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merrily

(45,251 posts)
Mon Sep 14, 2015, 08:34 AM Sep 2015

Creating one or more infrastructure banks is a vintage Democratic Leadership Council recommendation.

In one of his addresses to Congress--possibly the special address--Obama mentioned a national infrastructure bank, as does Hillary Clinton's plan for her administration. https://en.wikipedia.org/wiki/National_Infrastructure_Reinvestment_Bank For me, this raises some questions, especially given that the DLC touted this idea in one iteration or another and--full disclosure--I am not a fan of DLC policies.

I first heard of the Democratic Leadership Council right after Obama appointed Rahm Emanuel Chief of Staff. This was before Al From decided to implode the DLC qua entity and donate its papers to the Clinton Presidential Library, for safekeeping While not entirely easy to search, the DLC website then was easier to search than it became after the announcement that the DLC would dissolve its corporate existence. And, now, of course, the website is gone. Of course, the teachings of the DLC survived both technical corporate dissolution of the DLC and termination of the DLC website and remain highly relevant to the behaviors of the DNC and New Democrats.

In any event, quite a few of the earlier DLC articles were about schools and then about schools as infrastructure. As a general observation, things that involve children seem to be the wedge for policies from school lunch subsidies to charter schools: Who can say "no" to private ownership of schools subsidized at taxpayer expense, if Democrats and Republicans agree that charter schools definitely shall improve education of America's beloved children?

In any event, over time, DLC articles about schools as infrastructure in need of repair, etc. segued into funding of all kinds of infrastructure repairs through creation of infrastructure banks. Ultimately, former Congressman Harold Ford, who I believe was the last chair of the DLC, wrote an article about using infrastructure banks to repair and maintain the nation's infrastructure, such as roads and bridges and.....nuclear power plants.

I strongly suspect that Ford was able to distinguish in his own mind between (1) building or repairing a nuclear power plant; and (2) repairing a bridge or a road that the government built, owned and operated. However, his article gave no indication of any difference: it simply lumped nuclear power plants in with things like schools, bridges and roads. As I recall, his article made no distinction between charter schools and public schools, either. Therefore, I have no clue whether he intended to treat the building and/or repair of charter schools the same as public schools, bridges, etc. ("Which of these things is not like the others" is an important question to be able to answer on Main Street, as well as on Sesame Street.)

As the saying goes, the devil is always in the details. Accordingly, I recommend paying very close attention to the specifics of any proposal involving infrastructure banks.

28 replies = new reply since forum marked as read
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Creating one or more infrastructure banks is a vintage Democratic Leadership Council recommendation. (Original Post) merrily Sep 2015 OP
If they are Government owned banks used to pay contractors directly okay. WDIM Sep 2015 #1
I am not exactly sure. As the wiki article that I linked in the OP mentions, merrily Sep 2015 #4
They are a way to pay higher interest on government debt. jeff47 Sep 2015 #5
That is the scam WDIM Sep 2015 #7
In the main, yes. TheJames Sep 2015 #13
K&R! marym625 Sep 2015 #2
Thanks so much, marym625. merrily Sep 2015 #3
I love this group. marym625 Sep 2015 #6
Too kind. merrily Sep 2015 #8
I wrote a post 3 times marym625 Sep 2015 #9
Awww, I'm sorry. The new one is coming, s-l-o-w-l-y but surely. I can work on it only merrily Sep 2015 #11
I'll watch for it marym625 Sep 2015 #14
I posted it just a few minutes ago. It's long, though, so you may merrily Sep 2015 #15
Excellent post! marym625 Sep 2015 #18
Thank you and you're welcome. And you finished it almost a month ahead of Columbus Day, too. merrily Sep 2015 #19
Well, I have to check the links. marym625 Sep 2015 #20
You can just look at that material very quickly. merrily Sep 2015 #21
yeah, I do the same thing marym625 Sep 2015 #22
LOL! Bring it in. merrily Sep 2015 #23
More in marym625 Sep 2015 #24
LOL! Sadly, my nooner with DU must end. I've got to get stuff done. See you soon. merrily Sep 2015 #25
same here. Enjoy! marym625 Sep 2015 #26
Kicked and recommended to the Max! Thank you, merrily. Enthusiast Sep 2015 #10
Thank you and you're welcome, Enthusiast. merrily Sep 2015 #12
Good post, I'll try to add some info later. nt bananas Sep 2015 #16
I hope you can. That would be great. merrily Sep 2015 #17
How "nuclear loan guarantees" became actual taxpayer loans. bananas Sep 2015 #27
Wow, bananas, thank you. merrily Sep 2015 #28

WDIM

(1,662 posts)
1. If they are Government owned banks used to pay contractors directly okay.
Mon Sep 14, 2015, 09:07 AM
Sep 2015

If they are private central banks used to loan the government its own money it is a scam.

Just like the Federal Reserve. The idea the government has to borrow money it has the power to print is nothing but a scam and a fraud on the American people.

merrily

(45,251 posts)
4. I am not exactly sure. As the wiki article that I linked in the OP mentions,
Mon Sep 14, 2015, 09:54 AM
Sep 2015

the concept of one or more infrastructure banks "evolved" over time. If created, they may well continue to "evolve."

jeff47

(26,549 posts)
5. They are a way to pay higher interest on government debt.
Mon Sep 14, 2015, 10:03 AM
Sep 2015

The government borrows money to build a road. It pays the "normal" interest rate on that debt. For the federal government, that's basically 0% interest at the moment.

The "infrastructure banks" would be set up by the government with some seed money, but most of the money would come from "investors". The money would be used to build that road, but the "investors" would receive a higher rate than "regular" debt.

WDIM

(1,662 posts)
7. That is the scam
Mon Sep 14, 2015, 10:18 AM
Sep 2015

The Government should not borrow money that it prints. It should print the money to pay for the roads and pay for them directly without using a middle man.

Governmemts should not borrow their own money. This is why central banks are a scam and a crime based on fraud. The treasury should print the money put the money in circulation. The banks should pay our government interest for using the money not the other way around.

The government should control the monetary and fiscal policy for the benefit of the people not allow a private bank to control monetary policy for the benefit of the wealthy.

TheJames

(120 posts)
13. In the main, yes.
Mon Sep 14, 2015, 12:30 PM
Sep 2015

We NEED a government-owned central banking system. similar to, I think its Montana's state bank. The Fed charging interest on money it lends the government is absolutely a scam we've suffering under from the start.

merrily

(45,251 posts)
3. Thanks so much, marym625.
Mon Sep 14, 2015, 09:51 AM
Sep 2015

You've been very nice indeed about my little ramblings in the Populist Group.

merrily

(45,251 posts)
8. Too kind.
Mon Sep 14, 2015, 10:24 AM
Sep 2015

I've been working on another post on and off since I finished the post about infrastructure banks. But, in between, I've doing a bunch of other things.

marym625

(17,997 posts)
9. I wrote a post 3 times
Mon Sep 14, 2015, 10:49 AM
Sep 2015

And my fucking phone lost it. I gave up.

Looking forward to your new post!

merrily

(45,251 posts)
11. Awww, I'm sorry. The new one is coming, s-l-o-w-l-y but surely. I can work on it only
Mon Sep 14, 2015, 11:31 AM
Sep 2015

intermittently, but it will appear sometime today.

merrily

(45,251 posts)
15. I posted it just a few minutes ago. It's long, though, so you may
Mon Sep 14, 2015, 03:10 PM
Sep 2015

want to save it for the next three-day weekend. I think that's Columbus Day, right?



http://www.democraticunderground.com/12779992

marym625

(17,997 posts)
20. Well, I have to check the links.
Tue Sep 15, 2015, 12:00 PM
Sep 2015

Not a "tldr" just have to go back to it when I have more than a few minutes.

I will NEVER comment on something I haven't read, in full, without noting I will read later. And I WILL read later. I absolutely abhor when someone has the audacity to comment on something, especially in the negative, and says, "tldr." Unbelievable people do that.

merrily

(45,251 posts)
21. You can just look at that material very quickly.
Tue Sep 15, 2015, 12:27 PM
Sep 2015

With very few exceptions, when I do a post like that, I am going from memory, from things I "just knew."

I will usually double check myself via a quick rendezvous with Mr. Google and put the link there in case anyone is really interested.

It also saves some time for the "link, please" posters who think I make this stuff up as I go along.

bananas

(27,509 posts)
27. How "nuclear loan guarantees" became actual taxpayer loans.
Tue Sep 15, 2015, 01:26 PM
Sep 2015
https://en.wikipedia.org/wiki/Nuclear_Power_2010_Program

The "Nuclear Power 2010 Program" was launched in 2002 by President George W. Bush in order to restart orders for nuclear power reactors in the U.S. by providing subsidies for a handful of Generation III+ demonstration plants. The expectation was that these plants would come online by 2010, but this expectation was not met.

<snip>


https://en.wikipedia.org/wiki/Energy_Policy_Act_of_2005

The Energy Policy Act of 2005 (Pub.L. 109–58) is a bill passed by the United States Congress on July 29, 2005, and signed into law by President George W. Bush on August 8, 2005, at Sandia National Laboratories in Albuquerque, New Mexico. The act, described by proponents as an attempt to combat growing energy problems, changed US energy policy by providing tax incentives and loan guarantees for energy production of various types.

Public Utility Holding Company Act of 1935 was repealed, effective Feb 2006, by the passing of this act.[2]

<snip>

it includes nuclear-specific provisions;[9]

- it extends the Price-Anderson Nuclear Industries Indemnity Act through 2025;
- it authorizes cost-overrun support of up to $2 billion total for up to six new nuclear power plants;
- it authorizes production tax credit of up to $125 million total a year, estimated at 1.8 US¢/kWh during the first eight years of operation for the first 6.000 MW of capacity,[10] consistent with renewables;
- it authorizes loan guarantees of up to 80% of project cost to be repaid within 30 years or 90% of the project's life [1];
- it authorizes $2.95 billion for R&D and the building of an advanced hydrogen cogeneration reactor at Idaho National Laboratory [2];
- it authorizes 'standby support' for new reactor delays that offset the financial impact of delays beyond the industry's control for the first six reactors, including 100% coverage of the first two plants with up to $500 million each and 50% of the cost of delays for plants three through six with up to $350 million each for [3];
- it allows nuclear plant employees and certain contractors to carry firearms;
- it prohibits the sale, export or transfer of nuclear materials and "sensitive nuclear technology" to any state sponsor of terrorist activities;
- it updates tax treatment of decommissioning funds;

<snip>


https://en.wikipedia.org/wiki/Public_Utility_Holding_Company_Act_of_1935

The Public Utility Holding Company Act of 1935 (PUHCA),[1] also known as the Wheeler-Rayburn Act, was a law that was passed by the United States Congress to facilitate regulation of electric utilities, by either limiting their operations to a single state, and thus subjecting them to effective state regulation, or forcing divestitures so that each became a single integrated system serving a limited geographic area. Another purpose of PUHCA was to keep utility holding companies that were engaged in regulated businesses from engaging in unregulated businesses.

On August 8, 2005, the Energy Policy Act of 2005 passed both houses of Congress and was signed into law, repealing PUHCA.

<snip>

PUHCA was one of a number of trust-busting and securities regulation initiatives that were enacted in response to the government investigations of the Wall Street Crash of 1929 and ensuing Great Depression, which included the collapse of Samuel Insull's public utility holding company empire. By 1932, the eight largest utility holding companies controlled 73 percent of the investor-owned electric industry.[2] Their complex, highly leveraged, corporate structures were very difficult for individual states to regulate.

<snip>


http://www.neimagazine.com/features/featurehow-much-/

How much?
20 November 2007

For some utilities, the capital costs of a new nuclear power plant are prohibitive.

Just before the release of the US Energy Information Administration’s (EIA’s) Annual Energy Outlook 2005 (AEO 2005) the then senior vice president of nuclear generation and chief nuclear officer at the Nuclear Energy Institute (NEI), Marvin Fertel, told the Senate Energy and Natural Resources Committee that the assumptions made on new nuclear plant construction were erroneous. The EIA had assumed overnight capital costs of $1928/kWe, which Fertel claimed were “unrealistically high, and inflated.”

The EIA, Fertel said, “assumed that new nuclear plants would experience the same delays, lengthy construction periods and high costs experienced by some of the plants built in the 1980s and 1990s.” These assumptions were unrealistic owing to advances in construction techniques and new simplified, standardised plant designs. More realistic overnight capital cost estimates of new nuclear were of the order of $1400-1500/kWe for the first-of-a-kind and $300 less for the nth-of-a-kind, he claimed.

<snip>

There are many other figures available, including the June 2007 report by The Keystone Center, titled Nuclear Power Joint Fact-Finding. This study, which was funded by several nuclear plant operators as well as other interested parties including General Electric and NEI, estimates overnight costs of $2950/kWe (in 2007 dollars). With interest, this figure translates to between $3600/kWe and $4000/kWe.

Interestingly, when Nuclear Power Joint Fact-Finding was released, the nuclear industry press chose to either focus on other aspects – in particular the ‘finding’ that nuclear is a viable option for dealing with climate change – or ignore the report altogether. Considering the number of organisations involved in the nuclear industry that backed the report, this low level of coverage is anomalous, and suggests a certain amount of discomfort with the findings.

However, prohibitively high though it may at first appear to be, even the figure for new build costs in The Keystone Center report is considered too low by some observers.

<snip>


http://blogs.wsj.com/environmentalcapital/2008/05/12/its-the-economics-stupid-nuclear-powers-bogeyman/?mod=WSJBlog

May 12, 2008, 1:59 PM ET

It’s the Economics, Stupid: Nuclear Power’s Bogeyman

By Keith Johnson


It turns out nuclear power’s biggest worry isn’t Yucca Mountain, Three Mile Island ghosts, or environmental protesters. It’s economics.

Costs: You ain’t seen nothing yet.

Rebecca Smith reports today in the WSJ (sub reqd.) on the biggest hurdle to the nascent nuclear-energy revival in the U.S.—skyrocketing construction costs. Though all power sectors are affected to different degrees by rising capital costs, nuclear power’s vulnerability puts it in a class by itself. Notes the paper:

<snip>

Over the last five years, cost estimates for new nuclear power plants have been continually revised upward. Even the bean counters can’t keep pace. The paper notes:

Estimates released in recent weeks by experienced nuclear operators — NRG Energy Inc., Progress Energy Inc., Exelon Corp., Southern Co. and FPL Group Inc. — “have blown by our highest estimate” of costs computed just eight months ago, said Jim Hempstead, a senior credit officer at Moody’s Investors Service credit-rating agency in New York.


<snip>

The Congressional Budget Office just finished a rosy-glasses report on nuclear economics. Even while acknowledging that historical costs for nuclear plants always doubled or tripled their initial estimates, the CBO took heart from promises made by manufacturers of next-generation reactors and a single on-time and on-budget project in Japan to project cheaper nuclear construction costs in the future. And if those cost estimates are wrong? From the CBO:

<snip>



http://www.nirs.org/press/02-17-2010/1

FOR IMMEDIATE RELEASE
February 17, 2010

CONTACT
Michael Mariotte, NIRS 301-270-6477 12

Nuclear Loan Guarantees Aren’t Just Guarantees: They are Actual Taxpayer Loans

President Obama’s announcement yesterday of a “conditional” $8.3 billion loan “guarantee” to the Southern Company for construction of two nuclear reactors in Georgia obscured an important fact about the loan guarantee program: taxpayers are not just providing a guarantee, they also will be providing the actual loans.

According to a press release from Southern Company yesterday, “Total guaranteed borrowings would not exceed 70 percent of the company's eligible projected costs, or approximately $3.4 billion, and are expected to be funded by the Federal Financing Bank.” (Note: the discrepancy in amounts--$3.4 billion vs $8.3 billion, is because Southern Company is only a partial owner of the two reactors, the rest of the funds will go to the other owners).

The Federal Financing Bank (FFB) is a little-known government entity that more typically makes loans to universities, colleges, rural electric co-ops and other small-scale projects. Interest rates from the FFB may be lower than offered by private financial institutions. Use of the FFB means that the loans themselves for new reactor construction will come from taxpayers, putting taxpayers in the risky business of both providing the loans and guaranteeing to themselves that the loans will be repaid.

Similarly, UniStar Nuclear, which is said to be on the Department of Energy’s “shortlist” of loan guarantee applicants, states in its license application to the Nuclear Regulatory Commission, “It is expected that, with respect to the portion of the debt guaranteed by the Department of Energy under the loan guarantee program, the source of financing will be the Federal Financing Bank, and with respect to the portion of the debt insured by export credit agencies, the source of financing will be commercial banks.”

“This is not like Dad co-signing a loan for a child’s first car,” said Michael Mariotte, executive director of Nuclear Information and Resource Service. “The idea that these are just loan “guarantees” is fictitious: these are actual loans. Giant nuclear utilities will be raiding the federal treasury for money to build reactors, and they are expecting the taxpayers to bail them out if the project goes bad.”

“Coupled with Secretary Chu’s astonishing admission yesterday that he was unaware of the Congressional Budget Office report estimating a 50% failure rate for new reactor projects, the administration has chosen a path of enormous risk to taxpayers and is obscuring the real nature of that risk,” said Mariotte.


http://safeenergy.org/2014/04/22/does-desperation-on-vogtle-loan/

DOE’s desperation to give Vogtle loan now made clear

April 22, 2014

Now we know just how desperate the Department of Energy was to give a taxpayer loan to Southern Company and others for construction of two new reactors at the Vogtle site in Georgia.

Like a car dealer trying to sweep unsold autos off the lot, DOE gave Southern Co. the loan with nothing down. Nada. Zero.

Hannah Northey at E&E Publishing broke the story late yesterday, based on documents she received from DOE under the Freedom of Information Act.

Those documents indicated that the credit subsidy fee Southern and its partners had to pay to obtain the loan was zero. “The credit subsidy fee payable to DOE in connection with its execution of the loan guarantee agreement dated Feb. 20, 2014, between DOE and [Oglethorpe], pursuant to which DOE will guarantee a federal financing bank loan to OPC [for $3 billion, including estimated capitalized interest] is $0,’ Davison [DOE Loan Program Office Executive Director Peter] wrote in one letter to Higgins,” the article states.

Think of the “credit subsidy fee” as the down payment on a loan. If you buy a house, these days the bank is likely to require that you pay 20% of the mortgage up front–they want you to have a serious stake in the property. Apparently, when it comes to nuclear power, DOE decided that normal banking practices could be thrown out the window. What is surprising is that the White House’s Office of Management and Budget (OMB) signed on to the deal. For years, the rumors and chatter coming out of the notoriously tight-lipped OMB were that it regarded the project as risky and that it would require a meaningful credit subsidy fee. But OMB obviously backed down.

<snip>

merrily

(45,251 posts)
28. Wow, bananas, thank you.
Tue Sep 15, 2015, 04:36 PM
Sep 2015

Well, now I get why Harold Ford's article casually treated nuclear power plants like infrastructure. Figures it started with Dimson, doesn't it?

Yeah, I think we know the deal with those taxpayer "loan guaranties" at this point.

With all that work, you may want to think about turning your reply into an OP.

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