Tags: Gasparino | Investors | Hope | US | Recover

Gasparino: Investors Losing Hope US Can Ever Recover

By Michael Kling   |   Thursday, 08 Sep 2011 12:47 PM

President Barack Obama's plan to boost the economy and create jobs by establishing an “infrastructure bank” might put a few construction workers back to work, but it can’t come close to reversing the Great Recession, writes Fox Business Network Senior Correspondent Charles Gasparino.

And that's why investors are losing hope in an economic turnaround.

Government spending on infrastructure often leads to fraud and waste, and the history of infrastructure spending prompting real economic growth is "pretty dismal," he writes in an article for The New York Post.

Investors believe the $14 trillion in government debt is the real problem.

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President Barack Obama
(Getty Images photo)
"Government-mandated growth plans fail to deliver and often make a bad situation even worse," he says. "The spending has to be paid for — and whether that means higher taxes or new debt, it’s not worth the price."

Obama is proposing to extend the payroll tax cut, he notes. "First off, the cut that’s already in place hasn’t worked any miracles so far. Plus, everyone knows it’s only temporary — and he’s looking to raise income taxes on a permanent basis."

The infrastructure bank, or I-bank, plan calls for the government to provide low-cost loans, loan guarantees, and a small portion of funding, while private investors would contribute most of the money, according to CNNMoney. Republicans, Democrats and business support the idea.

State and municipalities typically sell bonds to finance projects, but institutional investors don't buy them since they cannot take advantage of their income tax benefits. An I-bank would let them get a part of action, proponents say.

The idea isn’t new. California created an I-bank in 1999 with $161 million in state funding, and it has helped fund $32 billion in public projects, CNNMoney reports.

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President Barack Obama's plan to boost the economy and create jobs by establishing an infrastructure bank might put a few construction workers back to work, but it can t come close to reversing the Great Recession, writes Fox Business Network Senior Correspondent Charles...
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