When I say “national infrastructure bank”, ma'am, I never mean Goldman Sachs or Morgan Stanley. The fault in our own country has been what are called P3s, the public-private partnerships. The cost of capital on the private side is usurious for the user community. Notably in the state of Pennsylvania, where great efforts were made to upgrade infrastructure, we ended up with roads and bridges that became unaffordable to the middle class because of the user fees.
We had to find three things happening concurrently. We had to believe that the decision would be made professionally and in a non-partisan fashion. I had the privilege of meeting the chairman at the National Governors Association. The governors are the stewards and fiduciaries of infrastructure, not our Congress. It's our mayors and governors. In our particular case, they want to know that all 50 governors have an equal opportunity to see their projects prioritized and funded.
The second objective was to make it very large, which is why block grants have historically been just whistling in the wind, so to speak. Even in what we call President Obama's “stim” package, his stimulus package after the crisis of 2007-08, he received $25 billion for his infrastructure bank, which was nothing but a block grant to the Department of Transportation. Our need—and you have a relatively similarly large number—is $1.5 trillion. If you don't do something approximating that, in my opinion, don't do it; wait for a better day.
The third thing is to make sure that the rate is affordable to the ultimate user. We, very proudly, have tremendous fiduciary organizations, as does Canada. If you talk to your colleagues on that side of this economy, a 2% to 3% return on their fixed-income portfolios with a high certainty of repayment is more than satisfactory. It would never satisfy Goldman Sachs. Indeed, in the White House today, we have a new adviser to our recently elected President, who comes from Goldman Sachs and is suggesting rates of return from the bank of 10% to 11%. That would crush the middle class and every user.
We have travelled for years among the fiduciary community asking what it would take to get them to commit in a very large way to the bank that we're suggesting. We've been to Kuwait, Norway, Japan, and to our large state fiduciaries, and the answer is that there would have to be some degree of federal support. Where it got particularly clever is that we then added a fourth aspect to the equation. The guarantee will never be drawn. The default rate on public infrastructure projects of the sort we're talking about, such as surface transportation, airports, and especially broadband, Mr. Chairman, is around 1% if fairly priced. The guarantee will never be “scored” in our system. I would suggest, from what little I know of your rules and behaviours, it won't be scored here either. It will be scored if ever drawn.
There was no way, coming out of the election, whether it had been Senator Sanders, Senator Clinton, or Mr. Trump, that anybody in our Congress was going to give them a trillion plus dollars. It's inconceivable. Even $40 billion would be a stretch. Our commercial banks have said that we should come their way. My answer to that is, “No way am I coming your way.” We've spent several years, as I've said, trying to find an alternative. Collectively, that is the alternative, and I think it works particularly well here. The reason I'm comfortable saying so is that it works similarly well in Germany.