1AC

Plan Text
Plan: The United States federal government should substantially increase its transportation infrastructure investment in the Unites States through a National Investment Bank.

Contention 1 is Growth

Advantage 1 is Stimulus
Destroyed infrastructure is undermining the foundation of the U.S. economy and is only going to get worse Thomas J. Donohue, president and chief executive officer of the US Chamber of Commerce, 09-082011, The highway to jobs - via better infrastructure,
http://www.csmonitor.com/Commentary/Opinion/2011/0908/The-highway-to-jobs-via-betterinfrastructure As Obama and Congress talk jobs, here's an appeal from the US Chamber of Commerce: Invest heavily in roads, air transport, and other infrastructure. The economy and jobs depend on it. Adopt innovative financing, including an infrastructure bank to leverage private investment. Throughout America's history, feats in infrastructure, like the Interstate Highway System, have not only been symbols of national achievement but also conduits for commerce and keys to prosperity. Today, however, much of this foundation of the US economy is costly, cracked, and crumbling. Roads, rail, airports, and

harbors need continual investment to keep pace with demand. Recent research by the US Chamber of Commerce discovered that underperforming transport infrastructure cost the US economy nearly $2 trillion in lost gross domestic product in 2008 and 2009. The chamber's
Transportation Performance Index showed that America's transit system is not keeping up with growing demands and is failing to meet the needs of the business community and consumers. Most important, the research proved for the first time that there is a direct relationship between transportation infrastructure performance and GDP . The index findings also showed that if America invests wisely in infrastructure, it can become more reliable, predictable, and safe. By improving underperforming transport infrastructure, the U nited S tates could unlock nearly $1 trillion in economic potential.

Making investments that tackle immediate challenges, like congestion, and that account for growing demand into the future, America would boost productivity and economic growth in the long run and support millions of jobs in the near term . Investment in infrastructure would also
improve quality of life by reducing highway fatalities and accidents and easing traffic congestion that costs the public $115 billion a year in lost time and wasted fuel - $808 out of the pocket of every motorist. Such an investment would also allow the country to better protect the environment while increasing mobility. If America fails to adequately invest in transportation infrastructure , by 2020 it will

lose $897 billion in economic growth. Businesses will see their transportation costs rise by $430 billion, and the average American household income will drop by more than $7,000. US exports will decline by $28 billion. Meanwhile, global competitors will surge past us with superior infrastructure that will attract jobs, businesses, and capital. So how can the US get its infrastructure to go from
insufficient and declining to safe, competitive, and productive? An obvious place to start is for Congress to pass core bills for surface transportation, aviation, and water programs - at current funding levels. Congress must move forward with multiyear reauthorizations to restore the nation's highways; modernize air traffic control and improve airports; and maintain American ports, harbors, dams, and levees.Doing so would enable communities to plan projects, hire employees, and prevent devastating layoffs of existing workers. Reauthorizing the Federal Aviation Administration alone would help keep 70,000 workers on the job. Next, America should expand energy infrastructure to support growing needs. A great example is the Keystone XL pipeline to connect Canadian oil sands with Texas refineries. The sooner the project is approved and construction begins, the sooner the US can rake in the benefits of added investment and government revenues, job creation, and more resources to fuel energy needs and keep costs down for businesses and consumers. Likewise, the US can't let a needlessly cumbersome permitting process stand

in the way of infrastructure development. The administration should limit environmental reviews to six months and forgo reviews when no significant environmental impact is expected. Duplicative reviews by state and federal governments should be prevented and, when multiple agencies are involved, a lead agency should be appointed to coordinate actions and move things along. Accelerating the permitting process would quickly mobilize construction and hiring from one end of the country to the other. In this era of tight government budgets, America must adopt innovative financing approaches and spur

on public-private partnerships. A national infrastructure bank must be a part of a long-term investment strategy. An initial government investment of $10 billion could leverage up to $600 billion
in private funds.But regulatory impediments must also be removed. They take an estimated $250 billion in global capital out of play. If that private capital were invested in infrastructure projects, it could create 1.9 million jobs over 10 years and spur untold economic growth. As for public investments, sooner or later we'll have to face the fact that the federal fuel tax has not been raised 1 cent in 17 years. The country needs modest, phased-in increase. Comprehensively restoring America's infrastructure and revitalizing the economy are monumental tasks. Fortunately, we are the same nation that built our world-class system in the first place. If anyone is up to the challenge, we are.

This negatively influences the entire economy - prevents a resilient supply chain Richard Little, director at the Keston institute for public finance and infrastructure policy, 04-05-2011,
Infrastructure investment and U.S. Competitiveness, http://www.cfr.org/united-states/infrastructureinvestment-us-competitiveness/p24585 The massive network of seaports, waterways, railroads, and highways we built in the nineteenth and twentieth centuries were designed to unlock the nation's natural resources, agriculture, and manufacturing strength and bring these products to market. Today, despite a dynamically changing economy, these sectors along with trade and transportation still account for more than a quarter of U.S. GDP or $3.5 trillion, but many transport linkages have become bottlenecks due to long-delayed repair and replacement. The entire U.S. economy, as well as consumers, would benefit from a more efficient and resilient supply chain. Unfortunately, for far too long, Americans have been lulled by their political leadership into a false sense of entitlement. Faced with the prospect of raising taxes or charging fees to cover the cost of maintaining these systems, they have chosen to do neither. As a result, our highways and bridges decline at alarming rates. Most of the other systems vital to our interests suffer the same fate. Fixing this is well within our control, the challenge will be to muster the will to do so. The first step in addressing this problem will be to ensure that adequate revenue streams are in place. Whether this revenue comes from the fuel tax, tolls, or other mechanisms is less important than having the funds to work with. Without a move to revenue-based models, necessary renewal of critical infrastructure will be long delayed, if provided at all. We can show that we value these systems by agreeing to pay for their upkeep or own both the responsibility for economic decline and its consequences.

Confidence is collapsing now and destroying investment a national infrastructure bank is the best short term stimulus that doesnt drive up the deficit Robert Skidelsky and Felix Martin, Emeritus Professor of Political Economy at the University of Warwick and macroeconomist and bond investor, 03-30-2011, For a National Investment Bank,
http://www.skidelskyr.com/site/article/for-a-national-investment-bank/ But could a National Investment Bank also help with the urgent problem of the weak recovery and the exhaustion of the current policy options? We believe that it could. Keynes was skeptical that economies can stage spontaneous recoveries from major slumps because he recognized the central importance of confidence in a market system. The destruction of confidence caused by a severe recession leads to a collapse in investment, which leads to further deterioration in confidence, and hence to further

reduction in investment. In a slump, there is no shortage of savings and liquidity in the economy (and this is why further increasing liquidity, for example by quantitative easing, does little good). The problem is that private businesses do not want to borrow and investregardless of how low interest rates on borrowing arebecause the future is particularly uncertain and they see no clear prospects for future demand. The current situation in the US conforms closely to Keyness analysis. There is no shortage of savingsthe proportion of disposable income that American households save has jumped from below 2 percent immediately before the crisis to over 5 percent today, and US banks are sitting on record levels of cash. But there is a chronic shortage of confidence in future demandso these savings are sitting in the most riskless of placesin short-term Treasury bills, and in banks accounts at the Federal Reserve. Keyness summary of the situation in 1932 still makes sense today, though in less extreme degree: It may still be the case that the lender, with his confidence shattered by his experience, will continue to ask for new enterprise rates of interest which the borrower cannot expect to earn. If this proves to be so, there will be no means of escape from prolonged and perhaps interminable depression except by state intervention to promote and subsidise new investment. The central challenge is to restore confidence on the one hand and on the other to find a way of deploying idle cash to finance the resulting investments. Keynes argued for the direct solution: let the government do both. By increasing fiscal expenditure, it will support demand now and bolster confidence for the future; and by issuing bonds to finance the resulting deficit, it will put the savings currently hiding in cash and Treasury bills to work. In effect, expenditures sponsored by government would substitute for the lost confidence of the private sector until business regains the confidence needed for future investment. For the time being such a policy is politically impossible, as President Obama has made clear. But the creation of a National Investment Bank provides an alternative solutionand one that has the cardinal virtue, in the current political situation, of not requiring the government to increase its borrowing significantly. As in the classical Keynesian solution, the federal government can revive confidence by making clear its support for large-scale, long-term investment programsprograms that will involve tens of billions of dollars of investment and generate hundreds of thousands of jobs. But unlike in the classical solution, the investments will be made by the private sector or by local governments, and the idle cash to fund these investments will be borrowed and deployed not by the federal government but by the National Investment Bank. Of course, the creation of a National Investment Bank cannot be a fiscal free lunch. Congress would need to appropriate sufficient funds to inject the initial capital of the bank. But the essence of banking is the ability to make loans up to a multiple of several times initial capital. For every dollar of initial capital from Congress, the National Investment Bank would be able to finance investment up to a sizable multiple of this initial capital by borrowing the extra dollars now languishing in the private capital markets. It would operate in two main ways. In some cases, the bank would offer a partial or full guarantee of repayment on bonds issued directly by investment projects themselves, thereby assuming some or all of the risk of the projects, and so reducing their cost of funding. But for the most part, the bank itself would lend to finance investment projects, and raise funds for lending from the capital markets by issuing longterm bonds carrying a modest premium over the interest rate on government securities. Such National Investment Bank bonds would likely be attractive assets for pension funds and other longterm investors.

Stimulus self-finances and directs investment into the economy - long-term output growth rate Lawrence H. Summers, is an American economist. He served as the 71st United States Secretary of the
Treasury from 1999 to 2001 under President Bill Clinton. He was Director of the White House United States National Economic Council for President Barack Obama until November 2010.[2] Summers is the Charles W. Eliot University Professor at Harvard University's Kennedy School of Government. He is the 1993 recipient of the John Bates Clark Medal for his work in several fields of economics, and J.

Bradford DeLong, is a professor of Economics and chair of the Political Economy major at the University of California, Berkeley. He served as Deputy Assistant Secretary of the United States Department of the Treasury in the Clinton Administration under Lawrence Summers. He is also a research associate of the National Bureau of Economic Research, and is a visiting scholar at the Federal Reserve Bank of San Francisco, 03-20-2012, Fiscal Policy in a Depressed Economy, http://www.brookings.edu/~/media/Files/Programs/ES/BPEA/2012_spring_bpea_papers/2012_spring_BP EA_delongsummers.pdf This paper focuses on policy choices in a deeply depressed demand constrained economy in which present output and spending are well below their potential level. We presume for the moment that monetary policy is constrained by the zero lower bound, and that the central bank is unable or unwilling to provide additional stimulus through quantitative easing or other meansan assumption we discuss further in Section V. The fact that most estimates of Federal Reserve reaction functions suggest that, if it were possible to have negative short-term safe nominal interest rates, they would have been chosen in recent years suggests the relevance of our analysis. 7 We focus on the impact of temporary fiscal stimulus on the governments long run budget constraint. A very simple calculation conveys the major message of this paper: A combination of low real U.S. Treasury borrowing rates, positive fiscal multiplier effects, and modest hysteresis effects is sufficient to render fiscal expansion selffinancing. Imagine a demand-constrained economy where the fiscal multiplier is 1.5, and the real interest rate on long-term government debt is 1 percent. Finally assume that a $1 increase in GDP increases tax revenues and reduces spending by $.33. Assume that the government is able to undertake a transitory increase in government spending, and then service the resulting debt in perpetuity, without any impact on risk premia. Then the impact effect of an incremental $1.00 of spending is to raise the debt stock by $0.50. The annual debt service needed on this $0.50 to keep the real debt constant is $0.005. If reducing the size of the current downturn in production by $1.50 avoids a 1% as large fall in future potential outputavoids a fall in future potential output of $0.015then the incremental $1.00 of spending now augments future-period tax revenues by $0.005. And the fiscal expansion is self-financing. The point would be reinforced by allowing for underlying growth in the economy, positive impacts of spending on future output, and increases in the price level as a result of expansion. It is dependent on multiplier and hysteresis effects, the assumption about government borrowing costs, and the assumption that government spending once increased can again be reduced. These issues and assumptions are explored in subsequent sections. Below we develop a framework for assessing under what conditions fiscal expansion is self-financing, and whether fiscal expansion will pass a benefit-cost test. Throughout, we assume a transitory increase in government spending and assume that it does not affect government borrowing costs. We address these issues in subsequent sections. A temporary boost to government purchases to increase aggregate demand in a depressed economy has four principal effects: First, there is the standard short-term aggregate demand multiplier. In the present period, prices are predetermined or slow to adjust and in which the level of production is demandpercentage point-y boosts production and income Yn (n for now) in the present period by an amount of percentage point-time value, in Section III. Second, there are hysteresis effects: a depressed economy is one in which investment is low; in which the capital stock is growing slowly; and in which workers without employment are seeing their skills, their weak-tie networks they use to match themselves with vacancies in the labor market, and their morale decays. All of these reduce potential output. In future periods production is supply determined, and equal to potential output. Thus in future periods potential

flow of future potential output per percentage point-year of the present-period output gap. We discuss the

In an economy with a long-term output growth rate g and a social rate of time discount r and where r>g so that present-value calculations are possible, the net effect of these first two on the socially-discounted is the present value of future output. Third, financing the expansio -andinc -toGDP ratio in the future periods thereafter, a fraction of this debt must be amortized. Assume for now that the real interest rate on government debt is equal to the social rate of time discount r. The taxes needed to finance these debtat a constant debt-to-GDP ratio of the present-period fiscal expansion requires the government to commit recurring futureassumes that there is a budget constraint: that the appropriate long-run real r is greater than the growth rate of the tax base g, The fourth effect is a knock-on consequence of the second. Higher futureperiod output from the smaller hysteresis shadow cast on the economy because expanded government purchases reduce the size of the present-period depression means that the taxes levied to finance baseline government programs and to amortize the preexisting national debt bring in more revenue. The effect on the governments future period net cash fl

Global economic crisis causes war strong statistical support proves Jedediah Royal, Director of Cooperative Threat Reduction at the U.S. Department of Defense, 2010,
Economic Integration, Economic Signaling and the Problem of Economic Crises, Economics of War and Peace: Economic, Legal and Political Perspectives, ed. Goldsmith and Brauer, p. 213-215 Less intuitive is how periods of economic decline may increase the likelihood of external conflict. Political science literature has contributed a moderate degree of attention to the impact of economic decline and the security and defence behaviour of interdependent slates. Research in this vein has been considered at systemic, dyadic and national levels. Several notable contributions follow. First, on the systemic level. Pollins (2008) advances Modelski and Thompson's (19%) work on leadership cycle theory, finding that rhythms in the global economy are associated with the rise and fall of a preeminent power and the often bloody transition from one pre-eminent leader to the next. As such, exogenous shocks such as economic crises could usher in a redistribution of relative power (sec also Gilpin. 1981) that leads to uncertainty about power balances, increasing the risk of miscalculation (Fearon, 1995). Alternatively, even a relatively certain redistribution of power could lead to a permissive environment for conflict as a rising power may seek to challenge a declining power (Werner, 1999). Separately. Pollins (1996) also shows that global economic cycles combined with parallel leadership cycles impact the likelihood of conflict among major, medium and small powers, although he suggests that the causes and connections between global economic conditions and security conditions remain unknown. Second, on a dyadic level. Copeland's (1996. 2000) theory of trade expectations suggests that 'future expectation of trade' is a significant variable in understanding economic conditions and security behaviour of states. He argues that interdependent states are likely to gain pacific benefits from trade so long as they have an optimistic view of future trade relations. However, if the expectations of future trade decline, particularly for difficult lo replace items such as energy resources, [lie likelihood for conflict increases. as states will be inclined to use force to gain access to those resources. Crises could potentially be the trigger for decreased trade expectations either on its own or because il triggers protectionist moves by interdependent states.4 Third, others have considered the link between economic decline and external armed conflict at a national level. Blomberg and Hess (2002) find a strong correlation between internal conflict and external conflict, particularly during periods of economic

downturn. They write, The linkages between internal and external conflict and prosperity are strong and mutually reinforcing. Economic conflict tends to spawn internal conflict, which in turn returns the favour. Moreover, the presence of a recession lends lo amplify the extent to which international and external conflicts self-reinforce each other. (Blomberg & I less. 2002. p. 89) Economic decline has also been linked with an increase in the likelihood of terrorism (Blomberg. Hess. & Wccrapana. 2004). which has the capacity to spill across borders and lead to external tensions. Furthermore, crises generally reduce the popularity of a silting government. "Diversionary theory' suggests that, when facing unpopularity arising from economic decline, sitting governments have increased incentives to fabricate external military conflicts to create a 'rally around the flag' effect. Wang (1996), DcRoucn (1995), and Blomberg. Mess, and Thacker (2006) find supporting evidence showing that economic decline and use of force are at least indirectly correlated. Gelpi (1997), Miller (1999), and Kisangani and Pickering (2009) suggest that the tendency towards diversionary tactics are greater for democratic states than autocratic states, due to the fact that democratic leaders are generally more susceptible to being removed from office due to lack of domestic support. DcRoucn (2000) has provided evidence showing that periods of weak economic performance in the United States, and thus weak Presidential popularity, are statistically linked to an increase in the use of force. In summary, recent economic scholarship positively correlates economic integration with an increase in the frequency of economic crises, whereas political science scholarship links economic decline with external conflict at systemic, dyadic and national levels.5 This implied connection between integration, crises and armed conflict has not featured prominently in the economic-security debate and deserves more attention. This observation is not contradictory to other perspectives that link economic interdependence with a decrease in the likelihood of external conflict, such as those mentioned in the first paragraph of this chapter. Those studies tend to focus on dyadic interdependence instead of global interdependence and do not specifically consider the occurrence of and conditions created by economic crises. As such, the view presented here should be considered ancillary to those views.

Independently, breakdown of global transportation causes extinction

Dempsey 2k (Paul Stephen, Professor of Law and Director of the Transportation Law Program at University of Denver, Director of the National Center for Intermodal Transportation, former attorney for the Interstate Commerce Commission and the US Civil Aeronautics Board, Summer 2000, 27 Transp. L. J. 367, Lexis Nexis) **Ableist discourse modified [] ** As the gateways to an increasingly global market, transportation corridors are the arteries through which

we and everything we consume flow. Transportation networks stimulate trillions of dollars in trade, c3ommerce, and tourism. In a global economy, they enable specialization in the production of goods and
services which, under the law of comparative advantage, stimulates broader economic growth. By shrinking the planet, transportation also facilitates the intermingling and integration of disparate economies and

cultures. Cultural interaction enhances international understanding which promotes global peace which, in a thermonuclear world, is essential for survival of our species. It offers hope for the creation of a global village of friends and neighbors rather than enemies and adversaries. Cultural interaction also stimulates intellectual social and artistic creativity, making the world a more interesting and richer place in which
to live. As a fundamental component of the infrastructure upon which economic growth is built - the veins and arteries of commerce, communications, and national defense - a healthy transportation system serving the public's needs for ubiquitous service at reasonable prices is vitally important to region and the nation it serves. It is for this reason that governments the world over have promoted, encouraged, and facilitated its provision by providing essential infrastructure, research and development, protective regulation, subsidies and, on occasion, outright ownership. Historically, government has facilitated transportation by guiding the airports, the seaports, the rail and transit lines, subsidized their operations where necessary, and established the basic codes and rules under which the industry serves the public. If done thoughtfully and well, government planning can facilitate creation of an efficient and productive transportation infrastructure better able to satisfy the broader needs of the public for safe, secure, seamless, expeditious and reasonably priced transportation service. The tourism and travel business is arguably the world's largest industry. It accounts for 5.5% of the world's GNP, 12.9% of consumer spending, 7.2% of worldwide capital investment, and 127 million jobs, employing one in every 15 workers. The ripple effect of transportation activity - the indirect and induced economic and employment stimulation - is vastly larger than the

prices paid directly by passengers or shippers. Transportation creates and transports wealth far in excess of its own facial value. In other words, the tacit benefits of economic stimulation created by transportation networks far exceeds its costs. In this sense, transportation has profound externalities, both
positive and negative. For example, a city with abundant airline, motor carrier and railroad networks radiating from it like the spokes of a wheel, enjoys a wide economic catchment area stimulating trade, commerce and wealth for its citizens. Conversely, a community with poor, declining or deteriorating access to the established and prevailing transportation networks will wither like a human limb or organ starved of oxygen by an artery made impassable by a tenacious blood clot. On a macroeconomic level, these observations are true for all nations and all regions, and arguably for all time. An expeditious, efficient, and economical transportation network will facilitate the public's need for mobility and will ordinarily advance economic productivity and growth. Conversely, a deteriorating transportation infrastructure will produce sluggishness in overall economic productivity and [slow] economic growth.

Growth eliminates the only rational incentives for countries to go to war Erik Gartzke, associate Professor of political science at the University of California, San Diego PhD from Iowa and B.A. from UCSF Erik, 2011, "SECURITY IN AN INSECURE WORLD", www.catounbound.org/2011/02/09/erik-gartzke/security-in-an-insecure-world/ Almost as informative as the decline in warfare has been where this decline is occurring. Traditionally, nations were constrained by opportunity. Most nations did not fight most others because they could not physically do so. Powerful nations, in contrast, tended to fight more often, and particularly to fight with other powerful states. Modern zones of peace are dominated by powerful, militarily capable countries. These countries could fight each other, but are not inclined to do so. At the same

time, weaker developing nations that continue to exercise force in traditional ways are incapable of projecting power against the developed world, with the exception of unconventional methods, such as terrorism. The world is thus divided between those who could use force but prefer not to (at least not against each other) and those who would be willing to fight but lack the material means to fight far from home. Warfare in the modern world has thus become an activity involving weak (usually neighboring) nations, with intervention by powerful (geographically distant) states in a policing capacity. So, the riddle of peace boils down to why capable nations are not fighting each other. There are several explanations, as Mack has pointed out. The easiest, and I think the best, explanation has to do with an absence of motive. Modern states find little incentive to bicker over tangible property, since armies are expensive and the goods that can be looted are no longer of considerable value. Ironically, this is exactly the explanation that Norman Angell famously supplied before the World Wars. Yet, today the evidence is abundant that the most prosperous, capable nations prefer to buy rather than take. Decolonization, for example, divested European powers of territories that were increasingly expensive to administer and which contained tangible assets of limited value. Of comparable importance is the move to substantial consensus among powerful nations about how international affairs should be conducted. The great rivalries of the twentieth century were ideological rather than territorial. These have been substantially resolved, as Francis Fukuyama has pointed out. The fact that remaining differences are moderate, while the benefits of acting in concert are large (due to economic interdependence in particular) means that nations prefer to deliberate rather than fight . Differences remain, but for the most part the capable countries of the world have been in consensus, while the disgruntled developing world is incapable of acting on respective nations dissatisfaction. While this version of events explains the partial peace bestowed on the developed world, it also poses challenges in terms of the future. The rising nations of Asia in particular have not been equalbeneficiaries in the world political system. These nations have benefited from economic integration, and this has proved sufficient in the past to pacify them. The question for the future is whether the benefits of tangible resources through markets are sufficient to compensate the rising powers for their lack of influence in the policy sphere. The danger is that established powers may be slow to accommodate or give way to the demands of rising powers from Asia and elsewhere, leading to divisions over the intangible domain of policy and politics. Optimists argue that at the same time that these nations are rising in power, their domestic situations are evolving in a way that makes their interests more similar to the West. Consumerism, democracy, and a market orientation all help to draw the rising powers in as fellow travelers in an expanding zone of peace among the developed nations. Pessimists argue instead that capabilities among the rising powers are growing faster than their affinity for western values, or even that fundamental differences exist among the interests of first- and second-wave powers that cannot be bridged by the presence of market mechanisms or McDonalds restaurants. If the peace observed among western, developed nations is to prove durable, it must be because warfare proves futile as nations transition to prosperity. Whether this will happen depends on the rate of change in interests and capabilities, a difficult thing to judge. We must hope that the optimistic view is correct, that what ended war in Europe can be exported globally. Prosperity has made war expensive, while the fruits of conflict, both in terms of tangible and intangible spoils have declined in value. These forces are not guaranteed to prevail indefinitely. Already, research on robotic warfare promises to lower the cost of conquest. If in addition, fundamental differences among capable communities arise, then warfare over ideology or policy can also be resurrected. We must all hope that the consolidating forces of prosperity prevail, that war becomes a durable anachronism.

Advantage 2 is the double dip

The U.S. is on the brink backsliding collapses the global economy
Nouriel Roubini, is a New York University professor and former economic advisor to the Clinton administration, chairman of Roubini Global Economics, an economic consultancy firm, received his Ph.D. in international economics from Harvard University in 1988, 07-23-2012, "US Economy Going from Bad to Worse, http://www.cnbc.com/id/48281577 A robust and self-sustaining U.S. recovery is not on the cards, and we should now expect below trend growth for many years to come, according to Nouriel Roubini, the economist famed for his bearish views. Roubini, best-known for calling the 2008 economic crisis, outlined five reasons the bulls have been wrong and argued that an American economic cold will lead the rest of the world to catch pneumonia in a post on the Project Syndicate website. Even this year, the consensus got it wrong, expecting a recovery to annual GDP growth of better than 3 percent, the founder of Roubini Global Economics wrote. And now, after getting the first half of 2012 wrong, many are repeating the fairy tale that a combination of lower oil prices, rising

auto sales, recovering house prices, and a resurgence of U.S. manufacturing will boost growth in the second half of the year and fuel above-potential growth by 2013. Roubini believes the U.S. economy will slow further this year and next as expectations of the fiscal cliff keep spending and growth lower and uncertainty about the outcome of the presidential election dogs markets. The fiscal cliff could knock 4.5 percent off 2013 growth if all tax cuts and transfer payments were allowed to expire and spending cuts where triggered, according to Roubini. Of course, the drag will be much smaller, as tax increases and spending cuts will be much milder. But, even if the fiscal cliff turns out to be a mild growth bump a mere 0.5 percent of GDP and annual growth at the end of the year is just 1.5 percent, as seems likely, the fiscal drag will suffice to slow the economy to stall speed: a growth rate of barely 1 percent, he wrote. The U.S. consumer, which drives plenty of the global economy as well as the U.S., will not be able to keep spending when $1.4 billion worth of tax cuts and extended transfer payments come to an end according to Roubini. In 2013, as transfer payments are phased out, however gradually, and as some tax cuts are allowed to expire, disposable income growth and consumption growth will slow. The U.S. will then face not only the direct effects of a fiscal drag, but also its indirect effect on private spending, he wrote. The problems in the euro zone, a slowdown in China and emerging markets, added to the chance that oil prices could be driven higher by tensions over Irans nuclear program, will also add to Americas economic woes, Roubini argued. He warned the Fed will not be able to ride to the rescue this time. The U.S. Federal Reserve will carry out more quantitative easing this year, but it will beineffective: long-term interest rates are already very low, and lowering them further would not boost spending, he wrote. Indeed, the credit channel is
frozen and velocity has collapsed, with banks hoarding increases in base money in the form of excess reserves. Moreover, the dollar is unlikely to weaken as other countries also carry out quantitative easing. Roubini also argued that earnings growth is now beginning to run out of steam, after buoying markets earlier in the economic cycle. The second-quarter earnings season has so far presented a mixed picture. A significant equity-price

correction could, in fact, be the force that in2013 tips the US economy into outright contraction. And if the U.S. starts to sneeze again, the rest of the world its immunity already weakened by Europes malaise and emerging countries slowdown will catch pneumonia, he warned.r the decision by Standard
& Poors to downgrade the countrys credit rating and as Europe continues its desperate attempt to stem its debt crisis. President Obama acknowledged the challenge in his Saturday radio and Internet address, saying the countrys urgent mission now was to expand the economy and create jobs. And Treasury Secretary Timothy F. Geithner said in an interview on CNBC on Sunday that the United States had a lot of work to do because of its long-term and unsustainable fiscal position. But he added, I have enormous confidence in the basic regenerative capacity of the American economy and the American people. Still, the numbers are daunting. In the four years since the recession began, the civilian working-age population has grown by about 3 percent. If the economy were healthy, the number of jobs would have grown at least the same amount. Instead, the number of jobs has shrunk. Today the economy has 5 percent fewer jobs or 6.8 million than it had before the last recession began. The unemployment rate was 5 percent then, compared with 9.1 percent today. Even those Americans who are

working are generally working less; the typical private sector worker has a shorter workweek today than four
years ago. Employers shed all the extra work shifts and weak or extraneous employees that they could during the last recession. As shown by unusually strong productivity gains, companies are now squeezing as much work as they can from their newly lean and mean work forces. Should a recession return, it is not clear how many additional workers businesses could lay off and still manage to function. With fewer jobs and fewer hours

logged, there is less income for households to spend, creating a huge obstacle for a consumer-driven economy. Adjusted for inflation, personal income is down 4 percent, not counting payments from the government
for things like unemployment benefits. Income levels are low, and moving in the wrong direction: private wage and salary income actually fell in June, the last month for which data was available. Consumer spending, along with housing, usually drives a recovery. But with incomes so weak, spending is only barely where it was when the recession began. If the economy were healthy, total consumer spending would be higher because of population growth. And with construction nearly nonexistent and home prices down 24 percent since December 2007, the country does not have a buffer in housing to fall back on. Of all the major economic indicators, industrial production as tracked by the Federal Reserve is by far the worst off. The Feds index of this activity is nearly 8 percent below its level in December 2007. Likewise, and perhaps most worrisome, is the track record for the countrys overall output. According to newly revised data from the Commerce Department, the economy is smaller today than it was when the recession began, despite (or rather, because of) the feeble growth in the last couple of years. If the economy were healthy, it would be much bigger than it was four years ago. Economists refer to the difference

between where the economy is and where it could be if it met its full potential as the output gap. Menzie Chinn, an economics professor at the University of Wisconsin, has estimated that the economy was about 7 percent smaller than its potential at the beginning of this year. Unlike during the first downturn, there would be few policy remedies available if the economy were to revert back into recession. Interest rates cannot be pushed down further they are already at zero. The Fed has already
flooded the financial markets with money by buying billions in mortgage securities and Treasury bonds, and economists do not even agree on whether those purchases substantially helped the economy. So the Fed may not see much upside to going through another politically controversial round of buying. There are only so many times

the Fed can pull this same rabbit out of its hat, said Torsten Slok, the chief international economist at Deutsche Bank. Congress had some room financially and politically to engage in fiscal stimulus during the last recession. But at the end of 2007, the federal debt was 64.4 percent of the economy. Today, it is estimated at around 100 percent of gross domestic product, a share not seen since the aftermath of World War II, and there is little chance of lawmakers reaching consensus on additional stimulus that would increase the
debt. There is no approachable precedent, at least in the postwar era, for what happens when an economy with 9 percent unemployment falls back into recession, said Nigel Gault, chief United States economist at IHS Global Insight. The one precedent you might consider is 1937, when there was also a premature withdrawal of fiscal stimulus, and the economy fell into another recession more painful than the first.

It kills resiliency Catherine Rampell, economics reporter for The New York Times; wrote for the Washington Post editorial pages and financial section, 08-07-2011, Second Recession in U.S. Could Be Worse Than
First, http://www.nytimes.com/2011/08/08/business/a-second-recession-could-be-much-worse-than-thefirst.html?pagewanted=all If the economy falls back into recession, as many economists are now warning, the bloodletting could be a lot more painful than the last time around. Given the tumult of the Great Recession, this may be hard to believe. But the economy is much weaker than it was at the outset of the last

recession in December 2007, with most major measures of economic health including jobs, incomes, output and industrial production worse today than they were back then. And growth has been so weak that almost no ground has been recouped, even though a recovery technically started in June 2009. It would be disastrous if we entered into a recession at this stage, given that
we havent yet made up for the last recession, said Conrad DeQuadros, senior economist at RDQ

Economics. When the last downturn hit, the credit bubble left Americans with lots of fat to cut, but a new one would force families to cut from the bone. Making things worse, policy makers used most of the economic tools at their disposal to combat the last recession, and have few options available. Anxiety and uncertainty have increased in the last few days after the decision by Standard & Poors to downgrade the countrys credit rating and as Europe continues its desperate attempt to stem its debt crisis. President Obama acknowledged the challenge in his Saturday radio and Internet address, saying the countrys urgent mission now was to expand the economy and create jobs. And Treasury Secretary Timothy F. Geithner said in an interview on CNBC on Sunday that the United States had a lot of work to do because of its long-term and unsustainable fiscal position. But he added, I have enormous confidence in the basic regenerative capacity of the American economy and the American people. Still, the numbers are daunting. In the four years since the recession began, the civilian working-age population has

grown by about 3 percent. If the economy were healthy, the number of jobs would have grown at least the same amount. Instead, the number of jobs has shrunk. Today the economy has 5 percent
fewer jobs or 6.8 million than it had before the last recession began. The unemployment rate was 5 percent then, compared with 9.1 percent today. Even those Americans who are working are generally working less; the typical private sector worker has a shorter workweek today than four years ago. Employers shed all the extra work shifts and weak or extraneous employees that they could during the last recession. As shown by unusually strong productivity gains, companies are now squeezing as much work as they can from their newly lean and mean work forces. Should a recession return, it is not clear how many additional workers businesses could lay off and still manage to function. With

fewer jobs and fewer hours logged, there is less income for households to spend, creating a huge obstacle for a consumer-driven economy. Adjusted for inflation, personal income is down 4 percent,
not counting payments from the government for things like unemployment benefits. Income levels are low, and moving in the wrong direction: private wage and salary income actually fell in June, the last month for which data was available. Consumer spending, along with housing, usually drives a recovery. But with incomes so weak, spending is only barely where it was when the recession began. If the economy were healthy, total consumer spending would be higher because of population growth. And with construction nearly nonexistent and home prices down 24 percent since December 2007, the country does not have a buffer in housing to fall back on. Of all the major economic indicators, industrial production as tracked by the Federal Reserve is by far the worst off. The Feds index of this activity is nearly 8 percent below its level in December 2007. Likewise, and perhaps most worrisome, is the track record for the countrys overall output. According to newly revised data from the Commerce Department, the economy is smaller today than it was when the recession began, despite (or rather, because of) the feeble growth in the last couple of years. If the economy were healthy, it would be much bigger than it was four years ago. Economists refer to the difference between where the economy is and where it

could be if it met its full potential as the output gap. Menzie Chinn, an economics professor at the University of Wisconsin, has estimated that the economy was about 7 percent smaller than its potential at the beginning of this year. Unlike during the first downturn, there would be few policy remedies available if the economy were to revert back into recession. Interest rates cannot be pushed down further they are already at zero. The Fed has already flooded the financial
markets with money by buying billions in mortgage securities and Treasury bonds, and economists do not even agree on whether those purchases substantially helped the economy. So the Fed may not see much upside to going through another politically controversial round of buying. There are only so many

times the Fed can pull this same rabbit out of its hat, said Torsten Slok, the chief international economist at Deutsche Bank. Congress had some room financially and politically to engage in fiscal stimulus during the last recession. But at the end of 2007, the federal debt was 64.4 percent of the economy. Today, it is estimated at around 100 percent of gross domestic product, a share not seen since the aftermath of World War II, and there is little chance of lawmakers reaching consensus
on additional stimulus that would increase the debt. There is no approachable precedent, at least in the

postwar era, for what happens when an economy with 9 percent unemployment falls back into recession, said Nigel Gault, chief United States economist at IHS Global Insight. The one precedent you might consider is 1937 , when there was also a premature withdrawal of fiscal stimulus, and the economy fell into another recession more painful than the first.

Nuclear war FORDHAM 10 (Tina Fordham, Investors cant ignore the rise of geopolitical risk, Financial
Times, 7-17-2010, http://www.ft.com/cms/s/0/dc71f272-7a14-11df-9871-00144feabdc0.html)

Geopolitical risk is on the rise after years of relative quiet potentially creating further headwinds to the global recovery just as fears of a double-dip recession are growing, says Tina Fordham, senior political analyst at Citi Private Bank. Recently, markets have been focused on problems within the eurozone and not much moved by developments in North Korea, new Iran sanctions, tensions between Turkey and Israel or the unrest in strategically significant Kyrgyzstan, she says. But taken together, we dont think investors can afford to ignore the return of geopolitical concerns to the fragile post-financial crisis environment. Ms Fordham argues the end of post-Cold War US pre-eminence is one of the most important by-products of the financial crisis. The postcrisis world order is shifting. More players than ever are at the table, and their interests often diverge. Emerging market countries have greater weight in the system, yet many lack experience on the global stage. Addressing the worlds challenges in this more crowded environment will be slower and more complex. This increases the potential for proliferating risks: most notably the prospect of politically and/or economically weakened regimes obtaining nuclear weapons; and military action to keep them from doing so. Left unresolved, these challenges could disrupt global stability and trade. This would be a very unwelcome time to see the return of geopolitical risk.

NIB solves double dip Will Marshall, president and founder of the Progressive Policy Institute (PPI); found the Democratic Leadership Council, serving as its first policy director; and Scott Thomasson, director of economic
and domestic policy for the Progressive Policy Institute and manages PPI's Innovative Economy Project and E3 Initiative10-07-2011, Sperling on Deferred Maintenance, http://progressivepolicy.org/sperling-on-%E2%80%9Cdeferred-maintenance%E2%80%9D

Its hard to imagine a more myopic example of the rights determination to impose premature austerity on our frail economy. From Lincoln to Teddy Roosevelt to Eisenhower, the Republicans were
once a party dedicated to internal nation building. Todays GOP is gripped by a raging anti-government fever which fails to draw elementary distinctions between consumption and investment, viewing all public spending as equally wasteful. But as the White Houses Gene Sperling said yesterday,

Republicans cant claim credit for fiscal discipline by blocking long overdue repairs of in the nations transport, energy and water systems. Theres nothing fiscally responsible about deferring maintenance on the U.S. economy. Sperling, chairman of the presidents National Economic Council,
spoke at a PPI forum on Capitol Hill on Infrastructure and Jobs: A Productive Foundation for Economic Growth. Other featured speakers included Sen. Mark Warner, Rep. Rosa DeLauro, Dan DiMicco, CEO of Nucor Corporation, Daryl Dulaney, CEO of Siemens Industry and Ed Smith, CEO of Ullico Inc., a consortium of union pension funds. Fiscal prudence means foregoing consumption of things youd like but could do without if you cant afford them a cable TV package, in Sperlings example. But

if a water pipe breaks in your home, deferring maintenance can only lead to greater damage and higher repair costs down the road. As speaker after speaker emphasized during yesterdays forum, thats precisely whats happening to the U.S. economy. Thanks to a generation of underinvestment in roads, bridges, waterways, power grids, ports and railways, the United States faces a $2 trillion repair bill. Our inadequate, worn-out infrastructure costs us time and money, lowering the productivity of workers and firms, and discouraging capital investment in the U.S. economy.
Deficient infrastructure, Dulaney noted, has forced Siemens to build its own rail spurs to get goods to market. Thats something smaller companies cant afford to do. They will go to countries like China, India and Brazil that are investing heavily in building world-class infrastructure. As Nucors DiMicco noted, a large-scale U.S. infrastructure initiative would create lots of jobs while also abetting the revival of manufacturing in America. He urged the Obama administration to think bigger, noting that a $500 billion annual investment in infrastructure (much of the new money would come from private sources rather than government) could generate 15 million jobs. The enormous opportunities to deploy more private capital were echoed from financial leaders in New York, including Jane Garvey, the

North American chairman of Meridiam Infrastructure, a private equity fund specializing in infrastructure investment. Garvey warned that what investors need from government programs is more transparent and consistent decision making, based on clear, merit-based criteria, and noted that an independent national infrastructure bank would be the best way to achieve this. Bryan Grote,
former head of the Department of Transportations TIFIA financing program, which many describe as a forerunner of the bank approach, added that having a dedicated staff of experts in an independent bank is the key to achieving the more rational, predictable project selection that investors need to see to view any government program as a credible partner. Tom Osborne, the head of Americas Infrastructure at UBS Investment Bank, agreed that an independent infrastructure bank like the version proposed by Senators Kerry, Hutchison and Warner, would empower private investors to fund more projects. And contrary to arguments that a national bank would centralize more funding decisions in Washington, Osborne explained that states and local governments would also be more empowered by the bank to pursue new projects with flexible financing options, knowing that the bank will evaluate projects based on its economics, not on the politics of the next election cycle. Adding urgency to the infrastructure push was Fed Chairman Ben Bernankes warning this week that the recovery is close to faltering. Unlike short-term stimulus spending, money invested in modernizing infrastructure would create lasting jobs by expanding our economys productive base. Warning that America stands on the precipice of a double dip recession , Sperling said it would be inexcusable for Congress to fail to act on the presidents job plan. He cited estimates by independent economic experts that the plan would boost GDP growth in 2012 from 2.4 to 4.2 percent , and generate over three million more jobs.

Employment is on the brink of recovery but will remain stagnant unless further stimulus is passed best economic analysis says little blips are insignificant Alan Krueger, The White House, 1-4-2013 [The Employment Situation in December, White House,
http://www.whitehouse.gov/blog/2013/01/04/employment-situation-december]/sbhag While more work remains to be done, todays employment report provides further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression. It is critical that we continue the policies that are building an economy that works for the middle class as we dig our way out of the deep hole that was caused by the severe recession that began in December 2007. With the passage of the American Taxpayer Relief Act earlier this week, more

than 98 percent of Americans and 97 percent of small businesses now have certainty that their income taxes will not rise. Additionally, unemployment insurance was extended for two million Americans who are searching for a job, and companies will continue to receive tax credits for the research that they do and continue to have tax incentives to accelerate investment in their businesses. By allowing income tax cuts for the top two percent of earners to expire, this legislation further reduces the deficit by $737 billion over the next decade. It is important that we continue to move toward a sustainable federal budget in a responsible way that balances revenue and spending while protecting critical investments in the economy and essential support for our most vulnerable citizens. Todays report from the Bureau of Labor Statistics (BLS) shows that private sector businesses added 168,000 jobs in December. Total non-farm payroll employment rose by 155,000 jobs last month. The economy has now added private sector jobs for 34 straight months, and a total of 5.8 million jobs have been added over that period, taking account of the preliminary benchmark revision. In 2012, private businesses added two million payroll jobs, taking account of the preliminary benchmark revision. The household survey showed that the unemployment rate was unchanged at 7.8 percent in December. The unemployment rate in November was revised from 7.7 percent to 7.8 percent as a result of BLSs annual update of seasonal factors. The labor force participation rate was also unchanged at 63.6 percent in December. Over the last 12 months, the unemployment rate has decreased by 0.7 percentage point as a result of growing employment, and the labor force participation rate has been essentially unchanged. According to the establishment survey, in December employment rose notably in the health care and social assistance industry (+55,000), restaurants and bars (+38,000), construction (+30,000), and manufacturing (+25,000). The manufacturing sector has added jobs in 30 of the last 35 months, gaining half a million jobs over that period, the most for any such period since the late-1980s. Payrolls rose in both residential and non-residential construction jobs. Retail trade lost 11,300 jobs, following gains totaling 161,300 over the previous four months. Government lost 13,000 jobs in December, mostly in local government education, which lost 11,500 jobs. The local government education sector has now lost 294,400 jobs since its recent peak in November 2009. As the Administration stresses every month, the monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision. Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available..

Investing in infrastructure helps those affected by the downturn budgets and employment transportation costs absorb one out of every seven dollars of income Treasury Department, March 23, 2012 [A NEW ECONOMIC ANALYSIS OF
INFRASTRUCTURE INVESTMENT, A REPORT PREPARED BY THE DEPARTMENT OF THE TREASURY WITH THE COUNCIL OF ECONOMIC ADVISERS]/sbhag IV. How Infrastructure Investment Affects the Middle Class For the average American family, transportation expenditures rank second only to housing expenditures. As can be seen in Figure 1, the average American annually spends more on transportation than food , and more than two times as much as on out-of-pocket healthcare expenses. Given how much Americans spend on transportation expenditures, public investments which lower the cost of transportation could have a meaningful impact on families budgets. Reducing fuel consumption, decreasing the need for car maintenance due to potholes and poor road conditions, increasing the availability of affordable and accessible public transit systems, and reducing fuel consumption by making better use of the land would benefit Americans and allow them to spend less money on transportation. Figure 1. 19 Middle-Class Americans Are the Biggest Beneficiaries of Improved Infrastructure For the 90 percent of Americans who are not among the top decile in the income distribution, transportation costs absorb one out of every seven dollars of income. Transportation expenses relative to income are almost twice as great for the bottom 90 percent as they are

for the top 10 percent. Figure 2. Providing high-speed rail and improved public transportation would provide middle-class families with more options to save time and money, so that they can retain more of their income for other purposes and spend more time doing what they want, rather than spending time getting there. One study concluded that individuals in a two-person household who ride public transportation and eliminate one car save, on average, almost $10,000 annually.34 Improved 34 American Public Transportation Association, Transit Savings Report, July 14, 2011. See appendix 1 for cities with greatest savings. <http://www.apta.com/mediacenter/pressreleases/2011/Pages/110714_Transit_Savings.aspx>. 20 accessibility to public transportation systems will also help protect household budgets against the impact of rising fuel costs over time . For example, research has estimated that between 2000 and 2009, median income households living in neighborhoods with diverse transportation choices and regional accessibility experienced a $200 per month savings in average transport costs, compared to similar households in less location efficient areas.35 Moreover, improving our nations transportation system can save middle-class families money by reducing the costs associated with congestion and the additional automobile maintenance caused by poor road conditions. One study found that poor conditions of roads cost the average motorist who drives in cities on a regular basis over $400 a year.36,37 Another study by the Department of Transportation finds that $85 billion in total investment per year over the next twenty years would be required in order to bring existing highways and bridges into a state of good repair.38 As Gramlich and others have found, these fix-it-first investments will save money for most American families. Infrastructure Investment Creates Middle-Class Jobs Spending on infrastructure generates demand for products and services from a variety of industries. For example, road building not only requires construction workers, but also grading and paving equipment, gasoline or diesel to run the machines, a variety of smaller hand tools, raw inputs of cement, gravel, and asphalt, surveyors to map the site, engineers and site managers, and even accountants to keep track of costs. Data from the Commerce Departments Bureau of Economic Analysis (BEA) provide insight into how a dollars worth of demand for some broad categories of spending is divided among the supplying industries. Analysis of data from the BEA 2010 annual inputoutput table and related data from the Bureau of Labor Statistics (BLS) on the composition of industry employment suggests that 61 percent of the jobs created by investing in infrastructure would be in the construction sector, 12 percent would be in the manufacturing sector, and 7 percent would be in retail trade, for a total of 80 percent in these three sectors. Using BLS data on the structure of occupations in those industries, and the distribution of wages for those occupations by industry, nearly 90 percent of the jobs in the three sectors most affected by infrastructure spending are middle-class jobs, defined as those between the 25th and 75th percentile in the national distribution of wages. 35 Housing and Transportation Affordability Index, Center For Neighborhood Technology, February 28, 2012. 36Americas Roughest Rides and Strategies to Make Our Roads Smoother, Sept. 2010. <www.tripnet.org/urban_roads_report_Sep_2010.pdf>. 37 See appendix 2 for a chart of 20 urban areas where costs are the highest. 38 Department of Transportation, 2010 Status of the Nations Highways, Bridges and Transit: Conditions and Performance Report. 21 Further analysis suggests that the jobs created by investing in infrastructure are not only middle-class jobs, but also are concentrated in occupations and industries that have been disproportionately affected by the recent economic downturn. Overall, the unemployment rate among those who would be put to work by additional investment in infrastructure has averaged approximately 13 percent over the past twelve months, more than one and one-half times the current national unemployment rate.39 Figure 3. One example of this can be found in Lincoln, Nebraska. Most people would never guess that an investment in improving the New York City transit system would create middle-class manufacturing jobs in Lincoln. However, that is exactly what happens every time New Yorks MTA or Metro North buys a rail car made at the Kawasaki factory in Lincoln. This factory, Kawasaki USAs largest manufacturing

plant, employs over 1,000 workers. The plant was established in 1974 as a consumer products center and expanded in 2001 to build rail cars. The vast majority of new M-8 rail cars ordered by New York Transits Metro North System (340 out of 382) are made in this plant, meaning that most of the folks who commute from Connecticut to 39 Treasury calculations using most recent Bureau of Labor Statistics data. 22 New York City by rail have ridden or will ride on a car made in this plant. 40 This is another example of the geographic diversity of benefits which comes from investing in infrastructure.

Government infrastructure programs are empirically effective at fighting rampant middle class unemployment Matt Sledge, 12/ 9/2011 [Government Jobs Could Fix Unemployment Crisis, Some Suggest, The
Huffington Post, http://www.huffingtonpost.com/2011/12/08/government-jobs-crisis_n_1137922.html, accessed 4/2/2012>]//sbhags The experience of Brennan and those millions of other Americans who passed through the "alphabet soup" of New Deal agencies, from the WPA to the CWA to the PWA, may point to one possible solution for today's dragging economy: direct government employment on public works programs . Joblessness increased from 3.3 percent in 1929 to 24.9 percent in 1933. For the millions out of work, President Franklin D. Roosevelt's New Deal jobs programs, like the CCC, offered hope in an otherwise bleak economic climate. Today, as unemployment sits at 8.6 percent and the nation continues to muddle through its worst period of prolonged joblessness since the Great Depression, some economists and historians say we should look back to the New Deal's infrastructure programs to stem the crisis. President Obama pointed to that era on Tuesday in a fiery speech delivered in Osawatomie, Kans. "This kind of inequality -- a level we haven't seen since the Great Depression -hurts us all," Obama said.

Unemployment causes systemic suffering and death Dean Baker, Co-Director of the Center for Economic and Policy Research, and Kevin Hassett,
Senior Fellow and Director of Economic Policy Studies at the American Enterprise Institute, former served as a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at the Graduate School of Business of Columbia University, holds a Ph.D. in Economics from the University of Pennsylvania, 05-12-2012, The Human Disaster of Unemployment, http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/the-humandisaster-of-unemployment Long-term unemployment is experienced disproportionately by the young, the old, the less educated, and African-American and Latino workers.While older workers are less likely to be laid off than younger workers, they are about half as likely to be rehired. One result is that older workers have seen the largest proportionate increase in unemployment in this downturn. The number of unemployed people between ages 50 and 65 has more than doubled.The prospects for the re-employment of older workers deteriorate sharply the longer they are unemployed. A worker between ages 50 and 61 who has been unemployed for 17 months has only about a 9 percent chance of finding a new job in the next three months. A worker who is 62 or older and in the same situation has only about a 6 percent chance. As unemployment increases in duration, these slim chances drop steadily.The result is nothing short of a national emergency. Millions of workers have been disconnected from the work force, and possibly even from society. If they are not reconnected, the costs to them and to society will be grim.Unemployment is almost always a traumatic event, especially for older workers. A paper by the economists Daniel Sullivan and Till von Wachter estimates a 50 to 100 percent increase in death rates for older male workers in the years immediately following a job loss, if they previously had been consistently employed. This higher mortality rate implies that a male worker displaced in midcareer can expect to live about one and a half years less than a worker who keeps his job.There are various reasons for this rise in mortality. One is suicide. A recent study found that a 10 percent increase in the unemployment rate (say from 8 to 8.8 percent) would increase the suicide rate for males by 1.47 percent. This is not a small effect.

Assuming a link of that scale, the increase in unemployment would lead to an additional 128 suicides per month in the United States. The picture for the long-term unemployed is especially disturbing. The duration of unemployment is the dominant force in the relationship between joblessness and the risk of suicide.Joblessness is also associated with some serious illnesses, although the causal links are poorly understood. Studies have found strong links between unemployment and cancer, with unemployed men facing a 25 percent higher risk of dying of the disease. Similarly higher risks have been found for heart disease and psychiatric problems.The physical and psychological consequences of unemployment are significant enough to affect family members. The economists Kerwin Charles and Melvin Stephens recently found an 18 percent increase in the probability of divorce following a husbands job loss and 13 percent after a wifes. Unemployment of parents also has a negative impact on achievement of their children. In the long run, children whose fathers lose a job when they are kids have reduced earnings as adults about 9 percent lower annually than children whose fathers do not experience unemployment.We all understand how the human costs can be so high. For many people, their very identity is their occupation. Few events rival the emotional strain of job loss.

We affirm human security its key to peace and our interrogation is integral to the kritik United Nations Development Programme 94[Human Development Report 1994 , pp 22-44, (Chapter
2 - New dimensions of human security), http://hdr.undp.org/en/media/hdr_1994_en_chap2.pdf]/sbhag Fifty years ago, Albert Einstein summed up the discovery of atomic energy with characteristic simplicity: "Everything changed." He went on to predict: "We shall require a substantially new manner of thinking if mankind is to survive." Although nuclear explosions devastated agasaki and Hiroshima, humankind has survived its first critical test of preventing worldwide nuclear devastation. But five decades later, we need another profound transition in thinking from nuclear security to human security. The concept of security has for too long been interpreted narrowly: as security of territory from external aggression, or as protection of national interests in foreign policy or as global security from the threat of a nuclear holocaust. It has been related more to nation-states than to people. The superpowers were locked in an ideological struggle-fighting a cold war all over the world. The developing nations, having won their independence only recently, were sensitive to any real or perceived threats to their fragile national identities. Forgotten were the legitimate concerns of ordinary people who sought security in their daily lives. For many of them, security symbolized protection from the threat of disease, hunger, unemployment, crime, social conflict, political repression and environmental hazards. With the dark shadows of the cold war receding, one can now see that many conflicts are within nations rather than between nations. For most people, a feeling of insecurity arises more from worries about daily life than from the dread of a cataclysmic world event. Will they and their families have enough to eat? Will they lose their jobs? Will their streets and neighbourhoods be safe from crime? Will they be tortured by a repressive state? Will they become a victim of violence because of their gender? Will their religion or ethnic origin target them for persecution (box 2.1)? In the final analysis, human security is a child who did not die, a disease that did not spread, a job that was not cut, an ethnic tension that did not explode in violence, a dissident who was not silenced. Human security is not a concern with weaponsit is a concern with human life and dignity . The idea of human security, though simple, is likely to revolutionize society in the 21st century. A consideration of the basic concept of human security must focus on four of its essential characteristics: Human security is a universal concern. It is relevant to people everywhere, in rich nations and poor. There are many threats that are common to all people-such as unemployment, drugs, crime, pollution and human rights violations. Their intensity may differ from one part of the world to another, but all these threats to human security are real and growing. The components of human security are interdependent. When the security of people is endangered anywhere in the world, all nations are likely to get involved. Famine, disease, pollution, drug trafficking,

terrorism, ethnic disputes and social disintegration are no longer isolated events, confined within national borders. Their consequences travel the globe. Human security is easier to ensure through early prevention than later intervention. It is less costly to meet these threats upstream than downstream. For example, the direct and indirect cost of HIV/AIDS (human immunodeficiency virus/acquired immune deficiency syndrome) was roughly $240 billion during the 1980s. Even a few HUMAN DEVELOPME T REPORT 1994 BOX 2.1 Human security-as people see it leads to a backlog of human deprivationpoverty, hunger, disease or persisting disparities between ethnic communities or between regions. This backlog in access to power and economic opportunities can lead to violence. When people perceive threats to their immediate security, they often become less tolerant, as the antiforeigner feelings and violence in Europe show. Or, where people see the basis of their livelihood erodesuch as their access to water-political conflict can ensue, as in parts of Central Asia and the Arab States. Oppression and perceptions of injustice can also lead to violent protest against authoritarianism, as in Myanmar and Zaire, where people despair of gradual change. billion dollars invested in primary health care and family planning education could have helped contain the spread of this deadly disease. Human security is peopLe-centred . It is concerned with how people live and breathe in a society, how freely they exercise their many choices, how much access they have to market and social opportunitiesand whether they live in conflict or in peace. Several analysts have attempted rigorous definitions of human security. But like other fundamental concepts, such as human freedom, human security is more easily identified through its absence than its presence. And most people instinctively understand what security means. Nevertheless, it may be useful to have a more explicit definition. Human security can be said to have two main aspects . It means, first, safety from such chronic threats as hunger, disease and repression. And second, it means protection from sudden and hurtful disruptions in the patterns of daily life-whether in homes, in jobs or in communities. Such threats can exist at all levels of national income and development. The loss of human security can be a slow, silent process--Qr an abrupt, loud emergency. It can be human-made-due to wrong policy choices. It can stem from the forces of nature. Or it can be a combination of both-as is often the case when environmental degradation leads to a natural disaster, followed by human tragedy. In defining security, it is important that human security not be equated with human development. Human development is a broader concept-defined in previous Human DeveLopment Reports as a process of widening the range of people's choices. Human security means that people can exercise these choices safely and freely-and that they can be relatively confident that the opportunities they have today are not totally lost tomorrow. There is, of course, a link between human security and human development: progress in one area enhances the chances of progress in the other. But failure in one area also heightens the risk of failure in the other, and history is replete with examples. Failed or limited human development NEW DTh-lENSIO S OF HUMAN ECURITY How individuals regard security depends very much on their immediate circumstances. Here are some views of security gathered from around the world, through a special sample sUNey by UNDP field offices. Pnmary school pupil in Kuwait "I feel secure because 1 am living with my family and 1 have friends. However, 1did not feel secure during the Iraqi invasion. If a country is at war, how are people supposed to feel secure?" Woman in Nigeria "My security is only in the name of the Lord who has made heaven and earth. 1 feel secure because 1 am at liberty to worship whom 1 like, how 1 like, and also because 1 can pray for all the people and for peace all over the country." Fourth-grade schoolgirl in Ghana "I shall feel secure when 1 know that I can walk the streets at night without being raped." Shoemender in ThatJand ''When we have enough for the children to eat, we are happy and we feel secure." Man in Namibia "Robberies make me feel insecure. 1 sometimes feel as though even my life will be stolen." Woman in Iran "I believe that a girl cannot feel secure until she is married and has someone to depend on." Publte administrator in Cameroon "Security for me means that my job and position are safe and I can continue to provide for the needs of my family and also have something for investment and friends." Woman in Kyrgyzstan "Human security indicates faith in tomorrow, not as much having to do with food and clothing, as with stability of the political and economic situation." Secondary school pupil

in Mongola "Before, education in this country was totally free, but from this year every student has to pay. Now 1 do not feel very secure about finishing my studies." WOman in Paraguay "I feel secure because I feel fulfilled and have confidence in myself. I also feel secure because God is great and watches over me." Man in Ecuador "What makes you feel insecure above all is violence and delinquency-as well as insecurity with respect to the police. Basic services are also an important part of security." 23 The world will never be secure from war if men and women have no security ill their homes and in their jobs 24 Ensuring human security does not mean taking away from people the responsibility and opportunity for mastering their lives . To the contrary, when people are insecure, they become a burden on society. The concept of human security stresses that people should be able to take care of themselves: all people should have the opportunity to meet their most essential needs and to earn their own living. This will set them free and help ensure that they can make a full contribution to developmenttheir own development and that of their communities, their countries and the world, Human security is a critical ingredient of participatory development. Human security is therefore not a defensive concept-the way territorial or military security is. Instead, human security is an integrative concept . It acknowledges the universalism of life claims that was discussed in chapter 1. It is embedded in a notion of solidarity among people. It cannot be brought about through force, with armies standing against armies. It can happen only ifwe agree that development must involve all people. Human security thus has many components. To clarify them, it helps to examine them in detail. Components of human security There have always been two major components ofhuman security: freedom from fear and freedom from want . This was recognized right from the beginning of the United Nations. But later the concept was tilted in favour of the first component rather than the second. The founders of the United Nations, when considering security, always gave equal weight to territories and to people. In 1945, the US secretary of state reported to his government on the results of the conference in San Francisco that set up the United Nations. He was quite specific on this point: The battle ofpeace has to be fought on two /ronts. The first is the security/ront where victory spells/reedom/rom fear. The second is the economic andsocial/ront where victory means /reedom /rom want. Only victory on both /ronts can assure the world of an enduring peace ,. ,,No provisions that can be written into the Charter will enable the Secun'ty Council to make the world secure /rom war if men and women have no security in their homes and their jobs. It is now time to make a transition from the narrow concept of national security to the all-encompassing concept of human security. People in rich nations seek security from the threat of crime and drug wars in their streets, the spread of deadly diseases like HN/AIDS, soil degradation, rising levels of pollution, the fear of losing their jobs and many other anxieties that emerge as the social fabric disintegrates. People in poor nations demand liberation from the continuing threat of hunger, disease and poverty while also facing the same problems that threaten industrial countries. At the global level, human security no longer means carefully constructed safeguards against the threat of a nuclear holocaust- a likelihood greatly reduced by the end of the cold war. Instead, it means responding to the threat of global poverty travelling across international borders in the form of drugs , HN/AIDS, climate change, illegal migration and terrorism. The prospect of collective suicide through an impulsive resort to nuclear weapons was always exaggerated. But the threat of global poverty affecting all human lives-in rich nations and in poor-is real and persistent. And there are no global safeguards against these real threats to human security. The concept of security must thus change urgently in two basic ways: From an exclusive stress on territorial security to a much greater stress on people's security. From security through armaments to security through sustainable human development. The list of threats to human security is long, but most can be considered under seven main categories: Economic security Food security Health security HU.\I.A, ' DEVELOP. I.E. 'T REPORT

1994 Environmental security Personal security Community security Political security. Economic security Economic security requires an assured basic income-usually from productive and remunerative work, or in the last resort from some publicly financed safety net. But only about a quarter of the world's people may at present be economically secure in this sense. Many people in the rich nations today feel insecure because jobs are increasingly difficult to find and keep. In the past two decades, the number of jobs in industrial countries has increased at only half the rate of GDP growth and failed to keep pace with the growth in the labour force. By 1993, more than 35 mil1ion people were seeking work, and a high proportion were women. Young people are more likely to be unemployed: in the United States in 1992, youth unemployment reached 14%, in the United Kingdom 15%, in Italy 33% and in Spain 34%. Often, the unemployment rate also varies with ethnic origin. In Canada, the unemployment rate among indigenous people is about 20%--twice that for other Canadians. And in the United States, the unemployment rate for blacks is twice that for whites. Even those with jobs may feel insecure if the work is only temporary. In 1991 in Finland, 13% of the employed were temporary workers, and the figures were even higher elsewhere-15% in Greece, 17% in Portugal, 20% in Australia and 32% in Spain. Some people do, of course, choose to work on a temporary basis. But in Spain, Portugal, Greece, Belgium and the Netherlands, more than 60% of workers in temporary jobs accepted them because they could not find full-time employment. To have work for everybody, industrial countries are experimenting with job-sharing. The problems are even greater in developing countries, where open registered unemployment is commonly above 10%, and total unemployment probably way beyond NEW DIME !SrO S OF HUMAN SECURI1Y that. Again, this is a problem especially for young people: for youths in Africa in the 1980s, the open unemployment rate was above 20%. And it is one of the main factors underlying political tensions and ethnic violence in several countries . But unemployment figures understate the real scale of the crisis since many of those working are seriously underemployed. Without the assurance of a social safety net, the poorest cannot survive even a short period without an income. Many of them, however, can relyon family or community support. Yet that system is rapidly breaking down. So, the unemployed must often accept any work they can find, however unproductive or badly paid. The most insecure working conditions are usually in the informal sector, which has a high proportion of total employment. In 1991, it accounted for 30% of all jobs in Latin America and 60% of those in Africa. The global shift towards more "precarious" employment reflects changes in the structure of industry. Manufacturing jobs have been disappearing, while many of the new opportunities are in the service sector, where employment is much more likely to be temporary or part-time-and less protected by trade unions. For many people, the only option is selfemployment. But this can be even less secure than wage employment, and those at the bottom of the ladder find it difficult to make ends meet. In the rural areas, the poorest farmers have little access to land, whose distribution can be gauged by the Gini coefficient-a measure of inequality that ranges from 0 (perfect equality) to 1 (absolute inequality). In Kenya, the Gini coefficient for land is 0.77, in Saudi Arabia 0.83 and in Brazil 0.86. And even those who have some land or know of productive investment opportunities often find it difficult to farm and invest effectively because they have little access to credit. This, despite the mounting evidence that the poor are creditworthy. In many developing countries, 40% of the people receive less than 1% of total credit. The shift to more precarious work has been accompanied by increasing insecurity of incomes. Nominal wages have remained Only about a quarter of the world's people may at present be economically secure 25 FI~URE 2.2 .. . Total unemplo ed High unemployment In Industnal countnes ~ y Unemployment rate (percent). 1992 1..8...... _..... .._-- . 15 ~ .. }.y~~~~~:d.:or~ than Spain Ireland Finland Canada Denmark Australia Italy France UK USA FIGURE 2.1 Falling incomes threaten human security 1991 GNP per capita as a percentage of 1980's 100-- 90 .... Mozambique 80 .... Ethiopia .... Nigeria 70 :::II Haiti, Rwanda Madagascar 60 .... Niger 50 .... Nicaragua .... Cote d'lvOire 40 ingful services. The disabled are, by and large, found among the poorest quarter of the population. And their unemployment rate is as high as 84% in Mauritius and 46% in China. With incomes low and insecure, many people have to look for more support from their governments. But they often look in vain. Most developing countries lack even the most rudimentary forms of social security, and budgetary

problems in industrial countries have unravelled social safety nets. In the United States between 1987 and 1990, the real benefits per pensioner declined by 40%, and in Austria by 50%. In Germany, where maternity compensation has already been cut to 25% of full pay, the government decided that over the next three years unemployment and welfare payments will be cut by some $45 billionthe largest cut in postwar German history. The result: increasing poverty. In both the United States and the European Union, nearly 15% of the people live below the poverty line. The incidence of poverty varies with ethnic origin. In Germany, while the national average has been estimated at 11%, the incidence of poverty among foreign-born residents is 24%. But the most acute problems are in the developing countries, where more than a third of the people live below the poverty line-and more than one billion people survive on a daily income of less than $1. One of economic insecurity's severest effects is homelessness. Nearly a quarter of a million New Yorkers-more than 3% of the city's population and more than 8% of its black children-have stayed in shelters over the past five years. London has about 400,000 registered homeless people. France has more than 500,000-nearly 10,000 in Paris. The situation is much worse in developing countries. In Calcutta, Dhaka and Mexico City, more than 25% of the people constitute what is sometimes called a "floating population". Figures 2.1 and 2.2 give selected indicators of economic insecurity. For industrial countries, these indicators refer to job security. But for developing countries, because of data limitations, the data refer only to income security. .-- - ..... ~ ........ I......, ,~ .-- - - 1- .-- ,- stagnant, or risen only slowly, but inflation has sharply eroded their value. Some of the worst examples of inflation in the 1980s: Nicaragua 584%, Argentina 417%, Brazil 328% and Uganda 107%; and in the 1990s: Ukraine 1,445%, Russian Federation 1,353% and Lithuania 1,194%. As a result, real wages in many parts of the world have declined. In Latin America in the 1980s, they fell by 20%, and in many Mrican countries during the same period, the value of the minimum wage dropped sharply-by 20% in Togo, 40% in Kenya and 80% in Sierra Leone. Worse off are women-who typically receive wages 30-40% lower than those of men for doing the same jobs. In Japan and the Republic of Korea, women in manufacturing jobs earn only about half as much as men. Income insecurity has hit industrial countries as well. In the European Union, 44 million people (some 28% of the workforce) receive less than half the average income of their country. In the United States, real earnings fell by 3% through the 1980s. Minority ethnic groups are usually among the hardest hit: in Canada, nearly half the indigenous people living on reservations now rely on transfer payments for their basic needs. Some sections of the population face a particularly difficult situation. In 1994, about 65 million disabled people need training and job placement to attain economic security. Only 1% will receive mean- 1- - .... j- - 6 9 3 o 12 26 IIU:-'lAN DEVELOPMENT REPORT 1994 Starvation amid plenty-the Bengal famine of 1943 cultural labourers and other workers found they could no longer afford to eat, and thousands headed for the cities, particularly Calcutta, in the hope of survival. Prices were then driven even higher by speculation and panic buying. The famine could probably have been averted by timely government action. But the colonial government did nothing to stop hoarding by producers, traders and consumers. The general policy was "wait and see". Relief work was totally inadequate, and the distribution of foodgrains to the rural districts was inefficient. Even in October 1943, with 100,000 sick and destitute people on the streets of Calcutta, the government continued to deny the existence of a famine. The result was one of the largest man-made catastrophes of our time.

Our decision process fights desensitization, alternatives legitimizes structural violence creates psychological priming for the worst atrocities of war Scheper-Hughes and Bourgois 4 (Prof of Anthropology @ Cal-Berkely; Prof of Anthropology
@ UPenn) (Nancy and Philippe, Introduction: Making Sense of Violence, in Violence in War and Peace, pg. 19-22) This large and at first sight messy Part VII is central to this anthologys thesis. It encompasses everything from the routinized, bureaucratized, and utterly banal violence of children dying of hunger and

maternal despair in Northeast Brazil (Scheper-Hughes, Chapter 33) to elderly African Americans dying of heat stroke in Mayor Dalys version of US apartheid in Chicagos South Side (Klinenberg, Chapter 38) to the racialized class hatred expressed by British Victorians in their olfactory disgust of the smelly working classes (Orwell, Chapter 36). In these readings violence is located in the symbolic and social structures that overdetermine and allow the criminalized drug addictions, interpersonal bloodshed, and racially patterned incarcerations that characterize the US inner city to be normalized (Bourgois, Chapter 37 and Wacquant, Chapter 39). Violence also takes the form of class, racial, political self-hatred and adolescent self-destruction (Quesada, Chapter 35), as well as of useless (i.e. preventable), rawly embodied physical suffering, and death (Farmer, Chapter 34). Absolutely central to our approach is a blurring of categories and distinctions between wartime and peacetime violence. Close attention to the little violences produced in the structures, habituses, and mentalites of everyday life shifts our attention to pathologies of class, race, and gender inequalities. More important, it interrupts the voyeuristic tendencies of violence studies that risk publicly humiliating the powerless who are often forced into complicity with social and individual pathologies of power because suffering is often a solvent of human integrity and dignity. Thus, in this anthology we are positing a violence continuum comprised of a multitude of small wars and invisible genocides (see also Scheper- Hughes 1996; 1997; 2000b) conducted in the normative social spaces of public schools, clinics, emergency rooms, hospital wards, nursing homes, courtrooms, public registry offices, prisons, detention centers, and public morgues. The violence continuum also refers to the ease with which humans are capable of reducing the socially vulnerable into expendable nonpersons and assuming the license - even the duty - to kill, maim, or soul-murder. We realize that in referring to a violence and a genocide continuum we are flying in the face of a tradition of genocide studies that argues for the absolute uniqueness of the Jewish Holocaust and for vigilance with respect to restricted purist use of the term genocide itself (see Kuper 1985; Chaulk 1999; Fein 1990; Chorbajian 1999). But we hold an opposing and alternative view that, to the contrary, it is absolutely necessary to make just such existential leaps in purposefully linking violent acts in normal times to those of abnormal times. Hence the title of our volume: Violence in War and in Peace. If (as we concede) there is a moral risk in overextending the concept of genocide into spaces and corners of everyday life where we might not ordinarily think to find it (and there is), an even greater risk lies in failing to sensitize ourselves, in misrecognizing protogenocidal practices and sentiments daily enacted as normative behavior by ordinary good-enough citizens. Peacetime crimes, such as prison construction sold as economic development to impoverished communities in the mountains and deserts of California, or the evolution of the criminal industrial complex into the latest peculiar institution for managing race relations in the United States (Waquant, Chapter 39), constitute the small wars and invisible genocides to which we refer. This applies to African American and Latino youth mortality statistics in Oakland, California, Baltimore, Washington DC, and New York City. These are invisible genocides not because they are secreted away or hidden from view, but quite the opposite. As Wittgenstein observed, the things that are hardest to perceive are those which are right before our eyes and therefore taken for granted. In this regard, Bourdieus partial and unfinished theory of violence (see Chapters 32 and 42) as well as his concept of misrecognition is crucial to our task. By including the normative everyday forms of violence hidden in the minutiae of normal social practices - in the architecture of homes, in gender relations, in communal work, in the exchange of gifts, and so forth - Bourdieu forces us to reconsider the broader meanings and status of violence, especially the links between the violence of everyday life and explicit political terror and state repression, Similarly, Basaglias notion of peacetime crimes - crimini di pace - imagines a direct relationship between wartime and peacetime violence. Peacetime crimes suggests the possibility that war crimes are merely ordinary, everyday crimes of public consent applied systematic- ally and dramatically in the extreme context of war. Consider the parallel uses of rape during peacetime and wartime, or the family resemblances between the legalized violence of US immigration and naturalization border raids on illegal aliens versus the US government- engineered genocide in 1938, known as the Cherokee Trail of Tears. Peacetime crimes suggests that everyday forms of state violence make a certain kind of domestic peace possible. Internal stability is purchased with the currency of peacetime

crimes, many of which take the form of professionally applied strangle-holds. Everyday forms of state violence during peacetime make a certain kind of domestic peace possible. It is an easy-to-identify peacetime crime that is usually maintained as a public secret by the government and by a scared or apathetic populace. Most subtly, but no less politically or structurally, the phenomenal growth in the United States of a new military, postindustrial prison industrial complex has taken place in the absence of broad-based opposition, let alone collective acts of civil disobedience. The public consensus is based primarily on a new mobilization of an old fear of the mob, the mugger, the rapist, the Black man, the undeserving poor. How many public executions of mentally deficient prisoners in the United States are needed to make life feel more secure for the affluent? What can it possibly mean when incarceration becomes the normative socializing experience for ethnic minority youth in a society, i.e., over 33 percent of young African American men (Prison Watch 2002). In the end it is essential that we recognize the existence of a genocidal capacity among otherwise good-enough humans and that we need to exercise a defensive hypervigilance to the less dramatic, permitted, and even rewarded everyday acts of violence that render participation in genocidal acts and policies possible (under adverse political or economic conditions), perhaps more easily than we would like to recognize. Under the violence continuum we include, therefore, all expressions of radical social exclusion, dehumanization, depersonal- ization, pseudospeciation, and reification which normalize atrocious behavior and violence toward others. A constant self-mobilization for alarm, a state of constant hyperarousal is, perhaps, a reasonable response to Benjamins view of late modern history as a chronic state of emergency (Taussig, Chapter 31). We are trying to recover here the classic anagogic thinking that enabled Erving Goffman, Jules Henry, C. Wright Mills, and Franco Basaglia among other mid-twentieth-century radically critical thinkers, to perceive the symbolic and structural relations, i.e., between inmates and patients, between concentration camps, prisons, mental hospitals, nursing homes, and other total institutions. Making that decisive move to recognize the continuum of violence allows us to see the capacity and the willingness - if not enthusiasm - of ordinary people, the practical technicians of the social consensus, to enforce genocidal-like crimes against categories of rubbish people. There is no primary impulse out of which mass violence and genocide are born, it is ingrained in the common sense of everyday social life. The mad, the differently abled, the mentally vulnerable have often fallen into this category of the unworthy living, as have the very old and infirm, the sick-poor, and, of course, the despised racial, religious, sexual, and ethnic groups of the moment. Erik Erikson referred to pseudospeciation as the human tendency to classify some individuals or social groups as less than fully human - a prerequisite to genocide and one that is carefully honed during the unremark- able peacetimes that precede the sudden, seemingly unintelligible outbreaks of mass violence. Collective denial and misrecognition are prerequisites for mass violence and genocide. But so are formal bureaucratic structures and professional roles. The practical technicians of everyday violence in the backlands of Northeast Brazil (Scheper-Hughes, Chapter 33), for example, include the clinic doctors who prescribe powerful tranquilizers to fretful and frightfully hungry babies, the Catholic priests who celebrate the death of angel-babies, and the municipal bureaucrats who dispense free baby coffins but no food to hungry families. Everyday violence encompasses the implicit, legitimate, and routinized forms of violence inherent in particular social, economic, and political formations. It is close to what Bourdieu (1977, 1996) means by symbolic violence, the violence that is often nus-recognized for something else, usually something good. Everyday violence is similar to what Taussig (1989) calls terror as usual. All these terms are meant to reveal a public secret - the hidden links between violence in war and violence in peace, and between war crimes and peace-time crimes. Bourdieu (1977) finds domination and violence in the least likely places - in courtship and marriage, in the exchange of gifts, in systems of classification, in style, art, and culinary taste- the various uses of culture. Violence, Bourdieu insists, is everywhere in social practice. It is misrecognized because its very everydayness and its familiarity render it invisible. Lacan identifies rneconnaissance as the prerequisite of the social. The exploitation of bachelor sons, robbing them of autonomy, independence, and progeny, within the structures of family farming in the European countryside that Bourdieu escaped is a case in point (Bourdieu, Chapter 42; see also Scheper-Hughes, 2000b; Favret-Saada, 1989). Following Gramsci,

Foucault, Sartre, Arendt, and other modern theorists of power-vio- lence, Bourdieu treats direct aggression and physical violence as a crude, uneconomical mode of domination; it is less efficient and, according to Arendt (1969), it is certainly less legitimate. While power and symbolic domination are not to be equated with violence - and Arendt argues persuasively that violence is to be understood as a failure of power - violence, as we are presenting it here, is more than simply the expression of illegitimate physical force against a person or group of persons. Rather, we need to understand violence as encompassing all forms of controlling processes (Nader 1997b) that assault basic human freedoms and individual or collective survival. Our task is to recognize these gray zones of violence which are, by definition, not obvious. Once again, the point of bringing into the discourses on genocide everyday, normative experiences of reification, depersonalization, institutional confinement, and acceptable death is to help answer the question: What makes mass violence and genocide possible? In this volume we are suggesting that mass violence is part of a continuum, and that it is socially incremental and often experienced by perpetrators, collaborators, bystanders - and even by victims themselves - as expected, routine, even justified. The preparations for mass killing can be found in social sentiments and institutions from the family, to schools, churches, hospitals, and the military. They harbor the early warning signs (Charney 1991), the priming (as Hinton, ed., 2002 calls it), or the genocidal continuum (as we call it) that push social consensus toward devaluing certain forms of human life and lifeways from the refusal of social support and humane care to vulnerable social parasites (the nursing home elderly, welfare queens, undocumented immigrants, drug addicts) to the militarization of everyday life (super-maximum-security prisons, capital punishment; the technologies of heightened personal security, including the house gun and gated communities; and reversed feelings of victimization

The rich-poor gap outweighs even nuclear impactsstructural violence from poverty kills more than armed conflict and a US-USSR nuclear exchange Gilligan 96 [James, Professor of Psychiatry at the Harvard Medical School, Director of the Center for
the Study of Violence, and a member of the Academic Advisory Council of the National Campaign Against Youth Violence, Violence: Our Deadly Epidemic and its Causes, p. 191-196] The deadliest form of violence is poverty. You cannot work for one day with the violent people who fill our prisons and mental hospitals for the criminally insane without being forcible and constantly reminded of the extreme poverty and discrimination that characterizes their lives. Hearing about their lives, and about their families and friends, you are forced to recognize the truth in Gandhis observation that the deadliest form of violence is poverty. Not a day goes by without realizing that trying to understand them and their violent behavior in purely individual terms is impossible and wrong-headed. Any theory of violence, especially a psychological theory, that evolves from the experience of men in maximum security prisons and hospitals for the criminally insane must begin with the recognition that these institutions are only microcosms. They are not where the major violence in our society takes place, and the perpetrators who fill them are far from being the main causes of most violent deaths. Any approach to a theory of violence needs to begin with a look at the structural violence in this country. Focusing merely on those relatively few men who commit what we define as murder could distract us from examining and learning from those structural causes of violent death that are for more significant from a numerical or public health, or human, standpoint. By structural violence I mean the increased rates of death, and disability suffered by those who occupy the bottom rungs of society, as contrasted with the relatively low death rates experienced by those who are above them. Those excess deaths (or at least a demonstrably large proportion of them) are a function of class structure; and that structure itself is a product of societys collective human choices, concerning how to distribute the collective wealth of the society. These are not acts of God. I am contrasting structural with behavioral violence, by which I mean the non-natural deaths and injuries that are caused by specific behavioral actions of individuals against individuals, such as the deaths we attribute to homicide, suicide, soldiers in warfare, capital punishment, and so on. Structural violence differs from behavior violence in at least three major respects. *The lethal effects of

structural violence operate continuously, rather than sporadically, whereas murders, suicides, executions, wars, and other forms of behavior violence occur one at a time. *Structural violence operates more or less independently of individual acts; independent of individuals and groups (politicians, political parties, voters) whose decisions may nevertheless have lethal consequences for others. *Structural violence is normally invisible, because it may appear to have had other (natural or violent) causes. [CONTINUED] The finding that structural violence causes far more deaths than behavioral violence does is not limited to this country. Kohler and Alcock attempted to arrive at the number of excess deaths caused by socioeconomic inequities on a worldwide basis. Sweden was their model of the nation that had come closest to eliminating structural violence. It had the least inequity in income and living standards, and the lowest discrepancies in death rates and life expectancy; and the highest overall life expectancy of the world. When they compared the life expectancies of those living in the other socioeconomic systems against Sweden, they found that 18 million deaths a year could be attributed to the structural violence to which the citizens of all the other nations were being subjected. During the past decade, the discrepancies between the rich and poor nations have increased dramatically and alarmingly. The 14 to 19 million deaths a year caused by structural violence compare with about 100,000 deaths per year from armed conflict. Comparing this frequency of deaths from structural violence to the frequency of those caused by major military and political violence, such as World War II (an estimated 49 million military and civilian deaths, including those by genocide or about eight million per year, 1939-1945), the Indonesian massacre of 1965-66 (perhaps 575,000 deaths), the Vietnam war (possibly two million, 1954-1973), and even a hypothetical nuclear exchange between the U.S. and the U.S.S.R. (232 million), it is clear that even war cannot begin to compare with structural violence, which continues year after year . In other words, every fifteen years, on the average, as many people die because of relative poverty as would be killed by the Nazi genocide of the Jews over a six-year period. This is, in effect, the equivalent of an ongoing , unending , and accelerating , thermonuclear war, or genocide, perpetrated on the weak and poor every year of every decade, throughout the world. Structural violence is also the main cause of behavioral violence on a socially and epidemiologically significant scale (from homicide and suicide to war and genocide). The question as to which of the two forms of violence structural or behavioral is more important, dangerous, or lethal is moot, for they are inextricably related to each other, as cause to effect.

Advantage 3 is unemployment
Its triggering a major economic crisis outweighs the deficit Laura Tyson, professor at the Haas School of Business at Cal Berkeley and former chair of the Council
of Economic Advisers and the head of the National Economic Council under President Clinton, 08-182011, What it will take for President Obama and big business to bring back American jobs, http://www.washingtonpost.com/national/on-leadership/for-president-obama-and-american-businessfixing-the-us-jobs-deficit/2011/08/18/gIQAhW8ZNJ_story.html The immediate crisis confronting the U.S. economy is the jobs deficit, not the budget deficit. Nearly 14 million Americans are unemployed, another 8.4 million are working part time because they cannot find full-time jobs, and yet another 2.8 million want a job and are available to work but have given up an active search. At 64 percent, the labor force participation rate is lower than it has been in nearly three decades. The magnitude of this jobs crisis were in is best measured by the jobs gapthe number of jobs the U.S. economy needs to add in order to return to its pre 2008-2009 employment level and absorb new entrants to the work force since then. The jobs gap at the end of August was more than 12 million jobs. Even at double the rate of employment growth realized during the last year, it would take more than 12 years for the U.S. economy to close this gap. The U.S. labor market, long admired for its flexibility and strength, is badly broken. Most American jobs are in the private sector, and private sector jobs have in fact been growing for 17 consecutive months; indeed, the private sector added about 1.8 million nonfarm payroll jobs during the last year. This pace of job creation is faster than during the previous recovery in the early 2000s and in line with the recovery of the early 1990s. But theres one major problem: Private-sector job losses were more than twice as large in the recent recession as in the previous two, and job growth has fallen far short of what is necessary to offset these losses. In addition, public-sector employment has been declining in this recoverythis in contrast to other postwar recovery periods, in which such employment has increased. Weve lost 550,000 public-sector positions in the last year alone, making the jobs crisis even more severe. Since the private sector creates (and eliminates) most jobs in the United States, and since budget constraints will likely mean more painful cuts in public-sector employment for the foreseeable future, Americans are understandably looking to business for solutions to the jobs crisis. To uncover the business solutions that could work, however, we first must acknowledge the fundamental cause of the problem: the dramatic collapse in aggregate demand that began with the 2008 financial crisis and that triggered huge job losses. Even with unprecedented amounts of monetary and fiscal stimulus, the recovery has been weak because consumers have curbed their spending, increased their saving and started to reduce their personal debt. And they still have a long way to go. Business surveys confirm that for both large and small companies, the primary constraint on job growth is weak demand, not regulation or taxation. In the apt words of a small business owner, If you dont have the demand, you dont hire the people. So what can the business community do to boost demand and job creation? It can convince Congress to establish a National Infrastructure Bank and pass a multi-year surface transportation bill to boost infrastructure investment. And while its at it, business can work with the Obama administration to reduce multi-year delays in the approval of infrastructure projects that would otherwise create tens of thousands of good-paying jobs in the next few years. It can partner with the Obama administration to achieve the target of doubling exports, supporting 2 million additional jobs, within five years. Securing congressional passage of the three pending trade agreements, combined with meaningful trade adjustment assistance for workers displaced by trade, would be a major step toward this goal. It can work in partnership with federal, state and local governments to encourage the retrofitting of commercial buildings to improve their energy efficiencya 20-percent improvement would save business about $40 billion a year on utility bills, money that could be used to hire and train workers. It can finance partnerships with colleges and universities to provide workers with the skills needed for the jobs that are currently available and for the jobs that are most likely to become available as the economy continues to

recover. These include jobs that require high levels of science and technology skills, such as engineering jobs that are currently unfilled because of a national shortage of engineers, as well as jobs that require community college training in specialized areas like manufacturing, clean energy, tourism and health care. In his recent column for the Washington Post, Professor Michael Useem challenged business leaders to focus not just on what is required for the success of their own companies but on what is required for the success of the national economy. Members of the Presidents Council on Jobs and Competitiveness, a private-sector advisory group in which I participate, , are responding to this challenge. Yet even with innovative ideas and commitment, the business community cannot boost aggregate demand by the amount needed to close the jobs gap. That requires appropriate macroeconomic policies. What should the federal government do? It should extend unemployment benefits and link them to training programs as many European countries do. It should extend the payroll tax cut for employees enacted at the end of 2010 and it should add a payroll tax cut for employers on new hires. Payroll tax relief should be maintained until the unemployment rate falls to 6 percent. The 10-year yield on U.S. Treasuries has fallen below 2.5 percent, the lowest it has been since the 1950s. There are numerous economically justifiable, demand-generating investments the U.S. government should make in infrastructure, research and education that would pay a higher rate of return and would create jobs now, while also laying the foundation for faster growth in the future. With nearly 25 percent of mortgages under water, a record number of foreclosures and historically low mortgage rates, the government should also explore new ways to make it possible for more households to refinance their mortgages. Refinancing could put tens of billions of dollars of spending power into the economy. Additional fiscal measures like these would boost demand and job creation. And yes, they would also add to the fiscal deficit. But the most important driver of the deficit in the short run is weak tax revenues, reflecting weak economic performance; and the most effective way to reduce the deficit in the next few years would be putting people back to work . Every one percentage point of growth adds about $2.5 trillion in government revenues. But even strong growth will not solve the long-run deficit problem. That will require a multiyear balanced plan of spending cuts and revenue increases. Thats why Congress should pair such a plan with temporary fiscal measures to boost job creationand pass both as a package now. Approving a deficit-reduction plan now but deferring its starting date until the economy is near full employment would reduce the danger that premature fiscal contraction will tip the economy back into recession. It would also alleviate investor concerns about the creditworthiness of the U.S. government, concerns that have been aggravated by recent political brinkmanship over the debt limit and the resulting S&P downgrade. Unfortunately, the odds that the United States will get the fiscal policy it needsa combination of countercyclical support now and balanced deficit reduction laterare low. And the odds that Congressional gridlock will increase uncertainty, undermine confidence and endanger the faltering recovery are high. These odds are not good for business, nor are they good for the millions of Americans who need a job.

The plan immediately boosts employment and growth Fareed Zakaria, Indian-American journalist and author. From 2000 to 2010, he was a columnist for
Newsweek and editor of Newsweek International. In 2010 he became editor-at-large of Time. He is the host of CNN's Fareed Zakaria GPS. He is also a frequent commentator and author about issues related to international relations, trade and American foreign policy, 06-13-2011, Zakaria: U.S. needs an infrastructure bank, http://globalpublicsquare.blogs.cnn.com/2011/06/13/zakaria-u-s-needs-aninfrastructure-bank/ President Obama has proposed a number of specific policies to tackle the jobs crisis, but they have gone nowhere because Republicans say that their top concern is the deficit and debt. Those of us worried about the debt - and I would strongly include myself - need to remember that if unemployment doesn't go down fast, the deficit is going to get much worse. If you're serious about deficit reduction, the

single most important factor that will shrink it is to have more people working and paying taxes. I want to focus on one of Obama's proposals because it actually would add very little to the deficit, it has some Republican supporters and it would have an immediate effect on boosting employment and growth. Plus, it's good for the country anyway. We need a national infrastructure bank to repair and rebuild America's crumbling infrastructure. The House Majority Leader, Eric Cantor, has played down this proposal as just more stimulus, but if Republicans set aside ideology, they would actually see that this is an opportunity to push for two of their favorite ideas - privatization and the elimination of earmarks. That's why Republicans like Kay Bailey Hutchison and Chuck Hagel are strongly in favor of such a bank. The United States builds its infrastructure in a remarkably socialist manner. The government funds bills and operates almost all American infrastructure. Now, in many countries in Europe and

Asia the private sector plays a much larger role in financing and operating roads, highways, railroads, airports and other public resources. An infrastructure bank would create a mechanism by which you could have private sector participation. Yes, there would be some public money involved, though mostly through issuing bonds. And with interest rates at historic lows, this is the time to use those low interest rates to borrow money and rebuild America's infrastructure. Such projects have huge long-term payoffs and can genuinely be thought of as investments, not expenditures . A national infrastructure bank would also address a legitimate complaint of the Tea Party
- earmark spending. One of the reasons federal spending has been inefficient is that Congress wants to spread the money around in ways that might make political sense but are economic nonsense. An

infrastructure bank would make those decisions using cost-benefit analysis in a meritocratic system rather than spreading the wealth around and basing these decisions on patronage, politics and whimsy. Let's face it, America's infrastructure is in a shambles. Just a decade ago, we ranked sixth in infrastructure in the world according to the World Economic Forum. Today we rank 23rd and dropping. We will not be able to compete with the nations of the world if we cannot fix this
problem. Is it too much to ask that Republicans and Democrats find a way to come together on this? That moment of bipartisanship might actually be the biggest payoff of all.

Unemployment causes widespread suffering and death Dean Baker, Co-Director of the Center for Economic and Policy Research, and Kevin Hassett,
Senior Fellow and Director of Economic Policy Studies at the American Enterprise Institute, former served as a senior economist at the Board of Governors of the Federal Reserve System and an associate professor of economics and finance at the Graduate School of Business of Columbia University, holds a Ph.D. in Economics from the University of Pennsylvania, 05-12-2012, The Human Disaster of Unemployment, http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/the-humandisaster-of-unemployment Long-term unemployment is experienced disproportionately by the young, the old, the less educated, and African-American and Latino workers. While older workers are less likely to be laid off than younger workers, they are about half as likely to be rehired. One result is that older workers have seen the largest proportionate increase in unemployment in this downturn. The number of unemployed people between ages 50 and 65 has more than doubled. The prospects for the re-employment of older workers deteriorate sharply the longer they are unemployed. A worker between ages 50 and 61 who has been unemployed for 17 months has only about a 9 percent chance of finding a new job in the next three months. A worker who is 62 or older and in the same situation has only about a 6 percent chance. As unemployment increases in duration, these slim chances drop steadily. The result is nothing short of a national emergency. Millions of workers have been disconnected from the work force, and possibly even from society. If they are not reconnected, the costs to them and to society will be grim. Unemployment is almost always a traumatic event, especially for older workers. A paper by the economists Daniel Sullivan and

Till von Wachter estimates a 50 to 100 percent increase in death rates for older male workers in the years immediately following a job loss, if they previously had been consistently employed. This higher mortality rate implies that a male worker displaced in midcareer can expect to live about one and a half years less than a worker who keeps his job. There are various reasons for this rise in mortality. One is suicide. A recent study found that a 10 percent increase in the unemployment rate (say from 8 to 8.8 percent) would increase the suicide rate for males by 1.47 percent. This is not a small effect. Assuming a link of that scale, the increase in unemployment would lead to an additional 128 suicides per month in the United States. The picture for the long-term unemployed is especially disturbing. The duration of unemployment is the dominant force in the relationship between joblessness and the risk of suicide. Joblessness is also associated with some serious illnesses, although the causal links are poorly understood. Studies have found strong links between unemployment and cancer, with unemployed men facing a 25 percent higher risk of dying of the disease. Similarly higher risks have been found for heart disease and psychiatric problems. The physical and psychological consequences of unemployment are significant enough to affect family members. The economists Kerwin Charles and Melvin Stephens recently found an 18 percent increase in the probability of divorce following a husbands job loss and 13 percent after a wifes. Unemployment of parents also has a negative impact on achievement of their children. In the long run, children whose fathers lose a job when they are kids have reduced earnings as adults about 9 percent lower annually than children whose fathers do not experience unemployment. We all understand how the human costs can be so high. For many people, their very identity is their occupation. Few events rival the emotional strain of job loss.

Advantage 4 is Hegemony
Strong econ key to sustaining heg
DuBoff 03 (Richard B., Professor Emeritus of Economics, U.S. Hegemony: Continuing Decline, Enduring Danger, Monthly Review, December) Global hegemony might be defined as a situation in which one nation-state plays a predominant role in organizing, regulating, and stabilizing the world political economy. The use of armed force has always been an inseparable part of hegemony, but military power depends upon the economic resources at the disposal of the state. It cannot be deployed to answer every threat to geopolitical and economic interests, and it raises the danger of imperial overreach, as was the case for Britain in South Africa (1899-1902) and the United states in Vietnam (1962-1975). Britannia ruled the waves from 1815 to 1913, but by the 1890s she was under economic challenge from the United States and Germany, and between the two world wars was no longer able to function as underwriter to the world system. U.S. hegemony began during the Second World War and peaked some thirty years later. The United States still has immense-unequalled-power in international economics and politics, but even as the wsole superpower it finds itself less able than it once was to influence and control the course of events abroad. Its military supremacy is no longer matched in the economic and political spheres, and is of dubious value in preserving the global economic order and the stake that U.S. capital has in it. Even during the golden days of 1944-1971 the United States was unable to avoid military defeat in Vietnam and draw in Korea.

US hegemony makes the inevitable transition to multi-polarity peaceful Walton, Lecturer in IR at University of Reading in England, 07
(Dale C, Geopolitics and the Great Powers in the Twenty-First Century: Multipolarity and the revolution in strategic perspective pg 65-66) ZLH Although international political conditions surely will differ enormously in the Coming decades from those of the middle 1940s, it would be grossly irresponsible for the United Stales to shrug off the burdens of great power status and return to the slumber that it once enjoyed. Almost certainly, if the United States had refused to take an active role in European politics in the middle of the twentieth century, a world would have emerged in which American values would not have flourished and even their survival on the North American continent would have been profoundly threatened. America's refusal to play a substantial role in the great power struggles of this century likely would have similarly deleterious effects. Importantly, if the United States withdraws to its hemisphere a third world war is far more likely. In a meta-region full of young, rising powers, the presence of a strategically mature superpower can be expected to have a stabilizing effect; the enormous military resources possessed by America compels would-be aggressors to consider carefully before launching a strategic adventure. liven more chillingly, as noted above, it is possible that the multipolar system could become sufficiently unbalanced that it would collapse, with a power such as China building a coalition that would allow it ultimately to emerge as the master of Eastern Eurasia and the greatest power in the world. The United States is the "court of last resort" protect-ing against such an eventuality. The latter possibility does not contradict the above argument that US uni-polarity is unsustainable - as an extra-Eurasian power lacking the ruthlessness to destroy potential great power competitors preventively, Washington simply cannot sustain unipolarity indefinitely. Nonetheless, while the emerging multi- polar system appears robust, it still should receive "care and feeding" other- wise, it is vulnerable to grossly unbalancing events, such as the creation of a very aggressive coalition dedicated to achieving Eurasian hegemony and willing, if necessary, to fight a third world war to achieve it. Most likely

such a coalition would not be able to simply bully its way to hegemony; it probably would have to fight, the result being a war enormously costly in blood, perhaps even one that would dwarf World War II in its price. If the aggressive coalition won, in turn, the multipolar system would be destroyed and the United States would face a competitor far more powerful than itself, and. in all likelihood, a world in which democracy and personal liberty would be in eclipse. In any case, it is a geopolitical imperative for the United States that no power or coalition attains hegemony in Eastern Eurasia, much less that an explicitly hostile state or coalition succeeds in doing so. If the United States is to guard its national interests successfully in this century, it is vital that it ensures that the transition from unipolarity to multipo- larity occurs in as gentle a manner as possible. In this capacity, it is important to understand that the United States is in long-term relative decline, but, at the same time, to acknowledge that it has very great military, financial, and diplo- matic resources at its disposal. If Washington deploys these resources wisely, it can maximize its security over the long term and minimize the probability of a great power war.

Collapse of the hegemonic state right now leads to transition wars between rising powers Ikenberry 5 (G. John, Professor of International Affairs at Princeton University, The Rise of China, Power Transitions, and the Western Order, pgs. 5-6, December 4, 2005, http://www.scribd.com/doc/7257921/IkenberryRise-of-China-Power-Transitions-and-the-Western-Order)

International order can be understood as a hierarchical political system that reflects the interests of the dominant state or states. Change occurs as great powers rise and decline and as they struggle over the rules and institutions of order. Robert Gilpin provides a classic account of the dynamics of international relations in these terms. The history of world politics is marked by a succession of powerful or hegemonic states that rise up to organize the international system. As Gilpin argues, the evolution of any system has been characterized by successive rises of powerful states that have governed the system and have determined the patterns of international interactions and established the rules of the system.4 Steady and inevitable shifts in the distribution of power among states gives rise to new challenger states who eventually engage the leading state in hegemonic war, which in turn gives rise to a new hegemonic state that uses its dominant position to establish an order favorable to its interests. Within a hegemonic order, rules and rights are established and enforced by the power capacities of the leading state. Compliance and participation within the order is ultimately ensured by the range of power capabilities available to the hegemon military power, financial capital, market access, technology, and so forth. Direct coercion is always an option in the enforcement of order, but less direct carrots and sticks are also mechanisms to maintain hegemonic control. Gilpin also argues that a wider set of resources ideology and status appeals are integral to the perpetuation of hegemonic order.5 But the authority of the hegemonic state and the cohesion of the hegemonic order are ultimately based on the preeminent power of the leading state. The hierarchical system is maintained as long as the leading state remains powerful enough to enforce the rules and institutions of order. When hegemonic power declines, the existing order begins to unravel and break apart. As Gilpin contends, a precondition for political change lies in a disjuncture between the existing social system and the redistribution of power toward those actors who would benefit most from a change in the system.6 The power transition leads to geopolitical struggles and security competition that ultimately culminate in hegemonic war and the emergence of a new leading state that organizes the international system according to a new logic.

Advantage 5 is State Budgets

States are stuck in a cycle of budget crises, Federal action is key to solve MCNICHOL ET AL 12 Elizabeth McNichol- M.A. in Political Science University of Chicago. Senior Fellow specializing in state fiscal
issues including methods of examining state budget processes and long-term structural reform of state budget and tax systems, served as Assistant Research Director of the Service Employees International Union in Washington, D.C. was a staff member of the Joint Finance Committee for the State of Wisconsin Legislature specializing in property taxes and state aid to local governments, AND*** Nicholas Johnson- graduate degree from Duke University's Terry Sanford Institute of Public Policy, Director of the State Fiscal Project, which works to develop strategies for long-term structural reform of state budget and tax systems, encourage lowincome tax relief, and improve the way states prioritize funding, received the Ian Axford Fellowship in Public Policy, a program financed by the New Zealand government and administered by Fulbright New Zealand. Through this fellowship, he spent six months as an advisor to the New Zealand Treasury and the New Zealand Ministry of Social Development; AND*** Phil Oliff - Policy Analyst with the State Fiscal Project; Masters degree in Public Policy from Harvard Universitys John F. Kennedy School of Government (Elizabeth, Nicholas Johnson, Phil Oliff, States Continue to Feel Recessions Impact , March 21, http://www.cbpp.org/cms/index.cfm?fa=view&id=711)

In states facing budget gaps, the consequences are severe in many cases for residents as well as the economy. To
date, budget difficulties have led at least 46 states to reduce services for their residents, including some of their most vulnerable families and individuals. [4] More

than 30 states have raised taxes to at least some degree, in some cases quite significantly. If revenue remains depressed, as is expected in many states, additional spending and service cuts are likely. Indeed a number of states that budget on a two-year basis have already made substantial cuts to balance their budgets for fiscal year 2013. Budget cuts often are more severe later in a state fiscal crisis, after largely depleted reserves are no longer an option for closing deficits. Spending cuts are problematic during an economic downturn because they reduce overall demand and can make the downturn deeper. When states cut spending, they lay off employees, cancel contracts with
vendors, eliminate or lower payments to businesses and nonprofit organizations that provide direct services, and cut benefit payments to individuals. In all of these circumstances, the companies and organizations that would have received government payments have less money to spend on salaries and supplies, and individuals who would have received salaries or benefits have less money for consumption. This directly removes demand from the economy.

Tax increases also remove demand from the economy by reducing the amount of money people have to spend. However to the extent these increases are on upper-income residents, that effect is minimized. This is because these residents tend to save a larger share of their
income, and thus much of the money generated by a tax increase on upper income residents comes from savings and so does not diminish economic activity. At the state level, a balanced approach to closing deficits raising taxes along with enacting budget cuts is needed to close state budget gaps in order to maintain important services while minimizing harmful effects on the economy.

Ultimately, the actions needed to address state budget shortfalls place a considerable number of jobs at risk.
The roughly $49 billion shortfall that states are facing for fiscal year 2013 equals about 0.32 percent of GDP. Assuming that economic activity declines by one dollar for every dollar that states cut spending or raise taxes, and based on a rule of thumb that a one percentage point loss of GDP costs the economy 1 million jobs, the state shortfalls projected to date could prevent the creation of 320,000 public- and private-sector jobs next year.

The Role of the Federal Government

Federal assistance lessened the extent to which states needed to take actions that further harmed the economy. The American Recovery and Reinvestment Act (ARRA), enacted in February 2009, included substantial assistance for states. The amount in ARRA to help states maintain current activities was about $135 billion to $140 billion over a roughly 2-year period or
between 30 percent and 40 percent of projected state shortfalls for fiscal years 2009, 2010, and 2011. Most of this money was in the form of increased Medicaid funding and a "State Fiscal Stabilization Fund." (There were also other streams of funding in the Recovery Act flowing through states to local governments or individuals, but these will not address state budget shortfalls.) This money reduced the extent of state spending cuts and state tax and fee increases.

In addition, H.R. 1586 the August 2010 jobs bill extended enhanced Medicaid funding for six months, through June 2011, and added $10 billion to the State Fiscal Stabilization Fund. Even

with this extension, federal assistance largely ended before state budget gaps had fully abated. The Medicaid funds expired in June 2011, the end of the 2011 fiscal year in most states,[5] and states had drawn down most of their State Fiscal Stabilization Fund allocations by then as well. So even though significant budget gaps remained in 2012, there was little federal money available to close them. Partially as a result, states' final 2012 budgets contain some of the deepest spending cuts since the start of the recession.
One way to avert these kinds of cuts, as well as additional tax increases, would have been for the federal government to reduce state budget gaps by extending the Medicaid funds for as long as state fiscal conditions are expected to be problematic.

But far from extending this aid, federal

policymakers are moving ahead with plans to cut ongoing federal funding for states and localities, thereby making state fiscal conditions even worse. The federal
government has already cut non-defense discretionary spending by nine percent in real terms since 2010. Discretionary spending caps established in the federal debt limit deal this past summer will result in an additional six percent cut by the end of the next decade. The additional cut by the end of the next decade would grow to 11 percent if sequestration the automatic, across the board cuts also established in the debt limit deal is allowed to take effect.

Fully one-third of non-defense discretionary spending flows through state and local governments in the form of funding for education, health

Large cuts in federal funding to states and localities would worsen state budget problems, deepen the size of cuts in spending, increase state taxes and fees, and thus slow economic recovery even further than is already
care, human services, law enforcement, infrastructure, and other services that states and localities administer. likely to occur.

Cuts create a drag on the economy. Lav 10 Iris J. Lav, Senior Advisor and former Deputy Director of the Center on Budget and Policy
Priorities, Founding Director of the State Fiscal Analysis Initiativea network of nonprofit organizations that work on state budget issues, currently teaches state and local finance at Johns Hopkins University School of Government, holds an MBA from George Washington University and an AB from the University of Chicago, and Robert Tannenwald, Senior Fellow at the State Fiscal Project of the Center on Budget and Policy Priorities, holds a Ph.D. from Harvard University, 2010 (The Zero-Sum Game: States Cannot Stimulate Their Economies by Cutting Taxes, Center on Budget and Policy Priorities, March 2nd, Available Online at http://www.cbpp.org/cms/index.cfm?fa=view&id=3100, Accessed 06-27-2012) Given states balanced budget requirements, neither a broad-based tax cut nor a jobs credit can do much to increase overall economic activity in the state. If the state pays for a tax cut by reducing other spending, then the private-sector job induced by the credit replaces a job in the public sector, in a nonprofit organization that contracts with the state, or in another private-sector company that provides goods and services to the state. There is little or no net gain to the economy . Indeed, a statelevel effort to stimulate the economy in this way can inadvertently create a fiscal drag on the state and national economy.

Federal infrastructure bank is key to business confidence and state budget COEA 12 - Council of Economic Advisers, Department of Treasury (A NEW ECONOMIC
ANALYSIS OF INFRASTRUCTURE INVESTMENT, March 23, http://www.treasury.gov/resourcecenter/economic-policy/Documents/20120323InfrastructureReport.pdf)
President Obamas FY 2013 Budget proposes a bold plan to renew and expand Americas infrastructure. This plan includes a $50 billion up-front investment connected to a six-year $476 billion reauthorization of the surface transportation program and the creation of a National

Infrastructure Bank. The Presidents plan would significantly increase investment in surface transportation by approximately 80 percent when compared to previous federal investment. The
plan seeks not only to fill a long overdue funding gap, but also to reform how Federal dollars are spent so that they are directed to the most effective programs. This report contributes to the ongoing policy dialogue by summarizing the evidence on the economic effects of investments in transportation infrastructure. Public infrastructure is an essential part of the U.S. economy. This has been recognized since the founding of our nation. Albert Gallatin, who served as President Jeffersons Treasury Secretary, wrote: The

early and efficient aid of the Federal Government

[emphasis in article] is recommended by still more important considerations. The inconveniences, complaints, and perhaps dangers, which may result from a vast extent of territory, can no otherwise be radically removed or prevented than by opening speedy and easy communications through all its parts. Good roads and canals will shorten distances, facilitate commercial and personal intercourse, and unite, by a still more intimate community of interests, the most remote quarters of the United States. No

other single operation,

within the power of Government, can more effectually tend to strengthen and perpetuate that Union which secures external independence, domestic peace, and internal liberty. 1
Gallatin spoke in terms of infrastructure shortening distances and easing communications, even when the only means to do so were roads and canals. Every day, Americans use our nations transportation infrastructure to commute to work, visit their friends and family, and travel freely around the country. Businesses

depend on a well-functioning infrastructure system to obtain their

supplies, manage their inventories, and deliver their goods and services to market. This is true for
companies whose businesses rely directly on the infrastructure system, such as shippers like UPS and BNSF, as well as others whose businesses indirectly rely on the infrastructure system, such as farmers who use publicly funded infrastructure to ship crops to buyers, and internet companies that send goods purchased online to customers across the world. A

modern transportation infrastructure

network is necessary for our economy to function, and is a prerequisite for future growth. President Eisenhowers vision is even more relevant today than it was in 1955, when he said in his State of the Union Address, "A modern, efficient highway system is essential to meet the needs of our growing population, our expanding economy, and our national security." Today, that vision would include making not only our highways, but our nations entire infrastructure system more efficient and effective. Our analysis indicates that further infrastructure investments would be highly beneficial for the U.S. economy in both the short and long term. First, estimates of economically justifiable investment indicate that American transportation infrastructure is not keeping pace with the needs of our economy. Second, because of high unemployment in sectors such as construction that were especially hard hit by the bursting of the housing
bubble, there are underutilized resources that can be used to build infrastructure. Moreover,

states and municipalities typically fund a significant portion of infrastructure spending, but are currently strapped for cash; the Federal government has a constructive role to play by stepping up to address the anticipated shortfall and providing more efficient financing mechanisms, such as Build America Bonds. The third key finding is that investing in infrastructure
benefits the middle class most of all. Finally, there is considerable support for greater infrastructure investment among American consumers and businesses. The Presidents plan addresses a significant and longstanding need for greater infrastructure investment in the United States. Targeted

investments in Americas transportation infrastructure would generate both short-term and longterm economic benefits. However, transforming and rehabilitating our nations transportation infrastructure system will require not
only greater investment but also a more efficient use of resources, because simply increasing funding does not guarantee economic benefits.

This idea is embodied in the Presidents proposal to reform our nations transportation policy, as well as to establish a National Infrastructure Bank, which would leverage private and other non-Federal government
resources to make wise investments in projects of regional and national significance. In this report, we begin by reviewing factors that should influence investment in infrastructure. We review the economic literature regarding returns to infrastructure investment. Next, we consider the specific condition of our economy and labor market, including the availability of workers with the requisite skills, which suggest that now is a particularly favorable time to initiate these investments. Then we analyze the benefits derived by American families and companies from well-functioning infrastructure systems and the costs associated with poor infrastructure systems. Finally, we review public and business sentiment regarding infrastructure investment .

The feds must act first or unemployment creates state budget cuts which hamper recovery JOHNSON ET AL 10 - Nicholas Johnson- graduate degree from Duke University's Terry Sanford
Institute of Public Policy, Director of the State Fiscal Project, which works to develop strategies for longterm structural reform of state budget and tax systems, encourage low-income tax relief, and improve the way states prioritize funding, received the Ian Axford Fellowship in Public Policy, a program financed by the New Zealand government and administered by Fulbright New Zealand. Through this fellowship, he spent six months as an advisor to the New Zealand Treasury and the New Zealand Ministry of Social Development. AND*** Iris J. Lav- created the State Fiscal Analysis Initiative, a network of nonprofit organizations that work on state budget issues. The SFAI network began with 11 state organizations in 1993 and now operates in 31 states with groups in seven other states under development. In 1999, she received the Steven D. Gold award for contributions to state and local fiscal policy. Holds an MBA from George Washington University and an AB from the University of Chicago. AND*** Elizabeth McNichol- M.A. in Political Science University of Chicago. Senior Fellow specializing in state fiscal issues including methods of examining state budget processes and long-term structural reform of state budget and tax systems, served as Assistant Research Director of the Service Employees International Union in Washington, D.C. was a staff member of the Joint Finance Committee for the State of Wisconsin Legislature specializing in property taxes and state aid to local governments (Nicholas, Iris J. Lav,Elizabeth McNichol, Additional Federal Fiscal Relief Needed to Help States Address Recessions Impact , March 1, http://www.cbpp.org/cms/index.cfm?fa=view&id=2988)

There are a number of reasons for these lags in state fiscal recovery.In the last two recessions, the unemployment rate continued climbing for 15 to 19 months after the recession ended and then remained high for a considerable period of time after that. That hampers the ability of state revenues to recover strongly; high unemployment reduces both income tax and consumption tax revenues. In the current economic downturn, unemployment is projected to continue rising in calendar year 2010 and to remain relatively high through 2012 or 2013. Mark Zandi forecasts that the unemployment rate will peak at 10.5 percent in the late spring of 2010 and not fall back to a rate consistent with full employment until 2013. Goldman-Sachs forecasts the unemployment rate to continue to rise throughout calendar year 2010, reaching 10.5 percent in the fourth quarter.[11]High unemployment also affects state expenditures, as Medicaid rolls remain swollen with residents who have lost their jobs, income, and health insurance.As states strive to balance their budgets while doing the least harm to their economies and their residents, they initially draw down rainy day funds and other reserves, sell assets, and postpone payments. The use of these strategies, however, creates holes in future-year budgets that have to be filled. When unemployment remains high in the years immediately after a recession ends, state revenue growth generally is not strong enough to fill these gaps.The tax increases that states enact during recessions often are temporary and expire before fiscal conditions have fully recovered.Timing of ActionBecause of state budget calendars, it would not be effective for the Administration and Congress to wait until the fall of 2010 to consider additional aid to the states for state fiscal year 2011.In most states, the governors proposed budget for fiscal year 2011[12] is being developed this fall. At the end of calendar 2009 or the beginning of calendar 2010, governors will submit their budgets to their legislatures, to be considered between January and June 2010. Final budgets for fiscal year 2011 will be adopted at some point during that period. Some states, particularly those with short legislative sessions, require the adoption of budgets by March or April.States budget for their fiscal years as a whole, not for six-month periods. The spending cuts and tax increases that states will institute in order to balance their 2011 budgets will be determined based on the states budget projections for all of fiscal year 2011. Those projections will include a significant drop-off in ARRA funds for the final half of the state fiscal year (i.e., after December 2010).Accordingly, many of the actions that states will take to balance their 2011 budgets will be implemented next summer (or in some cases even earlier if budget gaps have reopened for the current fiscal year). To gain maximum revenue, states that plan to adopt tax increases to help address their looming fiscal year 2011 shortfalls may want to put them in place as quickly as possible. The same applies to spending reductions; for example, many cuts in education spending are likely to take effect next summer, at the start of the 2010-2011 school year.The bottom line is that unless states know that additional aid is coming even if they do not actually receive the dollars until calendar year 2011 they will institute large new budget cuts and/or tax increases by next summer to close the shortfalls in their fiscal 2011 budgets.ConclusionState fiscal assistance under ARRA will end or largely be exhausted by the end of calendar year 2010. Unfortunately, big state deficits are expected to continue through state fiscal year 2012 that is, for another 18 months or so after 2010 ends. If states do not receive additional federal assistance beyond the scheduled expiration of such aid, they will be forced to institute further deep budget cuts and/or substantial tax increases. Such actions would place a drag on the U.S. economy, impeding the recovery and costing many jobs. Such measures also could cause serious hardship for many families and individuals that have lost their jobs and are relying on Medicaid and other key state services to make it through this unusually painful economic downturn.

Contention 2 is Solvency
A one-time investment into the Infrastructure Bank empirically solves and avoids all turns LIKOSKY 11 a senior fellow at the Institute for Public Knowledge, New York University (Michael
B., July 12, Banking on the Future, http://www.nytimes.com/2011/07/13/opinion/13likosky.html)

FOR decades, we have neglected the foundation of our economy while other countries have invested in state-of-the-art water, energy and transportation infrastructure. Our manufacturing base has migrated abroad; our innovation edge may soon follow. If we dont find a way to build a sound foundation for growth, the American dream will survive only in our heads and history books.
But how we will pay for it? Given the fights over the deficit and the debt, it is doubtful that a second, costly stimulus package could gain traction. President Franklin D. Roosevelt faced a similar predicament in the 1930s when the possibility of a double-dip Depression loomed. For this reason, the New Deals second wave aggressively pursued public-private partnerships and quasi-public authorities. Roosevelt described the best-known of these enterprises, the Tennessee Valley Authority, as a corporation clothed with the power of government but possessed of the flexibility and initiative of a private enterprise. A bipartisan bill introduced by senators including John Kerry, Democrat of Massachusetts, and Kay Bailey Hutchison, Republican of Texas, seeks a similar but modernized solution: it would

create an American Infrastructure Financing Authority to move private capital, now sitting on the sidelines in pension, private equity, sovereign and other funds, into much-needed projects. Rather than sell debt to investors and then allocate funds through grants, formulas and earmarks, the authority would get a onetime infusion of federal money ($10 billion in the Senate bill) and then extend targeted loans and limited loan guarantees to projects that need a push to get going but can pay for themselves over time like a road that collects tolls, an energy plant that collects user fees, or a port that imposes fees on goods entering or leaving the country.
The idea of such a bank dates to the mid-1990s. Even then, our growth was hampered by the inadequacy of our infrastructure and a lack of appetite for selling public debt to cover construction costs. Today we

find ourselves trapped in a vicious cycle that makes this proposal more urgent than ever . Our degraded infrastructure straitjackets growth. We resist borrowing, fearful of financing pork-barrel projects selected because of political calculations rather than need.
While we have channeled capital into wars and debt, our competitors in Asia and Latin America have worked with infrastructure banks to lay a sound foundation for growth. As a result, we must compete not only with their lower labor costs but also with their advanced energy, transportation and information platforms, which are a magnet even for American businesses. A recent survey by the Rockefeller Foundation found that Americans overwhelmingly supported greater private investment in infrastructure. Even so, there is understandable skepticism about public-private partnerships; Wall Street has not re-earned the trust of citizens who saw hardearned dollars vacuumed out of their retirement accounts and homes. An

infrastructure bank would not endanger taxpayer money, because under the Federal Credit Reform Act of 1990, passed after the savings and loan scandal, it would have to meet accounting and reporting requirements and limit government liability. The proposed authority would not and could not become a Fannie Mae or
Freddie Mac . It would be owned by and operated for America, not shareholders.

The World Bank, the Inter-American Development Bank, the Asian Development Bank and similar institutions helped debt-burdened developing countries to grow through infrastructure investments and laid the foundations for the global high-tech economy. For instance, they literally laid the infrastructure of the Web through a
fiber-optic link around the globe. Infrastructure banks retrofitted ports to receive and process shipping containers, which made it profitable to manufacture goods overseas. Similar investments anchored energy-intensive microchip fabrication. President Obama has proposed a $30 billion infrastructure bank that, unlike the Senate proposal, would not necessarily sustain itself over time. His proposal is tied to the reauthorization of federal highway transportation money and is not, in my view, as far-reaching or well designed as the Senate proposal.

But he recognizes, as his predecessors did, the importance of infrastructure to national security. For Lincoln, it was the transcontinental railroad; for F.D.R., an industrial platform to support military manufacturing; for Eisenhower, an interstate highway system, originally conceived to ease the transport of munitions. Americas

ability to project strength, to rebuild its battered economy and to advance its values is possible only if we possess modern infrastructure.

Only federal action solves HALLEMAN 11 - Business graduate with analytical and program management experience across a
range of transportation and infrastructure issues; Head of Communications & Media Relations at International Road Federation (Brendan, Establishing a National Infrastructure Bank - examining precedents and potential, October 2011, http://issuu.com/transportgooru/docs/ibank_memo__brenden_halleman)

The merits of establishing a National Infrastructure Bank are once again being debated in the wake of President Obamas speech to a joint session of the 112th United States Congress and the subsequent introduction of the American Jobs
Act 1 . A review of the Jobs Act offers a vivid illustration of how far the debate has moved under the Obama Administration. Earlier White House budgets had proposed allocating USD 4 billion as seed funding to a National Infrastructure Innovation and Finance Fund tasked with supporting individual projects as well as broader activities of significance. Offering grants, loans and long term loan guarantees to eligible projects, the resulting entity would not have constituted an infrastructure bank in the generally accepted sense of the term. Nor would the Fund have been an autonomous entity, making mere investment recommendations to the Secretary of Transportation2 .

Despite a number of important alterations, the Jobs Act contains the key provisions of a bipartisan Senate bill introduced in March 20113 establishing an American Infrastructure Financing Authority (AIFA). Endowed with annual infusions of USD 10 billion (rising to USD 20 billion in the third year), the Authoritys main goal is to facilitate economically viable transportation, energy and water infrastructure projects capable of mobilizing significant levels of State and private sector investment. The Authority thus
established: -supporting entity headed by a Board of Directors requiring Senate confirmation ntees to large scale projects

with anticipated costs in excess of USD 100,000,000

entities -grade rating (BBB-/ Baa3 or higher) environmental benefits t projects, such as tolls or user fees receipts transferred to the Treasury) Particularly striking are the layers of risk assessment contained in the BUILD Act. These translate into a dedicated risk governance structure with the appointment of a Chief Risk Officer and annual external risk audits of AIFAs project portfolio. At project level, applicants are required to provide a preliminary rating opinion letter and, if the loan or loan guarantee is approved, the Authoritys associated fees are modulated to reflect project risk. Lastly, as a Government-owned corporation, AIFA is explicitly held on the Federal balance sheet and is not able to borrow debt in the capital markets in its own name (although it may reoffer part of its loan book into the capital markets, if deemed in the taxpayers interest). Rationale As a percentage of GDP, the United States currently invests 25% less on transportation infrastructure than comparable OECD economies 4 . There is broad agreement that absent a

massive and sustained infusion of capital in infrastructure, the backlog of investment in new and existing transportation
assets will hurt productivity gains and ripple economy-wide5

The establishment of AIFA is predicated on a number of market considerations Dwindling demand for municipal bonds, resulting in significantly decreased capacity to invest at the State and local level. This scenario is confirmed by recent Federal Reserve data 6 indicating a sharp drop in the municipal bond market for the first two quarters of
2011 despite near-identical ten-year yields, a trend that can partly be explained by record-level outflows prior to the winding down of the Build America Bonds program on 31 December 20107 . Considering that roughly 75% of municipal bond proceeds go towards capital spending on infrastructure by states and localities 8 , this shortfall amounts to USD 135 billion for the first six months of 2011 alone.

Insufficient levels of private sector capital flowing in infrastructure investments. Despite the relatively stable cash flows typically generated by infrastructure assets, less than 10% of investment in transportation infrastructure came from capital markets in 2007 8 . By some estimates 9 , the total equity capital available to invest in global infrastructure stands at over USD 202 billion and investor appetite remains strong in 2011.

Federal underwriting may take enough of the risk away for bonds to achieve investment grade rating on complex infrastructure programs, particularly if they protect senior-level equity against first loss positions and offer other creditor-friendly incentives. For instance, the planned bill already includes a
cash sweep provision earmarking excess project revenues to prepaying the principal at no penalty to the obligor. Convincing evidence across economic sectors that Federal credit assistance stretches public dollars further 10 . The Transportation Infrastructure Finance and Innovation Act (TIFIA) already empowers the Department of Transportation to provide credit assistance, such as full-faith-and-credit guarantees as well as fixed rate loans, to qualified surface transportation projects of national and regional significance. It is designed to offer more advantageous terms and fill market gaps by cushioning against revenue risks (such as tolls and user fees) in the ramp up phase of large infrastructure projects. A typical project profile would combine equity investment, investment-grade toll bonds, state gas tax revenues and TIFIA credit assistance to a limit of 33%. TIFIA credit assistance is scored by the Office of Management and Budget at just 10%, representing loan default risk. In theory, a

Federal outlay of just USD 33 million could therefore leverage up to USD 1 billion in infrastructure funding 11 . To date, 21 projects have received USD 7.7 billion in credit
assistance for USD 29.0 billion in estimated total project cost 12.

32 States (and Puerto Rico) currently operate State Infrastructure Banks (SIBs) offering an interesting case study for the American Infrastructure Financing Authority. Moreover the BUILD Act
explicitly authorizes the Authority to loan to political subdivisions and any other instrumentalities of a State, such as the SIBs. SIBs were formally authorized nationwide in 2005 through a provision of the SAFETEA-LU Act 13 to offer preferential credit assistance to eligible and economically viable surface transportation capital projects. A provision of the Act also authorizes multistate Banks, although such cooperative arrangements

have yet to be established. SIBs operate primarily as revolving loan funds using initial capitalization (Federal and state matching funds) and ongoing funding (generally a portion of state-levied taxes) to provide subordinated loans whose repayments are recycled into new projects loans. Where bonds are issued by SIBs as collateral to leverage even greater investment capacity, these can be secured by user revenues, general State revenues or backed against a portion of federal highway revenues. As of December 2010, State Infrastructure Banks had entered into 712 loan agreements with a total value of over USD 6.5 billion12. While SAFETEA-LU provided a basic framework for establishing SIBs, each State has tailored the size, structure and focus of its Bank to meet specific policy objectives. The following table14 illustrates the scales of SIBS at the opposite end of the spectrum. These State-driven arrangements warrant a number of observations: The more active SIB States are those that have increased the initial capitalization of their banks through a combination of bonds and sustained State funding. South Carolinas Transportation Infrastructure Bank receives annual amounts provided by State law that include truck registration fees, vehicle registration fees, one-cent of gas tax equivalent, and a portion of the electric power tax. Significantly, all SIBs have benefited from the ability to recycle loan repayments including interest and fees into new infrastructure projects, a facility currently not available to the American Infrastructure Financing Authority under the terms of the BUILD Act. More than 87 percent of all loans from such banks made through 2008 were concentrated in just five States: South Carolina, Arizona, Florida, Texas and Ohio 14 . As a case in point, South Carolinas Transportation Infrastructure Bank has provided more financial assistance for transportation projects than the other 32 banks combined. Most State banks have issued fewer than ten loans, the vast majority of which fall in the USD 1-10 million size bracket 14 .

This suggests that not all States presently have experience, or the ability , to deal with capital markets for large-scale funding. States are, by and large, left to define specific selection criteria for meritorious projects, the SIBs share of the
project as well as the loan fee it will charge. Kansas, Ohio, Georgia, Florida and Virginia have established SIBs without Federal-aid money and are therefore not bound by the same Federal regulations as other banks. Californias Infrastructure and Economic Development Bank extends the scope of eligible projects to include water supply, flood control measures, as well as educational facilities. While adapted to local circumstances,

this patchwork of State regulations can also constitute an entry barrier for private equity partners and multistate arrangements. Given the structure of their tax base, SIBs are vulnerable to short term economy swings as well as the longer term inadequacy of current user-based funding mechanisms. SIBs borrow against future State and highway income. Many States are already reporting declining gas tax revenues and, on current projections, the Highway Trust Fund will see a cumulative funding gap of USD 115 billion between 2011 and 2021 18 . It is notable that Arizonas Highway Extension and Expansion Loan Program is currently no longer taking applications citing state budget issues.

Federal action key to ensure cooperation and resources for the plan Ryan McConaghy, Director of the Third Way Economic Program, and Jim Kessler, Vice President for Policy at Third Way, January 2011, A National Infrastructure Bank,
http://www.bernardlschwartz.com/political-initiatives/Third_Way_Idea_Brief__A_National_Infrastructure_Bank-1.pdf Americas economic future will hinge on how fast and well we move people, goods, power, and ideas. Today, our infrastructure is far from meeting the challenge. Upgrading our existing infrastructure and building new conduits to generate commerce will put people to work quickly in long-term jobs and will create robust growth. Funding for new infrastructure will be a crucial investment with substantial future benefits, but the current way that Congress doles out infrastructure financing is too political and wasteful. A National Infrastructure Bank will provide a new way to harness public and private capital to bridge the infrastructure gap, create jobs, and ensure a successful and secure future. THE PROBLEM Americas investment in infrastructure is not sufficient to spur robust growth. In October, Governor Chris Christie announced his intention to terminate New Jerseys participation in the Access to the Regions Core (ARC) Tunnel project, citing cost overruns that threatened to add anywhere from $2-$5 billion to the tunnels almost $9 billion price tag. At the time, Christie stated, Considering the unprecedented fiscal and economic climate our State is facing, it is completely unthinkable to borrow more money and leave taxpayers responsible for billions in cost overruns. The ARC project costs far more than New Jersey taxpayers can afford and the only prudent move is to end this project.1 Despite the fact that the project is absolutely necessary for future economic growth in the New Jersey-New York region and would have created thousands of jobs, it was held captive to significant cost escalation, barriers to cooperation between local, state, and federal actors, and just plain politics. Sadly, these factors are increasingly endemic in the execution of major infrastructure projects . Americas infrastructure has fallen into a state of disrepair, and will be insufficient to meet future demands and foster competitive growth without significant new investment . However, the public is fed up with massive deficits and cost overruns, and increasingly consider deficit reduction to be a bigger economic priority than infrastructure investment.2 They have lost confidence in governments ability to choose infrastructure projects wisely, complete them, and bring them in on budget. At the same time, traditional sources of funding are strained to the breaking

point and federal support is hindered by an inefficient process for selecting projects. Finding the resources necessary to construct new infrastructure will be also be a significant challenge. A new of way of choosing and funding infrastructure projects from roads, bridges, airports, rail, and seaports to broadband and power transmission upgradesis necessary to ensure growth and create jobs in America. Americas infrastructure isnt ready to meet future growth needs. The safety risks and economic costs associated with the deterioration of Americas infrastructure are increasingly apparent across multiple sectors. The American Society of Civil Engineers has awarded the nations overall infrastructure a grade of D.3 Since 1990, demand for electricity has increased by about 25% but construction of new transmission has decreased by 30%.4 Over about the last 25 years, the number of miles traveled by cars and trucks approximately doubled but Americas highway lane miles increased by only 4.4%.5 Over 25% of Americas bridges are de!cient6 and about 25% of its bus and rail assets are in marginal or poor condition.7 Americas broadband penetration rate ranks only 14th among OECD countries.8 As Americas population and economic activity increases, the stress on its infrastructure will only grow. The number of trucks operating daily on each mile of the Interstate Highway system is expected to jump from 10,500 to 22,700 by 2035,9 while freight volumes will have increased by 70% over 1998 levels.10 It is also expected that transit ridership will double by 2030 and that the number of commercial air passengers will increase by 36% from 2006 to 2015.11 Total electricity use is projected to increase by 1148 billion kWh from 2008 to 2035.12 In order to cope, Americas infrastructure will need a significant upgrade. Americas infrastructure deficit hurts its competitiveness and is a drain on the economy. Americas infrastructure gap poses a serious threat to our prosperity. In 2009, the amount of waste due to congestion equaled 4.8 billion hours (equivalent to 10 weeks worth of relaxation time for the average American) and 3.9 billion gallons of gasoline, costing $115 billion in lost fuel and productivity.13 Highway bottlenecks are estimated to cost freight trucks about $8 billion in economic costs per year,14 and in 2006, total logistics costs for American businesses increased to 10% of GDP.15 Flight delays cost Americans $9 billion in lost productivity each year,16 and power disruptions caused by an overloaded electrical grid cost between $25 billion and $180 billion annually.17 These losses sap wealth from our economy and drain resources that could otherwise fuel recovery and growth. The infrastructure gap also hinders Americas global competitiveness. Logistics costs for American business are on the rise, but similar costs in countries like Germany, Spain, and France are set to decrease.18 And while Americas infrastructure spending struggles to keep pace,19 several main global competitors are poised to make significant infrastructure enhancements. China leads the world with a projected $9 trillion in infrastructure investments slated for the next ten years, followed by India, Russia, and Brazil.20 In a recent survey, 90% of business executives around the world indicated that the quality and availability of infrastructure plays a key role in determining where they do business.21 If America is going to remain on strong economic footing compared to its competitors, it must address its infrastructure challenges. There are too many cost overruns and unnecessary projectsbut not enough funds. Cost overruns on infrastructure projects are increasingly prevalent and exact real costs. One survey of projects around the world found that costs were underestimated for almost 90% of projects, and that cost escalation on transportation projects in North America was almost 25%.22 Bostons Central Artery/Tunnel Project (a.k.a. the Big Dig) came in 275% over budget, adding $11 billion to the cost of the project. The construction of the Denver International Airport cost 200% more than anticipated. The San FranciscoOakland Bay Bridge retrofit project witnessed overruns of $2.5 billionmore than 100% of the original project cost before construction even got underway.23 And of course, there are the bridge to nowhere earmarks that solve a political need, but not an economic one. The current system for funding projects is subject to inefficiency and bureaucratic complication. Funding for infrastructure improvements is divided unevenly among federal, state, local, and private actors based on sector.24 Even in instances where the federal government provides funding, it has often ceded or delegated project selection and oversight responsibilities to state, local, and other recipients, weakening linkages to federal program goals and efforts to ensure accountability .25 Federal efforts are also hampered by organization and funding allocations based strictly on specific types of transportation, as opposed

to a system-wide approach , which create inefficiencies that hinder collaboration and effective investment.26 Complicating matters even further are the emergence of multi-state megaregions, which have common needs that require multijurisdictional planning and decision making ability .27 Infrastructure funding has also become significantly politicized. Congressional earmarking in multi-year transportation bills has skyrocketed from 10 projects in the STAA of 1982 to over 6,300 projects in the most recent bill (SAFETEA-LU).28 Even under a working system, the infrastructure improvements necessary to foster growth will require substantial investment. The American Society of Civil Engineers estimates that it would require $2.2 trillion over the next five years to bring our overall infrastructure up to par.29 However, sources of funding for infrastructure improvements are under significant strain and may not be sufficient.30 The Highway Trust Fund has already experienced serious solvency challenges, and inadequate revenues could lead to a $400 billion funding shortfall from 2010 to 2015.31 The finances of state and local governments, which are responsible for almost three-quarters of public infrastructure spending,32 have been severely impaired . At least 46 states have budget shortfalls in the current fiscal year, and it is likely that state financial woes will continue in the near future.33 In a recent survey by the National Association of Counties, 47% of respondents indicated more severe budget shortfalls than anticipated, 82% said that shortfalls will continue into the next year, and 54% reported delaying capital investments to cope.34 THE SOLUTION A National Infrastructure Bank In order to provide innovative, merit-based financing to meet Americas emerging infrastructure needs, Third Way supports the creation of a National Infrastructure Bank (NIB). The NIB would be a stand-alone entity capitalized with federal funds , and would be able to use those funds through loans, guarantees, and other financial tools to leverage private financing for projects. As such, the NIB would be poised to seize the opportunity presented by historically low borrowing costs in order to generate the greatest benefit for the lowest taxpayer cost. Projects would be selected by the banks independent, bipartisan leadership based on merit and demonstrated need. Evaluation criteria may include economic benefit, job creation, energy independence, congestion relief, regional benefit, and other public good considerations. Potential sectors for investment could include the full range or any combination of rail, road, transit, ports, dams, air travel, clean water, power grid, broadband, and others. The NIB will reform the system to cut waste, and emphasize merit and need. As a bank, the NIB would inject accountability into the infrastructure investment process. Since the bank would offer loans and loan guarantees using a combination of public and private capital, it would have the opportunity to move away from the traditional design-bid-build model and toward project delivery mechanisms that would deliver better value to taxpayers and investors.35 By operating on principles more closely tied to return on investment and financial discipline, the NIB would help to prevent the types cost escalation and project delays that have foiled the ARC Tunnel. Americas infrastructure policy has been significantly hampered by the lack of a national strategy rooted in clear, overarching objectives used to evaluate the merit of specific projects. The politicization and lack of coordination of the process has weakened public faith in the ability of government to effectively meet infrastructure challenges. In polling, 94% of respondents expressed concern about Americas infrastructure and over 80% supported increased federal and state investment. However, 61% indicated that improved accountability should be the top policy goal and only 22% felt that the federal government was effective in addressing infrastructure challenges.36 As a stand-alone entity, the NIB would address these concerns by selecting projects for funding across sectors based on broadly demonstrated need and ability to meet defined policy goals, such as economic benefit, energy independence, improved health and safety, efficiency, and return on investment.The NIB will create jobs and support competitiveness. By providing a new and innovative mechanism for project financing, the NIB could help provide funding for projects stalled by monetary constraints. This is particularly true for large scale projects that may be too complicated or costly for traditional means of financing. In the short-term, providing resources for infrastructure investment

would have clear, positive impacts for recovery and growth. It has been estimated that every $1 billion in highway investment supports 30,000 jobs,37 and that every dollar invested in infrastructure increases GDP by $1.59.38 It has also been projected that an investment of $10 billion into both broadband and smart grid infrastructure would create 737,000 jobs.39 In the longer-term, infrastructure investments supported by the NIB will allow the U.S. to meet future demand, reduce the waste currently built into the system, and keep pace with competition from global rivals. The NIB will harness private capital to help government pay for new projects. The NIB would magnify the impact of federal funds by leveraging them through partnerships with private entities and other actors, providing taxpayers with more infrastructure bang for their public buck. Estimates have placed the amount of private capital readily available for infrastructure development at $400 billion,40 and as of 2007, sovereign wealth fundsanother potential source of capitalwere estimated to control over $3 trillion in assets with the potential to control $12 trillion by 2012.41 While these and other institutional funds have experienced declines as a result of the economic downturn, they will continue to be important sources of large, long-term investment resources. By offering loan guarantees to induce larger private investments or issuing debt instruments and securities, the NIB could tap these vast pools of private capital to generate investments much larger than its initial capitalization . In doing so, it could also lower the cost of borrowing for municipalities by lowering interest on municipal bonds for state and local governments by 50 to 100 basis points.42 The NIB would also be poised to help taxpayers take full advantage of historically low borrowing costs. In 2010, the yield on 10-year U.S. Treasuries reached a historic low of 3.22%, as compared to a rate of 6.03% in 2000 and a peak rate of 13.92% in 1981. Prior to the Great Recession, this rate had not dipped below 4% since 1962.43 By allowing government and private actors to access financing at historically low rates, the NIB would help to capitalize on a once-in-a-lifetime window to make enduring infrastructure investments.

Deficits are inevitable but infrastructure financing now is feasible and provides short and long term growth William L. Holahan, is a professor of economics at the University of Wisconsin at Milwaukee, and Charles O. Kroncke, is associate dean in the University of South Florida College of Business, 06-132012, :On U.S. infrastructure, spend now, gain later, http://www.tampabay.com/opinion/columns/on-usinfrastructure-spend-now-gain-later/1234943 When the American Society of Civil Engineers issued a report card giving D and F grades for major infrastructure assets in the United States, the group estimated that it would cost $2.2 trillion to rehabilitate them. Even though these public sector assets support the private sector of the economy, and despite the availability of cheap money, Congress has no current plans to remedy this situation. Its reluctance to support investment in infrastructure is unfortunate because this is an opportune time to earn a better report card; presently, we can borrow at very low interest rates to upgrade our streets, roads, bridges, railroads, school buildings, Internet bandwidth and K-12 education. We have earned the trust of foreign investors, who value the safety of our financial markets and seek to loan us money through their purchases of U.S. Treasury bonds. In the short run, infrastructure investment would stimulate business growth and employ otherwise unemployed resources of labor and equipment. In the longer run, when these assets are in good working order, they would support faster growth of the economy, a prerequisite for bringing down the national debt and putting workers back on the path to higher after-tax incomes. What are we waiting for? Congressional inaction reflects the public concern over "runaway spending" and the rapid rise in the debt over the past 30 years, and especially the last five. Much of this concern rests on the falsely imagined equivalence of all government spending. But consumption spending and investment spending play very different roles in the economy, whether done by a firm, a family or the government. Our national debate should pivot from a

narrow focus on debt alone to one that separates investment from consumption, that is, whether the borrowed money is spent in ways that repayment can be expected through increased future productivity. Carefully chosen infrastructure spending is an investment that pays for itself in greater economic growth; in fact, failure to make these investments can retard growth. Infrastructure investment spending is more likely to be accepted by struggling taxpayers than increased consumption spending on safety net programs such as food stamps or extended unemployment insurance, however dire the need for such programs may be. Seriously? More debt? How often have we heard that the size of our current national debt some $15 trillion prevents us from borrowing more money? Even with interest rates this low and opportunities so beneficial, the resistance to further borrowing is quite strong. The false and misleading claim is that we have already "mortgaged the future" and we "don't have the money." These slogans reflect a key concern: the ability to repay the debt. The usual measure of the ability to repay debt is the ratio of debt to gross domestic product. Since infrastructure assets have very long lives, this measure should be calculated over a long time horizon. The public debt is projected to grow to $70 trillion over the next 75 years. If we experience 2 percent economic growth, national income over this period will total $2.46 quadrillion. The resulting ratio would be a mere 2.84 percent, demonstrating that as a nation, we are in a position to make cost-beneficial, growth-enhancing investments. Some additional arithmetic makes this point more forcefully. Suppose the infrastructure investments enable the economy to grow just one-tenth of one percent faster (2.1 percent versus 2.0 percent). Due to the power of compound interest, the added GDP over those 75 years is $116 trillion. Yes, the projected national debt is large, much larger than this year's GDP. But arithmetic also shows that failure to invest in growth will deny future generations the enormous gains available from even tiny improvements in economic growth rates.

An NIB avoids the normal governmental deadlock only way to fully solve Social Science Research Center, 2011, Rethinking: A 21st Century Government: Public-Private
partnerships and the National Infrastructure Bank (http://www.ssrc.org/workspace/images/crm/new_publication_3/%7B2c5cfcc9-6b9e-e011-bd4e001cc477ec84%7D.pdf) America is at a standstill. Federal, state, and local governments are facing overburdened public balance sheets while enormous sums sit in limbo in pension funds and in the accounts of what the McKinsey Global Institute has called the new global power brokers: Asian sovereign funds, petrodollar accounts, private equity funds, and hedge funds.1 It is why President Obama posed this question to his Economic Recovery Advisory Board in 2009: Obviously were entering into an era of greater fiscal restraint as we move out of deep recession into a recovery. And the question Ive had is people still got a lot of capital on the sidelines there that are looking for a good return. Is there a way to channel that private capital into partnering with the public sector to get some of this infrastructure built?2 Unless we can shepherd this money into our productive economy, the country will have to forego much-needed projects for lack of financing. Public-private partnerships involve federal agencies coinvesting alongside state and local governments, private firms, and nonprofits. Having partnerships within a governments toolbox not only brings a sizable new source of capital into the market, it also allows public officials to match assets with the most appropriate and cost-effective means of financing.

We control consensus infrastructure investment causes recovery to help the middle class Matt Sledge, 07/27/11 [Deteriorating Transportation Infrastructure Could Cost America $3.1 Trillion,
The Huffington post, http://www.huffingtonpost.com/2011/07/27/transportation-infrastructurecost_n_911207.html, accessed 4/2/2012]//sbhags Underscoring the wider appeal of ASCE's argument, the report received the backing of both labor and business leaders. "Todays report from the American Society of Civil Engineers further reinforces that the U.S. is missing a huge opportunity to ignite economic growth, improve our global competitiveness, and create jobs," Tom Donohue, president and CEO of the U.S. Chamber of Commerce, said in a release. Richard Trumka, the AFL-CIO president, said in a release that "with a modest increase in investment, we can rebuild a strong economy where business can thrive and workers can afford a place to live, raise a family, take an occasional vacation, pay for their childrens education and have a dignified retirement."