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Infrastructure 'Bank' Catches Washington's Imagination

Spending to date "has been more aligned with pork and politics" than with national priorities such as "economic growth, environmental health--whatever it is you want to do," Puentes says.

Bill Gross, co-CIO of bond giant Pimco, believes government spending on infrastructure is an important ingredient to an economic recovery.

"You've got to create a demand for labor," Gross told the The New York Times . "The private sector is not going to do it." Even if the government must do it directly, he said, "Putting a shovel in the hands of somebody can be productive."

And Brookings' Puentes believes initial spending by the U.S. government would attract foreign capital.

"The private sector has capital to spend--whether its sovereign wealth funds or pension funds or private investors, equity investors--whatever it is, that money is out there, we know, but there really isn't a good home for it here in the U.S. so a lot of its going elsewhere. Some kind of national infrastructure bank would help provide a place for those funds and then connect it to the infrastructure projects that are out there," Puentes says.

Even Rep. Ron Paul (R., Tex.), godfather of the cost-cut-obsessed Tea Party, acknowledges the need to spend more on infrastructure--even if it means cutting almost everything else.

"Before any subsidies or welfare payments are paid out, before social security is handed out to illegal immigrants, or health care is given to everyone, before bridges to nowhere are built at home, or entire countries bombed and rebuilt abroad, before any other myriad of exotic government projects are even considered, infrastructure should be attended to and taken seriously," Paul said in a speech on the House floor.

Paul spokesman Jesse Benton says Paul believes some government spending on infrastructure is necessary to pick up the slack for a time, though "ultimately it should be more of a free market approach." The government money would come from "not expanding universal healthcare and by cutting back what we're doing overseas," in terms of fighting foreign wars.

Whether infrastructure is more important than health care is a matter for debate. Let's hope we are capable of providing ourselves with both.

-- Written by Dan Freed in New York.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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