To reverse our discontent, America needs a national infrastructure bank

In my last column, I presented a blunt warning about American discontent. Over three-quarters of Americans believe the nation is headed in the wrong direction. A similar share express dissatisfaction with their lives. What can be done to get America back on track?

The overarching cause of this pessimism is Americans’ loss of trust and confidence in public and private institutions — from the federal government and the Supreme Court to law enforcement and even the once-revered military. The reality is that trust disappears in a second and takes years to be restored. Democrats and Republicans have both contributed to the former and are incapable of dealing with the latter.

America has faced bleaker times. The American Revolution, the Civil War and post-World War I-era were much grimmer. In fact, the period 1918-1921/22 is instructive.

As World War I was ending, having destroyed much of Europe, the Spanish Flu was killing at least as many people as died in that conflict. In the U.S., President Woodrow Wilson, immobilized by a stroke, refused to recognize the pandemic. His wife, Edith, and adviser Edward House were running the country. Worse, the country was being terrorized by a combination of the red scare and 24 letter bombs that killed two people.

Panic was far worse than after the 9/11 attacks, exacerbated by the Sedition and Espionage Acts, which suspended due process and habeas corpus and made it a crime to criticize the government. Tens of thousands of Americans were illegally detained and many were deported. And the economy was battered by the 1920-21 depression.

Comparisons a century apart are imperfect. But clearly, the U.S. was in a bad way then, probably worse than today. Then what happened?

The largest economic boom in American history followed, leading to the Roaring ‘20s. The main reasons were restrained demand that was unleashed by smart government policy under President Harding, who would die in 1923, and cars manufactured by Henry Ford and Walter Chrysler.

Harding signed the Federal Aid Highway Act of 1921, nearly three and a half decades before Ike’s famous legislation. Ford and Chrysler mass produced cars that consumers bought by the hundreds of thousands. Cars required steel for construction, rubber for tires, leather for seat covers and plenty of gasoline. Additionally, the hospitality industry for restaurants and motels and hotels blossomed.

Other technologies such as movies, aviation and radio likewise contributed to the boom. Unfortunately, regulations did not keep pace. In October 1929, the stock market crashed and a global depression took hold. In Germany, Adolf Hitler was exploiting the draconian Versailles Treaty, which laid the groundwork for World War II.

The parallel with 1921 to get America headed in the right direction rests in renovating and modernizing infrastructure for the 21st century, creating a new boom and new economic opportunities to neutralize this dissatisfaction. Infrastructure is broadly defined and not limited to highways, bridges, airports, water, fuel and electrical grids to broadband, education, supply chain reliability, quantum computing, biogenetics, health care and fusion. Infrastructure, writ large, offers the same potential for explosive growth as automobiles did a century ago.  

If wisely mobilized, literally tons of money is available to propel this growth — nearly $7 trillion  from the American Rescue Plan; the Infrastructure Investment and Jobs Act; the Chips and Science Act; the Inflation Reduction Act and the omnibus laws. Not all will go to infrastructure. But a significant amount will. Yet, how oversight, management and coordination of all this spending will be conducted is problematic and probably insufficient.  

The solution is to create a national infrastructure bank financed by federal funds taken from the nearly $7 trillion already appropriated and matched by the private sector. The goal would be to raise $4-5 trillion, sufficient to have lasting effect. Private investors would receive bonds guaranteed by the U.S. government at 1 or 3 percent over prime and paid for by user fees, tolls and a novel approach used in the Troubled Asset Relief Program (TARP) following the financial crash of 2008.

The bank would also invest in private and public companies in the infrastructure sectors, taking warrants or options. As these companies prospered, so would the bank, paying off investors and paying down the growing debt. TARP returned billions to the treasury.  

Importantly, the bank would have an oversight and coordination role that is lacking. Can this work to reverse America’s discontent? Yes. The question is whether it will be tried.

Harlan Ullman is senior adviser at the Atlantic Council and the prime author of “shock and awe.” His latest  book is “The Fifth Horseman and the New MAD: How Massive Attacks of Disruption Became the Looming Existential Danger to a Divided Nation and the World at Large.” Follow him on Twitter @harlankullman.