Mica's Love-Hate Relationship with Infrastructure Finance
Wednesday, September 14, 2011 - 09:54 AM
It was only minutes after President Barack Obama delivered his jobs speech to a joint session of Congress last Thursday night that House Transportation and Infrastructure Chair John Mica (R-Fla) was dismissing outright one of the President’s main proposals. “I’m strongly opposed to any type of a new federal infrastructure bank,” Mica told Todd Zwillich after the speech. “We’ve already had experience with some of these federal grant programs that requires Washington bureaucrats, Washington red tape, Washington approvals and then bowing and scraping to Washington.”
There are many kinds of potential infrastructure banks, of course, and indeed some lawmakers—including Mica’s Democratic predecessor, James Oberstar—imagined a bank as the grant-making group of technocrats Mica abhors. Others, however, have suggested that a federal infrastructure bank should act... well, something like a bank: It should loan money independently of politics with revenue generation in mind.
In his speech last Thursday, Obama telegraphed a few clues that he was imagining the latter type (my italics for emphasis): “No more earmarks. No more boondoggles. No more bridges to nowhere. We’re cutting the red tape that prevents some of these projects from getting started as quickly as possible. And we’ll set up an independent fund to attract private dollars and issue loans based on two criteria: how badly a construction project is needed and how much good it will do for the economy.”
The President went on to say that, “This idea came from a bill written by a Texas Republican and a Massachusetts Democrat,” a reference to the Building and Upgrading Infrastructure for Long-Term Development, or BUILD Act, sponsored by Senators John Kerry and Kay Bailey Hutchison. Since revealed, the infrastructure bank provision of the American Jobs Act is almost a cut-and-paste from the BUILD Act. Both would create an “American Infrastructure Financing Authority” that would “provide direct loans and loan guarantees to facilitate infrastructure projects that are both economically viable and of regional or national significance” and are backed by “tolls, user fees, or other dedicated revenue sources.”
Again, Chairman Mica opposes this. What does he support? The expansion of a program called TIFIA, which stands for the Transportation Infrastructure Finance and Innovation Act. And what does TIFIA provide? Direct loans, loan guarantees and standby lines of credit "for qualified projects of regional and national significance" "with tolls and other forms of user-backed revenue."
By now you've noticed that the Kerry-Hutchison infrastructure bank (which Mica opposes) bears a striking resemblance to the already-popular TIFIA program (which Mica supports). But there are some differences:
- The program that Mica supports helps the public and private sectors build transportation infrastructure, while the program Mica strongly opposes would help these same sectors build transportation, water, or energy infrastructure.
- The mechanism that Mica supports can loan up to 33 percent of an eligible project’s total costs, while the mechanism Mica opposes can loan up to 50 percent.
- Mica’s reauthorization proposal (pdf) from July set aside $6 billion to the program that Mica supports, while Obama and Kerry and Hutchison want to set aside $10 billion for the program that Mica opposes.
- The program that Mica opposes because it would be run by “Washington bureaucrats” would in fact be run by a revolving group of seven people appointed by the president and confirmed by the Senate, no more than four of whom could be from the same political party; the program that Mica supports is run entirely by executive branch bureaucrats working under the Secretary of Transportation.
Which of these key differences between the infrastructure bank and TIFIA causes Chairman Mica to hate one and love the other? Mica spokesperson Justin Harclerode acknowledged this was a good question, but could only re-emphasize the contrast in positions without explaining it. “You’re right that Chairman Mica supports TIFIA. We know that TIFIA works, and he plans to capitalize TIFIA more than in the past,” he emailed. “There have been various [infrastructure bank] proposals, but we just don’t believe that creating another government-sponsored enterprise like Fannie or Freddie is the way to go.”
Meanwhile, are there other TIFIA lovers out there who are infrastructure bank haters? Are we missing something? I’m looking for wonky insight. Don't tell me this is just partisan posturing!