Winning Back the Working Class with a National Infrastructure Bank

From the Coalition for a National Infrastructure Bank

Last Updated November 20, 2024

Summary: Democrats lost the 2024 Presidential election in a resounding defeat. Most news outlets attributed the loss to a failure by Democrats to overcome deep-seated economic concerns and connect with blue collar voters. Senator Bernie Sanders of Vermont summarized: “It should come as no great surprise that a Democratic Party which has abandoned working class people would find that the working class has abandoned them. … The American working class is angry — and for good reason. They want to know why the very rich are getting much richer … while weekly wages remain stagnant and 60 percent of Americans live paycheck to paycheck."

A bold transformative policy is needed to win back the working class. Fortunately, there exists a bill in Congress to create an off-budget public bank that will re-build our nation’s infrastructure, and directly benefit workers, as well as businesses and all sectors in between. This paper describes how the National Infrastructure Bank (NIB) solution works, its unique transformative nature, and how it directly benefits sectors of the economy that so far have been left behind.

The National Infrastructure Bank – as set out in HR4052 – Provides a Comprehensive Solution for Blue Collar Workers:

This legislation will create a $5 trillion off-budget public bank for infrastructure financing, and will go the farthest towards lifting up the working class. Such investments will create millions of great-paying, family sustaining wage jobs, thereby allowing families’ wages to catch up with the recent inflation spike. In addition, the NIB will lend substantial amounts to build at least 7.3 million housing units for extremely low-income households. Overall lending will iron out supply chain problems, increase domestic production, and bring the cost of everyday goods down. This Bank is a proven model which 6 American Presidents used 4 times before in our nation’s history; and other governments around the world employ.

Transformative features of HR4052 include:

·        High Wage Jobs: $5 trillion in project loans from the NIB will create 25 million new, mostly working class jobs. Legislation requires workers are paid high prevailing, or Davis Bacon Wages, with enforcement provisions. Hiring firms should pursue “earn while you learn” employment contracting to accelerate worker training. NIB loans will restructure the American workforce back towards production and high paying technical jobs. Economic modeling shows that infrastructure investments on this order of magnitude will ultimately grow the economy faster by 2.9% per year, and raise real disposable income by 3.4% per year, compared to an economy without such investments.

·        Addresses the Housing Crisis: The NIB will provide up to $720 billion over ten years for “expansion in the provision of public housing” (Section 205 of HR4052, Criteria for Community Development Loans). Objectives will be to build adequate numbers of affordable housing units to match escalating demand, and to lower housing prices. For the past three decades the Federal budget has spent only 4% of all discretionary spending on housing, a level that failed to keep pace with the sharp escalation in shelter costs. The NIB will first concentrate on rental public housing, since low-income families are often not in a position to purchase homes outright, while the private market is not building adequate numbers of affordable rental units for them. A new “social” housing model will require no additional subsidies from the Federal budget.

·        Lowers Other Inflation: Every $1 in loans from the NIB will stimulate $3 in new domestic production, bringing overall prices down. Specifically, more transit and high speed rail will bring transportation costs down, save on fuel, and thus lower gas prices. All projects should utilize technical advances and resiliency features in their design and construction to ensure each infrastructure project’s longevity.

·        Off-Budget Financing: The NIB is an off-budget lending bank – capitalized by private investors, taking in deposits, providing low-cost loans – whose operations require no infusions from the Federal budget to adequately finance projects over time. The legislation, therefore, is appealable to fiscal moderates.

·        Provides a Safer Living Environment: Replaces all 1 million lead water lines in the country. Rebuilds dams and seawalls, and ensures resiliency for deteriorating infrastructure, all of which threaten working communities and rural areas in particular.

·        Supports Industrial Policy: Although the IIJA, CHIPS, and IRA spending Acts have operated for some time now, they have not stimulated new manufacturing production. In fact, manufacturing output and employment generally fell over the past two years, while other sectors of the economy – like health services and leisure – grew rapidly. Both Presidential candidates called for boosting American manufacturing, but recommended policies which did not work in the past to adequately stimulate this important sector. Instead, a bold infrastructure investment policy supported by NIB lending will form a solid base, creating sustainable demand for U.S. manufactured construction inputs, while growing the economy faster to spur secondary manufacturing demand and technological advancement.

Going into the Election, the U.S. Economy in Aggregate Looked to be in Reasonable Shape: GDP grew at a healthy 2.7 percent rate over the last year. The jobless rate fell well below where it was when President Biden took office. Politically toxic inflation fell sharply from its spike two years ago, gas costs fell, and price growth for groceries dipped well below 2 percent. However, “Bidenomics” and Harris’s plans for an “opportunity economy” failed to resonate with voters. Two metrics of financial stress prove this point: average real wages remained stagnant, while the cost of housing -- the largest component of household spending -- exploded. Now 65% of Americans say they are under severe financial stress, and cannot pay their bills.

Then there was the budget constraint: Biden’s three signature investment programs – the Infrastructure Investment and Jobs Act, the climate-oriented Inflation Reduction Act, and the CHIPS Act – were well-directed towards promoting good-paying jobs. However, they were simply too small, having been whittled down from a much larger Build Back Better plan. Leading up to the election, there was very little discussion of ways to pay for election promises, let alone to address our failing infrastructure needs. Neither candidate spoke about our ballooning Federal debt, now surpassing $36 trillion (with interest payments on the debt now exceeding defense spending). And, looking forward, that debt is expected to grow by another $20 trillion by 2034, according to the Congressional Budget Office.

Election Results: “It was the Economy for the Working Class Stupid”: In the end, Donald Trump won the 2024 election with most demographic groups based on concerns about the economy. One of the biggest swings was among voters of all races who don’t have a four-year college degree. He won them by 13 percentage points this time versus 4 percentage points in 2020—a huge change in a group that accounted for more than half of the electorate. (College-educated voters of all races also swung to Trump, but to a much smaller degree.) Voter analysts surmised that economic anxiety had outweighed other political considerations, especially in the wake of the earlier COVID pandemic that hit many working-class voters the hardest. Today, Americans without a college degree account for 67% of the population but only 27% of household wealth. A majority of U.S. workers earning less than $50,000 a year are struggling to afford their regular mortgage or rent payments, with some resorting to skipping meals or buying needed medicine just to make ends meet, according to a Redfin survey.