Richard G. Little of the University of Southern California’s School of Policy Planning and Development has an interesting new paper out entitled, “Towards a New Federal Role in Infrastructure Investment: Using U.S. Sovereign Wealth to Rebuild America.”
The paper’s premise is that the US has to address years of chronic under-investment in infrastructure. In order to do this, Little want’s to tap into the public pension and social security savings in order to match long-term investment capital with long-term investments in infrastructure (which the US desperately needs). As he says:
“The core idea of the proposal is to utilize a combination of public and institutional pension funds, individual retirement accounts, and other private investment capital, together with Social Security Trust Funds to capitalize a National Infrastructure Bank (NIB) that would provide senior debt to fund projects and programs supported by user fees or other reliable and sustainable revenue streams.”
So long as this new entity remains commercially oriented, it’s a reasonable idea; public pension funds have indeed been moving into infrastructure at an increasing rate, driven in large part by the desire to find assets that better match their long-term liabilities. So, Little has a tenable position, but it’s hard to imagine US policymakers agreeing to use the Trust Fund in this way…even if I tend to think the SSTF should be restructured to allow for some more aggressive investments.
Get the paper here.