I think this is a sound proposal and relates to various work I have been doing.  One thing was a study on subways which showed that government intervention actually improved the  productivity of the production process; it helped to promote designs to meet the needs of the government purchaser and user.  In the economic reconstruction network, we now are investigating the future of such networks in promoting subway production.

I would also extend the network to include ties between the U.S. and sympathetic allies in Latin America, Europe and elsewhere.  I have called this the creation of a "shadow state."

I would note that this idea predates Clinton and its most sophisticated expression was given by the philosopher Peter Kropotkin, from whom I quote at length:

"The communes of the next revolution will not only break down the state and substitute free federation  for parliamentary rule; they will trust the free organization of food supply and production to free groups of workers...which will federate with like groups in other cities and villages not through the medium of a communal parliament but directly, to accomplish their aim."

Given the libertarian and conservative critique of the state, one should consider first-- how the state can actually promote productivity and second -- how accountability structures and governance could be decentalized more locally, to the local state as Rynn also argues.

References

Jonathan M. Feldman, "The Conversion of Defense Engineers' Skills: Explaining Success and Failure Through Customer-Based Learning, Teaming and Managerial Integration." Chapter 18 in The Defense Industry in the Post-Cold War Era: Corporate Strategy and Public Policy Perspectives, Gerald I. Susman and Sean O'Keefe, eds. Oxford: Elsevier Science, 1998.

Jonathan Feldman, "From Warfare State to `Shadow State': Militarism, Economic Depletion and Reconstruction," Social Text, 91, Volume 25, Number 22 Summer, 2007.

P. A. Kropotkin, Selected Writings on Anarchism and Revolution, Cambridge, The MIT Press, 1970.