2009 program that provides no strategic outlook for steelmakers and other manufacturers.

**Now is key – focusing on __new projects__ is key to the industry’s survival**
====** King, 12 ** – political writer for the Wheeling News-Register and the Intelligencer (Joselyn King, “’Future Of Steel’ Topic In D.C”, Wheeling News-Register, 3/25/12, [] | AK) ==== WHEELING - Congress must take action to protect American manufacturing - and along the way make certain the U.S. steel industry survives, said U.S. Rep. David B. McKinley. McKinley, R-W.Va., last week attended the annual "State of the Steel Industry" hearing in Washington, D.C., where steel leaders discussed issues affecting their business. "We have seen the chilling affects that over regulation by the Federal government, Chinese currency manipulation and illegal dumping of manufactured goods - as well as irrational court decisions in the World Trade Organization courts and the U.S. Court of International Trade - have caused ..." McKinley said. "What we heard ... is that Congress must take action to protect America's manufacturers and their employees who continue to suffer due to unfair policies and decisions . At a time when 23 million Americans are unemployed or underemployed, Congress must put partisan politics and bickering aside to do what is right for our nation." McKinley was among the co-sponsors of House Resolution 4105, which allows for duties on imports into the United States from countries that subsidize manufacturing. The bill was passed by the House and Senate earlier this month, and has since been signed into law by President Barack Obama. A second bill clarifies that additional duties may be imposed to address subsidies relating to a fundamentally undervalued currency of any foreign country. The bill has not moved in the House. In the Senate, Sen. Sherrod Brown, D-Ohio, introduced the Currency Exchange Rate Oversight Reform Act of 2011 that passed into law late last year. The measure requires the U.S. Commerce Department to investigate if a country is undervaluing its currency, while releasing the findings to the public. "But we continue to leave this vital American industry at risk when we buy steel - whether for military armor plates or for transportation infrastructure - from foreign countries ," he said. " Taxpayer dollars should be spent on American-made steel, the very best available to protect our service members, and to reinforce our highways and bridges. "We know how to make steel from start to finish right here in America. There's no reason why countries like China, Russia, and Brazil should be doing it for us." Sen. Rob Portman, R-Ohio, said the steel industry in the Ohio Valley is doing better and can have a bright future, " so long as the federal government does a better job creating the right business environment ." "This means more sensible regulations, trade policy that ensures other countries comply with the rules, and other pro-growth policies including more development of domestic sources of energy on private and public lands," he said. "If we encourage a continued growth of oil and natural gas production in shale formations like the Marcellus and the Utica, we will stabilize energy costs for manufacturers, increase demand for products and fortify the nation's economy." Jay Rockefeller, D-W.Va., noted a thriving manufacturing base in the U.S. is essential for our future . " Our steelworkers are second to none , and they continue to make products every day that we can all be proud of," he said. "I have continued to work to bring new investors for steel companies in the state, fought for a tax credit that would help support our steel and coal communities and the jobs that depend on them, and make sure that American steel is used to build our roads and bridges." A decline in the steel industry makes America vulnerable, according to Sen. Joe Manchin, D-W.Va. " This leaves us in a dangerous position of not being able to manufacture critical products, therefore eroding our economy and leaving us dependent on other countries ," he explained. This is why it is so important that we must start rebuilding America and the first step is to focus on our infrastructure and our steel and manufacturing sectors ."

**The 2009 ARRA was __insufficient__ – establishing a national infrastructure bank is __crucial__**
====** Robertson, 10 ** – Pittsburgh Bureau chief at American Metal Market (Scott Robertson, “Obama infrastructure plan a first step, but short of needs: steel”, American Metal Market, 9/10/10, General OneFile | AK) ==== PITTSBURGH -- Steel industry players said President Obama's planned $50-billion investment in a national infrastructure program falls far short of what's required, estimating some $2.2 trillion might be necessary over the next five-plus years to put the national infrastructure on globally competitive ground. Obama announced in Milwaukee on Labor Day the planned investment to rebuild U.S. roads, bridges and runways, seen by steel and transportation industry officials as a necessary first step in a long-needed process as they also renewed their call for reauthorization of a surface transportation bill that they say is critical to an infrastructure rebuild that would create jobs, strengthen the U.S. manufacturing base and stimulate steel demand. " The SMA has supported rebuilding of the American infrastructure, and not just to the tune of $50 billion in one year ," Thomas A. Danjczek, president of the Steel Manufacturers Association, Washington, said. "We've supported the need to spend $2.2 trillion over the next five years. We have always supported Sen. (James) Oberstar's long-term legislation aimed at rebuilding the transportation infrastructure . However, we strongly advocate the establishment of a federal infrastructure bank to expand and enhance transportation infrastructure project spending ." Kevin Dempsey, senior vice president of public policy at the American Iron and Steel Institute (AISI), Washington, called the proposed $50-billion investment "the first down-payment" on a multiyear surface transportation reauthorization. "The White House has pointed out that the surface transportation bill has been reauthorized only on a temporary basis," Dempsey said. "The President is urging Congress to pass a long-term reauthorization.... A long-term package would provide the kind of investment required that would result in additional demand for steel." The steel industry demand wasn't met by the American Recovery and Reinvestment Act, the $787-billion economic stimulus package launched by the Obama administration a year ago in an attempt to bring the economy out of recession. That bill, which many hoped would spark massive rebuilding of roads and bridges and subsequent demand for steel, resulted in money going to many projects that seemed only to clean and polish rather than actually rebuild. The AISI advocates passage of a six-year bill that would provide $500 billion in investment, including about $450 billion for highways and $50 billion for the transit sector. The long-term investment would help avoid some of the problems the initial stimulus package failed to solve, Dempsey said. "Really, it is an investment in our economy --there is a cost, but the transportation infrastructure is one of the bedrocks on which our national economy is built ," he said. " The global competitiveness of our economy depends on our having a first-class transportation infrastructure ." A U.S. Transportation Department report showing that 25 percent of the nation's bridges are in need of repair or replacement underscores the need for longer-term investment, Dempsey said. " When you focus on the short term, you get too much of a quick-fix thing, like we got with the paving projects in the first stimulus . That's not the answer. It's not what is needed. Long-term investment is far more important to the future benefit of our economy." Danjczek agreed, pointing to the costs associated with inaction. " In light of our current economic recession, there is a concern over the cost of such proposals," he said. " But it also is useful to consider the cost of inaction and further deterioration of our highway and bridge systems ." Transportation officials agree that investment is needed, although some are skeptical that the money will reach its intended targets. Al Dworakowski, public relations director at PGT Trucking Inc., Monaca, Pa., said it is no secret that the nation's roads and bridges need repair. He remains mystified, though, with what happens to the large amount of tax dollars and fees his company and others pay, and wonders if the Obama infrastructure bank idea might be just another political maneuver that doesn't generate the desired results. "I can't say this (infrastructure bank proposal) is a good thing or a bad thing because I don't really know where the money goes," he said. "I know that as a company we pay a lot of money in fees and taxes--fuel taxes and things like that--but I don't know what happens to that money. If it goes to roads and bridge repairs, that's good, but I don't know that it really goes there." The American Road and Transport Builders Association (ARTBA), Washington, also is involved in a grassroots effort aimed at educating Congress about the need for long-term investment. "This is a step in the right direction," Jeffrey Solsby, the group's director of public affairs, said. "We're cautiously optimistic it will be approved. We believe any investment must be accompanied by a six-year bill and not be a temporary measure." While some details of the President's plan remain "sketchy" and it's difficult to tell how the plan will improve on the initial infrastructure stimulus package, ARTBA remains hopeful, Solsby said. " The President has said we need to spend more on infrastructure because we know the work needs to be done and because (infrastructure work) is a proven job creator . The second thing he said is that he wants to see a transportation bill passed as soon as possible. We want to see that, too. It's something we see as critical to the (success and growth of) the economy. "

**The highway reauthorization bill wasn’t enough either – a __substantial__ new investment is vital**
====** STI, 12 ** – is an English language journal. It contains a digest of global news, events, statistics, and stockholding news, as well as more detailed technical articles, company and country profiles, conference reports and regular regional economic briefings. The target readership are managers and CEOs in the steel industry, but it is also widely read by stockholders, members of research organizations, technical consultants and business consultants, citing Timothy J. Considine, Ph.D. and Professor of Economics at the University of Wyoming, John P. Surma, Chairman and CEO of the United States Steel Corp., and Thomas J. Gibson, President and CEO of the American Iron and Steel Institute (Steel Times International, “American Iron and Steel Institute calls for further Government intervention”, STI, May/June 2012, [] | AK) ==== THE American Iron and Steel Institute has a mission to influence public policy and educate and shape public opinion in support of a strong, sustainable US and North American steel industry committed to manufacturing products that meet society’s needs. It is comprised of 26 member companies, including integrated and electric furnace steelmakers, and 130 associate and affiliate members who are suppliers to customers of the steel industry. AISI's member companies represent approximately 80% of both US and North American steel capacity. In mid April, the organisation held a Press Conference to address various matters of importance to steel producers in North America. John P Surma, chairman and CEO of United States Steel Corp, Pittsburgh and also the current chairman of AISI said that while the US steel industry is clearly in recovery mode, it is still facing certain significant challenges to its international competitiveness, including burdensome tax rates, uncertain energy costs, //inadequate investments in infrastructure// , increasing regulatory burdens and foreign unfair trade practices. “These issues are not new, but the urgency for us to address them is very, very immediate ,” he stressed. Steel drives recovery As highlighted by a recent report written by Prof Timothy J Considine, an economist with the University of Wyoming, the steel industry a major factor in the recent rebound of the US manufacturing sector, which, according to Thomas J Gibson, AISI’s president and CEO, has consistently grown since 2010 and c ontinues to drive the economy out of the recession. Nevertheless, he says there is an //urgent need// to address key policy issues to help continue the resurgence of the steel industry. The report in summary or full is addressed in more detail in the USA and Latin American Updates in the May/June issue of Steel Times International and is available as a download in summary or full as a link from the AISI Home page www.steel.org/ Shale gas vital to development “As an energy intensive industry our competitiveness will increase in direct relationship to our ability to capitalize on our nation’s abundant and affordable energy supply. The discovery and development of North America’s shale (gas) resources has the potential to be the most remarkable source of economic growth and prosperity that we will see in our lifetimes ,” Surma says, adding that a second positive dimension of shale gas resource development for the steel industry is that steel pipe and tubular products that US steelmakers produce are integral to the exploration, production and transmission of natural gas and oil. “ By developing our natural gas and oil reserves, our nation can lessen its dependence on foreign oil, create thousands of jobs and spur economic growth ,” Gibson says. “However, one the biggest threats in developing our nation’s domestic energy sources is overly burdensome and misguided federal regulations.” Canada - USA pipeline Regarding the controversial Keystone XL pipeline extension project – a 1897km (1179mile) pipeline from Hardisty, Alberta in Canada to carry crude oil derived from tar sands to Steele City, Nebraska, USA for onwards transmission to refineries in Illinois and on the Gulf Coast at Houston and Port Arthur, Texas, Surma says the AISI supports the entire pipeline, although it is not particularly happy that TransCanada did not buy more US sourced material for that project. “(Nevertheless) the ancillary construction associated with the project should it be completed will be good for the steel industry.” Transport infrastructure AISI is also calling for the US Congress to pass a new, robust, long term surface transportation bill as opposed to continually extending the old one three months or so at a time. “ We must make rebuilding our crumbling transportation infrastructure system a top national priority ,” Surma says, adding that doing so is essential to doing business efficiently and for the US to maintain its dominant role in the global economy. Just before Congress went on recess in late March it passed its ninth 90-day extension of the surface transportation bill, which will guarantee funding for the nation’s bridges, highways and roads until June 30. The US House of Representatives in mid-April passed what would be a tenth 90-day extension, taking the bill to the end of September, although that bill is not expected to pass the Senate because of factors relating to the Keystone XL pipeline which is being opposed by some environmental groups. Gibson says the extension of the bill will not provide the boost that the US economy, and the steel industry, needs. “ We need a long-term bill with level funding so that the states can plan the bigger construction projects that can produce the valuable jobs and generate the demand for steel, concrete and other materials. “Our preference would be the longest, most robustly funded bill that this Congress can produce,” Surma says, which would be the House leadership’s five-year, $260bn surface transportation authorization bill, which, if passed, would include energy and natural resource provisions to open up on-shore and offshore bans for oil and gas drilling leases. Gibson lauded the Senate for doing its job and passing a two year, $109bn reauthorization bill in mid-March. Now, he says the House, which has not passed a bill yet, must act and pass a bill that could be conferenced with the Senate measure. The question, however, lies in how to pay for such a bill given all the concerns of the burgeoning US deficit. “ Transportation is a core function of government and it costs something to fund,” Gibson says, however, he observes that the traditional way to do that, the highway fund, which is funded by a tax on gasoline, is falling short , partly because vehicles are becoming more fuel efficient and Americans are changing their driving behavior. He called on the government to be more creative in finding a funding solution, including possibly more public/private partnerships. Call for Fair Trade Surma added that the AISI is supporting a more effective US trade policy to combat foreign, unfair trading practices, including China’s “protectionist policy that gives Chinese exports an artificial advantage over American goods by undervaluing its currency by as much as 30%.” Gibson notes that the steel industry celebrated a big victory on the trade front in early March when President Obama signed legislation overturning an erroneous federal Court of Appeals ruling on the application of countervailing duty laws against subsidized products, including steel, from China and other non-market economies. “I think that is proof that when Congress is faced with time critical problem they can act in a bipartisan manner to solve it.” While he called that “a significant victory,” Gibson says there are still other areas that need to be addressed to make sure the US steel industry is competing on a level playing field. “It is critical that the Obama administration and Congress continue to pressure foreign governments, such as China, that continue to artificially undervalue their currency. We cannot give a free pass to countries that flagrantly disregard their WTO commitments,” he adds. Summing up the AISI’s priorities for 2012, Surma states, “ A strong manufacturing sector creates significant benefits for our society, including good paying jobs, investment in research and development, critical materials for our national defense and high value exports. We must address each of these issues if we want our nation’s manufacturing sector to continue to thrive and drive the economic recovery .”

** A national infrastructure bank is critical – new infrastructure investments are vital to stimulate steel and manufacturing demand **
====** Danjczek et al., 11 ** – President of the Steel Manufacturers Association (Thomas A. Danjczek, “2011 — 2012 PUBLIC POLICY STATEMENT STEEL MANUFACTURERS ASSOCIATION”, Steel Manufacturers Assocation, 2011-2012, [] | AK) ==== The Need for Infrastructure Investment The infrastructure is the backbone of our nation’s economy. The US interstate system was at one point the envy of the entire world, and was instrumental in the growth of our economy, and emergence as the world’s greatest power. But development has not kept pace with changing demographics over the past several decades, and the US continues to vastly under-invest in its transportation infrastructure. Worse still, these funds are typically the first to be redirected when addressing budget shortfalls in other areas. Continuous delays in highway bill reauthorization and a reliance on short-term funding extensions will have damaging implications for project planning and manufacturing growth. In order to stimulate growth in manufacturing employment, US policymakers need to address the challenges of funding mechanisms and sufficiently invest long-term in America’s infrastructure. The US Congress needs to pass a multiyear transportation reauthorization to help rebuild our crumbling roads, bridges, and infrastructure. Economic Impact The latest research by the Department of Transportation shows that each $ 1 billion of federal investment in highways creates an estimated 35,000 American jobs. These are well-paying positions that support families across the nation. Highway investment has been shown to stimulate the economy more than any other federal expenditure. According to research by Standard and Poor’s DRI, each dollar invested in highway construction generates $1.80 of Gross Domestic Product in the short term. This stimulating effect on the economy is greater than income or payroll tax cuts, or increases in unemployment benefits. In a 2009 report by the American Society of Civil Engineers (ASCE), the US infrastructure was given an overall grade of “D”. ASCE projected an infrastructure funding need of $2.2 trillion over five years. With crumbling bridges, bursting water pipes, and dangerous, congested highways, the safety of American lives is jeopardized by an under-funded infrastructure. Additionally, traffic on our highways and underdeveloped passenger rail systems contribute to the waste of countless barrels of oil, impacting our environment, and increasing US dependence on foreign energy sources. American companies are placed at a competitive disadvantage in increasingly global markets as they compete with foreign producers who operate in nations that fund their transportation infrastructures at much greater rates, as is true of most of our major trading partners. While this is to be expected for developing countries such as China and India, the EU also continues to invest in its infrastructure at a much higher rate , as a percentage of GDP. Increasing Our Investment in America Responding to a Congressional mandate, the National Surface Transportation Policy and Revenue Study Commission released a bipartisan report in January 2008 that outlined US infrastructure needs, projections for the next 50 years, and possible funding mechanisms. This report calls for an annual infrastructure investment of at least $225 billion for the next 50 years. We are spending less than 40 percent of that amount today. Where will the money come from?The SMA has for years advocated the need of a Federal Infrastructure Bank to expand and enhance transportation infrastructure project funding .Congress should move to enact provisions that would create a federal entity that would finance infrastructure projects by utilizing both public and private capital, including international funds. This would help to minimize political impediments in the funding process, and expedite the approval of key projects.

**__First, the economy__ – the steel industry’s vital to __all sectors__**
====** Considine, 12 ** – is an SER Professor of Economics in the Department of Economics and Finance. He received his Ph.D. from Purdue University. His research on petroleum market analysis has been published in the top economics journals. Recently, The Cato Institute published his paper exploring management policy issues facing the U.S. Strategic Petroleum Reserve, and the U.S. Department of Energy's Office of the Strategic Petroleum Reserve currently uses his econometric model of world crude oil markets to estimate the market impacts of various management policies. Dr. Considine also worked as an economist at Bank of America, and as the lead analyst for natural gas deregulation on the U.S. Congressional Budget Office (Timothy J. Considine, “Economic Impacts of the American Steel Industry”, Legacy Steel, March 2012, [] | AK) ==== American steel industry directly employed more than 139,000 workers and contributed $17.5 billion in value added or g ross d omestic p roduct during 2010. The economic contribution of the steel industry to the U.S. economy, however, goes beyond these sector specific measures because steel companies purchase inputs from many other sectors of the U.S. economy. Moreover, the steel industry contributes to household income, which then induces additional rounds of stimulus to the economy as households spend this income on goods and services. For instance, during 2010 the steel industry purchased more than $20 billion of materials produced in other industries, $8 billion of services, $5 billion of energy products, $4.5 billion of machinery, $4.4 billion from wholesale and retail trade sectors, more than $4 billion of transportation services, and generated $12.4 billion in labor income. Clearly, the steel industry supports businesses and jobs in many sectors of the U.S. economy. To map these interdependencies, this study employs an input-output table of the U.S. economy with the IMPLAN system from MIG, Inc. to estimate these indirect or supply chain impacts as well as the impacts induced by the spending of household income contributed directly and indirectly by the steel industry. Our economic impact analysis indicates that the steel industry directly contributed $17.5 billion of value added, $40 billion indirectly via supply chain spending, and induced another $35.8 billion as households spent their income generated from these activities. So in terms of net contribution to the U.S. economy the American steel industry contributed $93.4 billion to g ross d omestic p roduct during 2010. Likewise, the steel industry directly employs over 139,000 workers, supports another 360,986 workers indirectly through the supply chain, and induces spending by households that supports another 443,002 jobs in other sectors of the economy. In total the steel industry supported 943,045 jobs in the U.S. economy during 2010. With higher levels of steel sales during 2011, the American steel industry contributes $101.2 billion to gross domestic product, and generates $22.9 billion in tax revenues at the federal, state, and local level, for a gross economic output of over $246 billion. Since steel is the most prevalent material in our economy, the steel industry is highly interrelated with other economic sectors, as reflected in the ripple effect on employment. Every one job in the U.S. Steel industry creates seven jobs in the U.S. economy. For 2011, the industry directly employs 150,700, and given the multiplier effect, supports more than 1,022,009 jobs.

**__Second, hegemony__ – a strong steel industry is the __vital__ internal link to military primacy**
====** AISI, 7 ** – serves as the voice of the North American steel industry in the public policy arena and advances the case for steel in the marketplace as the preferred material of choice. AISI also plays a lead role in the development and application of new steels and steelmaking technology (American Iron and Steel Institute, “STEEL AND THE NATIONAL DEFENSE”, AISI, January 2007, [] | AK) ==== The U.S. carbon/alloy and specialty steel industries are vital partners to American defense contractors and to the DOD. Domestic and specialty metals are found in virtually every military platform. Whether it is missiles, jet aircraft, submarines, helicopters, Humvees® or munitions, American-made steels and specialty metals are crucial components of U.S. military strength. A few examples follow: 1. The Joint Strike fighter F135 engine, the gears, bearings, and the body itself, will use high performance specialty steels and superalloys produced by U.S. specialty steel companies. 2. Land based vehicles such as the Bradley Fighting Vehicle, Abrams Tank, and the family of Light Armored Vehicles use significant tonnage of steel plate per vehicle. 3. Steel plate is used in the bodies and propulsion systems of the naval fleet. 4. The control cables on virtually all military aircraft, including fighter jets and military transport planes, are produced from steel wire rope. Numerous additional examples illustrating how steel and specialty metals directly support the U.S. defense industrial base are provided in Appendices 1 and 2. These materials are an integral part of many diversified military applications and, as such, are in a continuing state of technological development. Steel’s importance to the military must also be looked at in a broader context to include both direct and indirect steel shipments to the military infrastructure that are needed to support our defense efforts, both at home and overseas -- e.g., all of the steel that goes into the rails, rail cars, ground vehicles, tanks, ships, military barracks, fences and bases, which are not classified as shipments to ordinance, aircraft, shipbuilding or other military uses. The September 11 attacks on the United States made it clear that (1) steel will be needed to “harden” existing U.S. infrastructure and installations and (2) a strong and viable domestic steel industry will be needed to provide immediate steel deliveries when and where required. Consider the potential difficulties the U.S. would face in defending, maintaining and rebuilding infrastructure in an environment where our nation is largely dependent upon foreign steel. By becoming even more dangerously dependent upon offshore sources of steel, the United States would experience sharply reduced security preparedness in the face of : • Highly variable , and certainly higher , costs ; • Uncertain supply , impacted by unsettled foreign economies and politics; • Quality, design and performance problems ; • Inventory problems, long lead times and extended construction schedules. In Appendix 3 of this paper, we illustrate how the U.S. depends upon a healthy American steel industry to meet the growing U.S. demands for steel-intensive infrastructure. Engineers and contractors on sophisticated infrastructure projects require an uninterrupted supply of quality steel that they can depend upon to meet the performance characteristics of a project’s design, delivered on time, and at a competitive cost. U.S. national economic security requires a strong and viable domestic steel industry to meet all of these criteria on a consistent basis.

**Heg prevents global nuclear war**
====**Barnett, 11** [Thomas Barnett, //Chief analyst at Wikistrat, former visiting scholar at the University of Tennessee’s Howard Baker Center for Public Policy and a visiting strategist at the Oak Ridge National Laboratory, former Senior Strategic Researcher and Professor in the Warfare Analysis & Research Department, Center for Naval Warfare Studies,// March 7, 2011, “The New Rules: Leadership Fatigue Puts US, and the Globalization, at Crossroads”, World Politics Review, http://www.worldpoliticsreview.com/articles/8099/the-new-rules-leadership-fatigue-puts-u-s-and-globalization-at-crossroads] ==== Events in Libya are a further reminder for __Americans__ that we __stand at a crossroads in our__ continuing __evolution as the world's__ sole full-service __superpower__. Unfortunately, __we are__ increasingly seeking change without cost, and __shirking from risk because we are tired of the responsibility__. We don't know who we are anymore, and our president is a big part of that problem. Instead of leading us, he explains to us. Barack Obama would have us believe that he is practicing strategic patience. But many experts and ordinary citizens alike have concluded that he is actually beset bystrategic incoherence-- in effect, a man overmatched by the job.It is worth first examining the larger picture: We live in a time of arguably the greatest structural change in the global order yet endured, with this historical moment's most amazing feature being its relative and absolute lack of mass violence. That is something to consider when Americans contemplate military intervention in Libya, because if we do take the step to prevent larger-scale killing by engaging in some killing of our own, we will not be adding to some fantastically imagined global death count stemming from the ongoing "megalomania" and "evil" of American "empire." We'll be engaging in the same sort of system-administering activity that has marked our stunningly successful stewardship of global order since World War II. Let me be more blunt: As the guardian of globalization, __the U.S. military has been the greatest force for peace the world has ever known. Had America been removed from the global dynamics__ that governed the 20th century, __the mass murder never would have ended__. Indeed, it's entirely conceivable __there would now be **no identifiable human civilization left**, once nuclear weapons entered the killing **equation**.__ But __the world did not keep sliding down that path of **perpetual war**.__ Instead, __America stepped up____and changed everything by ushering in our now-**perpetual great-power peace**. We__ introduced the international liberal trade order known as globalization and __played loyal Leviathan__ over its spread. __What resulted was the collapse of empires, an explosion of democracy, the persistent spread of human rights, the liberation of women, the doubling of life expectancy, a roughly 10-fold increase in adjusted global GDP and a profound and persistent reduction in battle deaths from state-based conflicts.__

**A national bank devoted just to transportation will revitalize U.S. infrastructure --- it will be easy on the budget and politically palatable**
====** Lovaa, 11 ** --- Federal Transportation Policy Director for NRDC (6/28/2011, Deron, “An Infrastructure Bank for Transportation,” [], JMP) ==== Another creative funding idea that’s getting some attention lately is a national infrastructure bank, an independent entity that would use government funding to attract major private investment in public infrastructure projects. NYU professor Michael Likosky recently convened a meeting between Treasury officials, bankers, pension funds and hedge fund managers to discuss how such a bank might work. It’s the first time this diverse group has ever shared their opinions with the government on this idea – and apparently some of them are bullish on it. __Infrastructure banks__ __in other parts of the world have proven to be largely successful in leveraging public money__. The European Investment Bank (EIB), owned and funded by the European Union, finances investments worth $470 billion using only about $50 billion in government funds. That’s a ratio of more than 9:1 in private versus public funding. The bank, which has funded huge projects like the Port of Barcelona and the TGV rail system that connects France and Spain, consistently turns a profit and has had only negligible delinquencies over the past five decades, according to economists Robert Skidelsky and Felix Martin, writing in the New York Review of Books. Likosky, an expert on public-private partnerships and author of Obama’s Bank: Financing a Durable New Deal, has a fairly expansive vision of how a national infrastructure bank would operate – he’s talking about something on the level of the EIB that could finance investments on the order of $500 billion. Even Fareed Zakaria recently wrote about the need for a national infrastructure bank. The problem is that in our current political climate, talk of using public funds to create a government bank is a total turn-off to many Republicans. No matter how great its potential benefits, a large, national infrastructure bank is exceedingly unlikely to pass muster with this Congress. However, __the concept of an infrastructure bank in and of itself shouldn’t scare anyone off, since **the size of the bank can be scaled down and still have tremendous benefits. A scaled-down infrastructure bank, devoted solely to transportation, could be more palatable to the reduced fiscal appetites of today’s Congress**__**.** President Obama recently proposed exactly this in his new 2011 budget. His National Infrastructure Innovation and Finance Fund (notice the absence of the word “bank”) would be housed under the Department of Transportation, and oversee $4 billion in funds over the next two years. This is significantly smaller than the infrastructure bank he proposed last year, which was intended to be funded at $5 billion per year for five years. Yet __even at this smaller scale____, the bank can still be effective at leveraging public money to attract private investors__ __for critical infrastructure projects.__ __An infrastructure bank__ __for transportation would make merit-based loans for infrastructure improvements, using public funds to attract investment from the private sector. A merit-based system would make more efficient use of funds than the current, earmark-heavy funding that dominates the federal transportation program.__ __Through the bank, federal, state and local governments could work together with the private sector to fix crumbling roads and bridges, and create a 21st century transportation system.__ Likosky envisions the role of the government in public-private partnerships as that of a “player-coach,” not dictating the rules from the sidelines (and thus being a thorn in the side of potential private investors) but being involved in the game itself. The biggest challenges, which they’ve seemed to manage pretty well over in Europe, are ensuring that the public gets a reasonable return for their investment in the end, and that non-monetary objectives rooted in the public good, such as increased accessibility and employment, or greenhouse gas reductions, are specified and required. America’s infrastructure ranking has dropped from 6th to 23rd in the past decade, and continues to drop, according to the World Economic Forum. __We need to invest__ __in our roads, rails and bridges if we want to remain economically competitive. And with the federal budget under such pressure, it’s becoming increasingly apparent that we need a lot of private capital to do it. A scaled-down infrastructure bank might not be able to generate the trillions of dollars we need to upgrade our entire transportation network, but it will make good use of our limited public funds to vastly improve the status quo.__

**Federal action is superior --- better evaluation, finance, and reduced borrowing costs**
====** Thomasson, 11 ** --- Director of Public Policy, Progressive Policy Institute (10/12/2011, Scott, Congressional Documents and Publications, House Transportation and Infrastructure Subcommittee on Highways and Transit Hearing - "National Infrastructure Bank: More Bureaucracy and More Red Tape," Factiva) // NK ====

Myth #6: We don't need a national infrastructure bank, because we can strengthen state infrastructure banks instead. Reality: State banks are an excellent tool and an important step in the right direction for project finance in the U.S. But //state banks are woefully inadequate// for meeting many of our financing needs,and they should //not be thought of as substitutes// for a //n// a tional //i// nfrastructure //b// ank, or even as incompatible with creating a national bank. A well designed national bank offers a number of features and advantages not available from state banks. A national bank could finance large, expensive projects that are //beyond the scale of state banks//. A national bank would be better able to //evaluate and finance projects// of regional and national significance --those that produce clear economic benefits to the country, but which otherwise would not benefit any one state enough to justify bearing the cost alone. And a properly structured national bank would //have much lower borrowing costs than state banks//, particularly with U.S. Treasury yields at historically low levels , as they are now. A national bank could easily be structured to //complement and empower state banks// by passing through lower federal borrowing costs for state-sponsored projects. Giving states the option to partner with the national bank would be an additional and purely voluntary tool, so the argument that the bank would somehow limit the decision-making power of state banks is //entirely misplaced//.

**__National bank__ is key to send a __strong signal__ to private sector investors --- facilitates public-private partnerships**
====** Puentes, 12 ** --- Senior Fellow, Metropolitan Policy Program at Brookings (7/16/2012, Robert, “What Would an Infrastructure Bank Really Do?” [], JMP) ==== Third is that the establishment of an NIB would be a //strong signal to the private sector// that the //national government is committed// and open to private involvement in infrastructure financing and delivery. Today private sector financiers and investors are understandably frustrated by the //lack of clarity// about the rules of engagement that is--as in many states--a real hindrance to the development of the public-private partnership market.

**Federal action key to ensure cooperation and resources for __large-scale__ projects**
====** McConaghy & Kessler, 11 ** --- * Director of the Third Way Economic Program, AND **Vice President for Policy at Third Way (January 2011, Ryan McConaghy and Jim Kessler, “A National Infrastructure Bank,” [], JMP) ====

America’s economic future will hinge on how fast and well we move people, goods, power, and ideas. Today, our infrastructure is far from meeting the challenge. Upgrading our existing infrastructure and building new conduits to generate commerce will put people to work quickly in long-term jobs and will create robust growth. __Funding for new infrastructure will be a crucial investment__ __with substantial future benefits, but the current way that Congress doles out infrastructure financing is too political and wasteful. A National Infrastructure Bank will provide a new way to harness public and private capital to bridge the infrastructure gap, create jobs, and ensure a successful and secure future.__ THE PROBLEM __America’s investment in infrastructure is not sufficient to spur robust growth____.__ In October, __Governor__ Chris __Christie announced his intention to terminate New Jersey’s participation in the Access to the Region’s Core__ (ARC) __Tunnel project, citing cost overruns__ that threatened to add anywhere from $2-$5 billion to the tunnel’s almost $9 billion price tag. At the time, Christie stated, “Considering the unprecedented fiscal and economic climate our State is facing, it is completely unthinkable to borrow more money and leave taxpayers responsible for billions in cost overruns. The ARC project costs far more than New Jersey taxpayers can afford and the only prudent move is to end this project.”1 __Despite the fact that the project is absolutely necessary__ __for future economic growth in the__ New Jersey-New York __region__ and would have created thousands of jobs, __it was **held captive to significant cost escalation, barriers to cooperation between local, state, and federal actors, and just plain politics****.**__ Sadly, __these factors are increasingly endemic in the execution of major infrastructure projects__. __America’s__ __infrastructure has fallen into a state of disrepair, and will be insufficient to meet future demands and foster competitive growth without significant new investment.__ However, the public is fed up with massive deficits and cost overruns, and increasingly consider deficit reduction to be a bigger economic priority than infrastructure investment.2 They have lost confidence in government’s ability to choose infrastructure projects wisely, complete them, and bring them in on budget. At the same time, **__traditional sources of funding are strained to the breaking point__** __and federal support is hindered by an inefficient process__ __for selecting projects__. Finding the resources necessary to construct new infrastructure will be also be a significant challenge. __A new of way of choosing and funding infrastructure projects____— from roads, bridges, airports, rail, and seaports__ to broadband and power transmission upgrades— __is necessary__ __to ensure growth and create jobs in America.__ America’s infrastructure isn’t ready to meet future growth needs. The safety risks and economic costs associated with the deterioration of America’s infrastructure are increasingly apparent across multiple sectors. The American Society of Civil Engineers has awarded the nation’s overall infrastructure a grade of D.3 Since 1990, demand for electricity has increased by about 25% but construction of new transmission has decreased by 30%.4 Over about the last 25 years, the number of miles traveled by cars and trucks approximately doubled but America’s highway lane miles increased by only 4.4%.5 Over 25% of America’s bridges are de!cient6 and about 25% of its bus and rail assets are in marginal or poor condition.7 America’s broadband penetration rate ranks only 14th among OECD countries.8 __As America’s population and economic activity increases, the stress on its infrastructure will only grow.__ The number of trucks operating daily on each mile of the Interstate Highway system is expected to jump from 10,500 to 22,700 by 2035,9 while freight volumes will have increased by 70% over 1998 levels.10 It is also expected that transit ridership will double by 2030 and that the number of commercial air passengers will increase by 36% from 2006 to 2015.11 Total electricity use is projected to increase by 1148 billion kWh from 2008 to 2035.12 In order to cope, America’s infrastructure will need a significant upgrade. America’s infrastructure deficit hurts its competitiveness and is a drain on the economy. __America’s infrastructure gap poses a serious threat to our prosperity__. In 2009, the amount of waste due to congestion equaled 4.8 billion hours (equivalent to 10 weeks worth of relaxation time for the average American) and 3.9 billion gallons of gasoline, costing $115 billion in lost fuel and productivity.13 __Highway bottlenecks__ are estimated to __cost__ freight trucks about $ __8 billion__ in economic costs per year,14 and in 2006, total logistics costs for American businesses increased to 10% of GDP.15 __Flight delays cost Americans $9 billion in lost productivity each year__ ,16 and power disruptions caused by an overloaded electrical grid cost between $25 billion and $180 billion annually.17 These __losses sap wealth from our economy and drain resources that could otherwise fuel recovery and growth.____The infrastructure gap also hinders America’s global competitiveness__. Logistics costs for American business are on the rise, but similar costs in countries like Germany, Spain, and France are set to decrease.18 And while America’s infrastructure spending struggles to keep pace,19 __several main global competitors are poised to make significant infrastructure enhancements__. China leads the world with a projected $9 trillion in infrastructure investments slated for the next ten years, followed by India, Russia, and Brazil.20 In a recent survey, 90% of business executives around the world indicated that the quality and availability of infrastructure plays a key role in determining where they do business.21 __If America is going to remain on strong economic footing compared to its competitors, it must address its infrastructure challenges__. There are too many cost overruns and unnecessary projects—but not enough funds. __Cost overruns on infrastructure projects are increasingly prevalent and exact real costs__. One survey of projects around the world found that costs were underestimated for almost 90% of projects, and that cost escalation on transportation projects in North America was almost 25%.22 Boston’s Central Artery/Tunnel Project (a.k.a. the “Big Dig”) came in 275% over budget, adding $11 billion to the cost of the project. The construction of the Denver International Airport cost 200% more than anticipated. The San Francisco-Oakland Bay Bridge retrofit project witnessed overruns of $2.5 billion—more than 100% of the original project cost— before construction even got underway.23 And of course, there are the “bridge to nowhere” earmarks that solve a political need, but not an economic one. __The current system for funding projects is subject to inefficiency and bureaucratic complication. Funding for infrastructure improvements is divided unevenly among federal, state, local, and private actors based on sector.__ 24 __Even in instances where the federal government provides funding, it has often ceded or delegated project selection__ __and oversight responsibilities to state, local, and other recipients, **weakening linkages to federal program goals and efforts to ensure accountability**.__ 25 __Federal efforts are also hampered by organization and funding allocations__ __based strictly on specific types of transportation, as opposed to a system-wide approach, which create inefficiencies that hinder collaboration and effective investment.__ 26 __Complicating matters even further are the emergence of **multi-state “megaregions,” which have common needs that require multijurisdictional planning and decision making ability**____.__ 27 Infrastructure funding has also become significantly politicized. Congressional earmarking in multi-year transportation bills has skyrocketed from 10 projects in the STAA of 1982 to over 6,300 projects in the most recent bill (SAFETEA-LU).28 Even under a working system, the infrastructure improvements necessary to foster growth will require substantial investment. The American Society of Civil Engineers estimates that it would require $2.2 trillion over the next five years to bring our overall infrastructure up to par.29 However, __sources of funding for infrastructure improvements are under significant strain and may not be sufficient__ .30 The Highway Trust Fund has already experienced serious solvency challenges, and inadequate revenues could lead to a $400 billion funding shortfall from 2010 to 2015.31 __The finances of state and local governments____, which are responsible for almost three-quarters of public infrastructure spending__ ,32 __have been severely impaired__. __At least 46 states have budget shortfalls in the current fiscal year____, and it is likely that state financial woes will continue in the near future__ .33 In a recent survey by the National Association of Counties, 47% of respondents indicated more severe budget shortfalls than anticipated, 82% said that shortfalls will continue into the next year, and 54% reported delaying capital investments to cope.34 __THE SOLUTION A National Infrastructure Bank__ In order to provide innovative, merit-based financing to meet America’s emerging infrastructure needs, Third Way supports the creation of a National Infrastructure Bank (NIB). __The NIB would be a stand-alone entity capitalized with federal funds, and would be able to use those funds through loans, guarantees, and other financial tools to leverage private financing for projects. As such, the NIB would be poised to seize the opportunity presented by historically low borrowing costs in order to generate the greatest benefit for the lowest taxpayer cost.__ Projects would be selected by the bank’s independent, bipartisan leadership based on merit and demonstrated need. Evaluation criteria may include economic benefit, job creation, energy independence, congestion relief, regional benefit, and other public good considerations. Potential sectors for investment could include the full range or any combination of rail, road, transit, ports, dams, air travel, clean water, power grid, broadband, and others. The NIB will reform the system to cut waste, and emphasize merit and need. __As a bank, the NIB would inject accountability into the infrastructure investment process__. Since the bank would offer loans and loan guarantees using a combination of public and private capital, it would have the opportunity to move away from the traditional design-bid-build model and toward project delivery mechanisms that would deliver better value to taxpayers and investors.35 __By operating on principles more closely tied to return on investment and financial discipline, the NIB would help to prevent the types cost escalation and project delays that have foiled the ARC Tunnel.__ America’s infrastructure policy has been significantly hampered by the lack of a national strategy rooted in clear, overarching objectives used to evaluate the merit of specific projects. __The politicization and lack of coordination of the process has weakened public faith in the ability of government to effectively meet infrastructure challenges__. In polling, 94% of respondents expressed concern about America’s infrastructure and over 80% supported increased federal and state investment. However, 61% indicated that improved accountability should be the top policy goal and only 22% felt that the federal government was effective in addressing infrastructure challenges.36 As a stand-alone entity, __the NIB would address__ these __concerns by selecting projects for funding across sectors based on broadly demonstrated need and ability to meet defined policy goals, such as economic benefit, energy independence, improved health and safety, efficiency, and return on investment.__ The NIB will create jobs and support competitiveness. __By providing a new and innovative mechanism for project financing, the NIB could help provide funding for projects stalled by monetary constraints. This is particularly true for large scale projects that may be too complicated or costly for traditional means of financing.__ In the short-term, providing resources for infrastructure investment would have clear, positive impacts for recovery and growth. It has been estimated that every $1 billion in highway investment supports 30,000 jobs,37 and that every dollar invested in infrastructure increases GDP by $1.59.38 It has also been projected that an investment of $10 billion into both broadband and smart grid infrastructure would create 737,000 jobs.39 In the longer-term, __infrastructure investments supported by the NIB will allow the U.S. to meet future demand____, reduce the waste currently built into the system, and **keep pace with competition from global rivals****.**__ The NIB will harness private capital to help government pay for new projects. __The NIB would magnify the impact of federal funds__ __by leveraging them through partnerships with private entities and other actors, providing taxpayers with more infrastructure bang for their public buck. Estimates have placed the amount of private capital readily available for infrastructure development at $400 billion__ ,40 __and as of 2007, sovereign wealth funds—another potential source of capital—were estimated to control over $3 trillion in assets with the potential to control $12 trillion by 2012.__ 41 While these and other institutional funds have experienced declines as a result of the economic downturn, they will continue to be important sources of large, long-term investment resources. __By offering loan guarantees to induce larger private investments or issuing debt instruments and securities, **the NIB could tap these vast pools of private capital to generate investments much larger than its initial capitalization**__. In doing so, it could also lower the cost of borrowing for municipalities by lowering interest on municipal bonds for state and local governments by 50 to 100 basis points.42 __The NIB would also be poised to help taxpayers take full advantage of historically low borrowing costs__. In 2010, the yield on 10-year U.S. Treasuries reached a historic low of 3.22%, as compared to a rate of 6.03% in 2000 and a peak rate of 13.92% in 1981. Prior to the Great Recession, this rate had not dipped below 4% since 1962.43 By allowing government and private actors to access financing at historically low rates, __the NIB would help to **capitalize on a once-in-a-lifetime window to make enduring infrastructure investments.**__