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Posts from the "National Infrastructure Bank" Category

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Will New Infrastructure Funding Survive the Demise of Obama’s Jobs Bill?

Tuesday night, the Senate blocked a vote on the president’s jobs plan. As had been forecast, Republicans voted unanimously against the plan, and they weren’t alone: Two Democrats joined them – Sens. Jon Tester of Montana and Ben Nelson of Nebraska. Now it’s on to Plan B, which involves breaking up the bill into pieces to be voted on separately.

Sen. Schumer's plan to salvage the jobs bill wouldn't resuscitate plans for $50 billion in transportation spending. Photo: AP

New York Sen. Chuck Schumer has proposed narrowing the bill down to two parts – one favored by Democrats, the other by Republicans. Under the plan, an infrastructure bank would be created in the model endorsed by the president and the Kerry-Hutchison BUILD Act. In exchange, there would be a tax holiday for corporations to bring back to the U.S. profits they made overseas.

Obama’s bill had also called for a $50 billion investment in transportation infrastructure, and that appears to be dead as the Senate pursues Schumer’s plan. The House had dismissed the transportation component long ago, with Republican leadership saying they might hold a vote on the pieces of the bill that appeal to them (surprise — stimulus spending isn’t one of them). Meanwhile, some insiders say that Republicans in the House are getting serious about passing a transportation reauthorization before March 31 so that they can show that they, too, are serious about job creation.

Of course, the path they seem to be setting out on involves paying for a higher level of transportation spending with oil drilling, a proposal that’s sure to run up against massive Democratic opposition and possibly even a presidential veto.

And many think that not much is going to happen on any of this until the super committee comes back with its proposals for deficit reduction before Thanksgiving.

Back to the Schumer jobs plan: We’ve written a lot, and will be writing more, about the pros and cons of an infrastructure bank. But what about this idea of repatriating overseas profits?

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Does the Elusive Infrastructure Bank Already Exist?

Last week, three Washington heavy-hitters brought a new contribution to the debate over a national infrastructure bank: They said we already have one.

Mark Alderman of the Obama-Biden transition team, former U.S. Senator Evan Bayh, and Howard Schweitzer, former vice president of the Export-Import Bank co-wrote an op-ed for the Washington Post saying that the Export-Import Bank was already authorized and organized to do exactly what an infrastructure bank is supposed to do:

Is this what you had in mind, I-bank proponents? It's the Export-Import Bank -- but some experts believe it could serve the same function as a national infrastructure bank. Photo: GSA

Many of those pushing for an infrastructure bank say that public-private partnerships are part of the solution. This basic concept combines private capital with some form of public support to finance large projects. That is the Export-Import Bank’s bread and butter. Put another way, the United States already has a bank that knows how to balance investor return with lender (i.e., taxpayer) protection — often a major stumbling block to public-private deals.

They go on to say, “A newly expanded Export-Import Bank could facilitate private-sector investment in projects such as repairing roads and bridges, modernizing the energy grid, and maintaining our dams and levees — creating jobs while rebuilding the country.”

It’s a compelling argument, especially in the face of skepticism about creating a new quasi-government entity, especially in a political environment suspicious of Big Government. Some fear an I-bank will be too much like Fannie Mae and Freddie Mac; some would rather just stick with the TIFIA loan program; others want to encourage state infrastructure banks instead of a big national one. If making a few tweaks to an existing structure could yield the same benefits as a national infrastructure bank, isn’t that easier?

The Ex-Im bank has a similar financial model to the Kerry-Hutchison I-bank proposal (which the president has adopted) and a similar governing structure – an independent, though government-owned, corporation. Even better, the Ex-Im Bank makes money for the U.S., depositing money into the Treasury, not taking it.

“The Ex-Im bank already has some of that staff in place and an established history of success, fiscal responsibility, and a low risk to taxpayers,” said bank expert Scott Thomasson of the Progressive Policy Institute. “And there actually is a window to expand the mandate of the Ex-Im Bank if there is political support to do that.”

There’s not a lot of interest on Capitol Hill yet about this idea, but it could become the compromise that saves the whole I-bank concept. For now, some say, politicians that have been on the forefront of the bank idea would rather stick with their own idea (which they can then take credit for).

Rep. Rosa Delauro (D-CT) has been the primary Congressional champion of an infrastructure bank for the past 17 years. At an event yesterday sponsored by PPI, Delauro admitted that while the Ex-Im Bank was an interesting model, “Yes, I am wedded to an infrastructure bank.”

Sen. Mark Warner, an original cosponsor of the Kerry-Hutchison BUILD Act, gave a similarly cautious welcome to the Ex-Im Bank proposal. “I’ve not given that enough thought, but I think it’s something that ought to be examined,” he said yesterday. He did say that he and his cohorts have always thought of the Ex-Im Bank as a far closer model for the infrastructure bank than Fannie and Freddie.

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Cantor Orders Up Tax Cuts, Hold the Jobs

Congressional insiders say that House Majority Leader Eric Cantor is refusing to hold an ”all or nothing” vote on President Obama’s jobs bill. Cantor says he’ll bring “elements” of the bill to the floor but not the whole bill.

Eric Cantor still thinks tax cuts create more jobs than, you know, job creation. Photo: Chip Somodevilla/Getty Images

It’s pretty clear which elements Cantor approves of. He expressed his preferences soon after the president unveiled his $447 billion job-creation proposal, which includes $50 billion for infrastructure investment — something Obama’s been pushing for (though not always pushing very hard) since Labor Day of last year.

“Over half, I think, of the total dollar amount is so-called stimulus spending,” Cantor told reporter Brian Beutler soon after Obama announced his jobs plan. “We’ve been there, done that. The country cannot afford more spending like the stimulus bill.”

The Washington Monthly’s Steve Benen responded:

A little more than half of the American Jobs Act is made up of tax cuts. Cantor, at least today, didn’t reflexively rule out these provisions.

Instead, what Cantor disapproves of are the parts of the proposal most likely to create jobs — infrastructure investments, job training, unemployment aid, and assistance to states to prevent public-sector layoffs. It’s as if the oft-confused Majority Leader looked at the plan, found the measures that would have the great[est] impact to improve the economy, and immediately rejected them.

A Republican version of the jobs bill would almost certainly eliminate the infrastructure bank, which Obama proposed as part of the jobs bill. House Transportation Committee Chair John Mica immediately repudiated this idea, saying, “Unfortunately, a National Infrastructure Bank run by Washington bureaucrats requiring Washington approval and Washington red tape is moving in the wrong direction.” He preferred his own plan of encouraging states to set up their own banks.

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Obama: “I Will Veto Any Bill” Without Tax Increases on the Wealthy

In a Rose Garden speech this morning, President Obama soundly rejected Republicans’ push to address the deficit exclusively through spending cuts with no tax increases. He was responding to House Speaker John Boehner, who said last week that tax increases were “off the table.” The outcome of the current deficit-cutting fight could have significant implications for transportation-related proposals like the national infrastructure bank, which Obama included in his recently-unveiled American Jobs Act.

President Obama said he won't accept spending cuts without tax increases. Photo: Chip Somodevilla/Getty Images

In a speech last Thursday, Boehner ruled out any form of tax increase as the deficit reduction “super committee” decides how to meet its mandate. “When it comes to producing savings to reach its $1.5 trillion deficit reduction target, the Joint Select Committee has only one option,” he said, “spending cuts and entitlement reform.”

President Obama went to the mat this morning for a different approach to cutting the deficit. He presented his own plan, which includes some spending cuts and policy changes to Medicare and Medicaid, in addition to other programs. But the centerpiece is the elimination of corporate tax loopholes and of tax cuts for the wealthy.

“I will veto any bill that changes benefits for those who rely on Medicare but does not raise serious revenues by asking the wealthiest Americans or biggest corporations to pay their fair share,” Obama said. “We are not going to have a one-sided deal that hurts the folks that are most vulnerable.”

There are many plans on the table right now, both to increase spending and to cut it. The president released his deficit reduction plan, in part, to explain how to pay for his job creation bill, which includes $50 billion for transportation infrastructure and $10 to capitalize a national infrastructure bank.

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Politico Reporter Tweets That Senate Will Take Up Infrastructure Bank Bill

More information when we get it.

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Obama Includes Infra Bank in His Jobs Push; Mica Rejects It Out of Hand

Last night, President Obama addressed a joint session of Congress to present his new jobs plan, a bill he’s calling the American Jobs Act. He relied on the well-worn appeal to people’s patriotic competitiveness by pointing out that China is improving its infrastructure while the U.S. is sitting idly by. Without mentioning the dollar figure (psst… it’s $50 billion) he said he’d get construction workers back on the job rebuilding transportation infrastructure and schools:

And to make sure the money is properly spent, we’re building on reforms we’ve already put in place. 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.

And without ever saying the words “infrastructure bank,” he made his push for one:

This idea came from a bill written by a Texas Republican [Kay Bailey Hutchison] and a Massachusetts Democrat [John Kerry]. The idea for a big boost in construction is supported by America’s largest business organization and America’s largest labor organization. It’s the kind of proposal that’s been supported in the past by Democrats and Republicans alike. You should pass it right away.

He would capitalize the bank with an initial $10 billion, just as Sens. Kerry and Hutchison had proposed. Obama’s own earlier proposal called for a $30 billion investment.

Obama’s written plan also pledges investments in TIGER and TIFIA – good news, since the 2012 transportation budget passed by a House subcommittee yesterday zeroed out TIGER entirely. It also builds on his instruction to agency heads to identify projects that deserve federal help – if not funds – for streamlining the process.

Transportation reform advocates praised the bill, with James Corless of Transportation for America calling it “both ambitious and pragmatic.”

House Transportation Committee ranking Democrat Nick Rahall sat next to Chair John Mica during the speech, and afterward, Rahall said, “We may have walked out of the chamber with different views on the President’s proposals, but I remain committed to working together in a bipartisan fashion.”

We’ll see if they can find anything they both agree to work on. The statement Mica issued after the speech was a quick repudiation of everything the president had asked for:

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Boxer Confirms Bike-Ped Funding, Gang of Six Loves infrastructure Spending

At today’s hearing, the Senate Environment and Public Works Committee celebrated the bipartisan consensus it has reached on a new transportation reauthorization – but details of that consensus are still not public. Sen. Barbara Boxer (D-CA) did confirm that dedicated federal funding for bicycle and pedestrian programs remains in the bill. Addressing LA Mayor Antonio Villaraigosa:

A full bike rack outside the Senate building where today's EPW hearing was held. Photo: Tanya Snyder.

You’ve worked with us on Safe Routes to Schools, because that’s so crucial, and we kept it, and bike paths, and we kept it, and recreational trails, and we kept it. Tough debates, giving here, taking there. But that has remained in the bill.

The reauthorization negotiations have been largely overshadowed by the ongoing talks over the debt ceiling. For a long time it appeared that if the debt talks had any impact on the transportation program, it would be to institutionalize the 33 percent cuts mandated by House Budget Committee Chair Paul Ryan’s budget. However, as Boxer mentioned a few times during today’s hearing, the outlook is looking brighter.

The bipartisan Gang of Six has a plan to cut the deficit and raise the debt ceiling. That plan calls for very little spending – but the one area they did see fit to spend on was infrastructure. The Gang of Six plan calls for the following:

Tax reform must be estimated to provide $1 trillion in additional revenue to meet plan targets and generate an additional $133 billion by 2021, without raising the federal gas tax, to ensure improved solvency for the Highway Trust Fund.

According to our sources, that additional revenue would stabilize the trust fund for the next 10 years.

The vote of confidence by the Gang of Six is encouraging and should be a shot in the arm to the Senate. If that debt plan passes, it could even give House Transportation Committee Chair John Mica enough political cover to raise the total price tag of his bill.

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Senate Leaders Vow to “Marry” Competing Infrastructure Bank Proposals

At a Commerce Committee hearing today, Sens. John Kerry (D-MA) and Kay Bailey Hutchison (R-TX) spoke out in favor of their infrastructure bank proposal, while Frank Lautenberg (D-NJ) and John Rockefeller (D-WV) championed their own legislation. Sen. Barbara Boxer (D-CA), who is a member of the Commerce Committee as well as chair of the Environment and Public Works Committee, also spoke strongly in favor of an infrastructure bank, although the transportation reauthorization outline she released yesterday didn’t say anything specifically about such a bank.

Steve Bruno of the Brotherhood of Locomotive Engineers and Trainmen cautioned against over-reliance on the private sector when building public infrastructure.

“Isn’t it wonderful to see the bipartisanship behind the infrastructure bank?” Boxer said. “Count me in. I think it’s a wonderful thing.”

She and other senators affirmed that raising the gas tax, or switching to a VMT fee, is off the table. Still, she criticized House Transportation Committee Chair John Mica for “walking away” from the Highway Trust Fund since it’s coming up short. “It’s a 36 percent cut in our basic program,” she said. “That’s a loss of 630,000 jobs.”

In the absence of new revenues, it becomes more important to leverage the scarce public dollars that are available, so the committee hearing focused on financing tools – specifically, an infrastructure bank.

Kerry and Hutchison have put forward a bipartisan bill to create an infrastructure bank with $10 billion in seed money that would fund not only transportation but energy and water projects as well. It would only make loans, not grants.

A somewhat more idealistic proposal is the Lautenberg/Rockefeller bill, which focuses exclusively on transportation. They also propose $10 billion, but over just two years, with $600 million a year for grants. Another major difference is that it would be housed within USDOT, whereas Kerry’s proposal was to create a completely independent entity. The Lautenberg/Rockefeller plan hews more closely to the administration proposal than Kerry’s does.

“I think our bill is the answer,” said Sen. Hutichson today. Addressing Sen. Rockefeller, who chairs the committee, she said, “I would love for this committee to pass our bill, and I bet you probably want your bill to be passed. So maybe we can work together or maybe we can report both of them.”

“Well, we usually work together,” Rockefeller said, and indeed, all subsequent comments from all the bill sponsors included messages of “marrying” the two bills.

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Fareed Zakaria: Republicans Should Embrace an Infrastructure Bank

Have you seen Fareed Zakaria’s editorial in the Washington Post today? It’s pretty stunning. He begins with some pretty gloomy analysis of the country’s economic trajectory and some bad news about unemployment and growth. And just when it seems like there’s no hope and the country’s going down the tubes, he suggests one shining beacon of hope: a national infrastructure bank, the “simplest way” to help unemployed workers — “and the country.”

Not only that, he makes a strong case for Republicans and even tea-partiers to embrace the concept:

House Majority Leader Eric Cantor has played down this proposal as just more stimulus, but if Republicans set aside ideology they would see it is actually an opportunity to push for two of their favorite ideas: privatization and the elimination of earmarks.

The United States builds infrastructure in a remarkably socialist manner; the government funds, builds and operates almost all American infrastructure. In many countries in Europe and Asia, the private sector plays a large role in financing and operation of roads, highways, railroads and airports, as well as other public resources. An infrastructure bank would create a mechanism by which such private-sector participation would become possible here as well. Yes, some public money would be involved, mostly through issuing bonds, but with interest rates at historic lows, this is the time to rebuild. Such projects, with huge long-term payoffs, could genuinely be called investments, not expenditures.

A national infrastructure bank would also address a legitimate complaint of the Tea Party — earmarks. One of the reasons federal spending has been inefficient is that Congress wants to spread money around in ways that make political sense but are economically inefficient. An infrastructure bank would make these decisions using cost-benefit analysis, in a meritocratic system, rather than basing decisions on patronage and whimsy.

He makes it clear that such a bank is no panacea, but it’s a good start toward a national jobs plan he thinks President Obama should propose. Of course, the president has proposed an infrastructure bank — one focused exclusively on transportation, no less. While he might need a push to start talking about it again, Zakaria is smart to direct his remarks to conservatives who have opposed such an idea, in hopes that the bank will make it into the House transportation bill.

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Sen. Kerry on Transportation Funding: “We’re in a Crazy Place Right Now”

As the House and Senate get closer to unveiling their respective transportation proposals, it’s crunch time for figuring out how to pay for infrastructure investment moving forward. Senator Max Baucus (D-MT), who has let slip that he’s in favor of a two-year reauthorization because of current funding constraints, chaired a hearing in the Finance Committee today to examine options for financing. No one panacea emerged, and conservatives on the committee and among the witnesses quickly countered most of the suggestions raised.

Sen. John Kerry is at the end of his rope with all this budget-cutting. Photo: Chip Somodevilla/Getty Images North America

Top committee Republican Orrin Hatch of Utah said the president’s push for infrastructure building is just a “Carter-era message of tax-and-spend” that’s been re-branded and spun to be “more palatable to the American people.”

“What used to be called raising taxes is now called shared sacrifice,” Hatch said. “And what used to be called government spending has now been dubbed investments.”

Former Pennsylvania Gov. Ed Rendell took Hatch to task for that. “I respectfully disagree, and I think the American people disagree that spending on infrastructure is not investment,” he said. “They see it as investment; they see it as worthwhile; they see it as providing value to them; they see it as improving the quality of their life, their safety, and our nation’s economic competiveness.”

He sees new construction as a potential jobs program for troops returning from Iraq and Afghanistan, saying infrastructure investment should be looked at as a “new GI bill” to put those vets back to work here. He suggested using money saved by drawing down military efforts in those countries to rebuild this one.

Rendell’s words were a good antidote to Gabriel Roth, a conservative transportation economist from the Independent Institute, whose entire testimony was devoted to the proposition that the federal government shouldn’t be financing any infrastructure whatsoever outside of the revenues of the Highway Trust Fund. “Matters ought to be handled by the smallest, lowest, or least centralized competent authority,” he asserted.

Roth said federal funding leads to a variety of ills: it forces road users to pay for non-road projects, for one. It increases highway costs because those damn feds won’t let states pay slave wages on public works projects. Plus, he said, the federal government favors some states over others, and its money comes with strings attached (like speed limits).

Rendell disagreed. “I think the federal government should, as is done in every other developed nation in the world, have a significant role in infrastructure spending,” he said, adding that the private sector won’t finance projects that aren’t profitable and federal authority is needed for many projects that cross state lines. As for how to pay for them, Rendell had an endless supply of ideas. First and foremost was a change in the way the nation budgets for infrastructure:
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