Lawmakers Try Again on Infrastructure Bank
Tuesday, March 15, 2011 - 05:47 PM
That seems to be the philosophy behind a new congressional push to establish a government-owned "infrastructure bank" to help fund America's ailing water and transportation systems.
A bipartisan group of lawmakers--backed by unions and business groups--is pushing the idea as a way to pay for projects without dipping into the Treasury at a time when Washington is allergic to spending.
"We've got to be creative," said Sen. Kay Bailey Hutchison (R-TX), who is behind the effort with Sen. John Kerry (D-MA) and Sen. John Warner (D-VA). They see the bank as a way to help fill the yawning gap between what the nation's aging infrastructure needs and what Congress and the public seem willing to pay. (You can watch a video of today's press conference here.)
Lawmakers are proposing a federally-owned but independently-run bank empowered to issue loans and loan guarantees to public-private partnership infrastructure projects with revenue potential. The bank itself would be nonprofit, issue no stock, and fall under the control of no federal agency. Kerry hit all these points hard as he strove to differentiate the bank from the now-maligned Fannie Mae and Freddie Mac publicly-chartered housing loan corporations.
Kerry and his allies seem well-attuned to the anti-spending political climate gripping the Capitol. They're pushing the bank as a way to fund billions in transportation and water projects by leveraging private investment with federal loans and loan guarantees. Even the relatively modest $10 billion in federal seed money would come from existing funds, not new spending.
"It will not be appropriated money because we do not have that money today," Kerry told reporters. The seemingly-modest $10 billion figure represents "what we think we can pass," he said.
Still, supporters predict that relatively modest $10 billion in public money can leverage more than $600 billion in project investments over the next decade.
The idea has been tried before. Several variants on the infrastructure bank idea were floated in 2007, right around the time of the I-35 bridge collapse in Minneapolis. "It's been talked about in policy circles for probably 20 years," Robert Puentes, senior fellow at the Brookings Institution's Metropolitan Policy Project, said in an interview.
This time, lawmakers are steering clear of anything that smacks of new government spending. The bank would issue no grants, only loans and guarantees. And as a bank, it would limit itself to projects that can bring money in, like toll roads, development plans and freight lines.
Kerry pitched the idea as a way around the "partisan paralysis" that has crippled cross-party consensus on the need to fund infrastructure projects. The optics of his press conference seem to reflect that.
Lawmakers flanked themselves with AFL-CIO president Richard Trumka and Tom Donahue, president of the US Chamber of Commerce. Both organizations back expanded infrastructure projects as a job-friendly, business-friendly strategy for economic growth.
"It'll put people back to work," Trumka said.
And, in a sign of apparent truce, both Donahue and Trumka indicated they would not push a fight over the Davis-Bacon Act, the federal rules requiring workers on federal projects earn the prevailing local wage. "Existing law," Kerry said, when asked about the chances for a wage fight under the bank's operating rules.
Kerry said he's floated his version of the bank to White House officials and that they were supportive. The Obama Administration has backed $53 billion in new federal infrastructure spending -- but has also backed infrastructure banks in its last three budget proposals.
The proposal is likely headed for this spring's expected debate over a congressional budget resolution. Puentes, of Brookings, said the emphasis on no new spending, plus strong backing from business and labor, could be the best chance for the proposal in austere times.
"I think they're starting to frame infrastructure in the right way," he said.