Showing the kind of bipartisan leadership that has become all too rare these days, Senators John Kerry and Kay Bailey Hutchison have announced a new proposal to improve the way we fund infrastructure and unlock hundreds of billions in much-needed financing for new projects across the country. Their bill has one of those great acronym-friendly names that congressional staff labor to perfect: The Building and Upgrading Infrastructure for Long-Term Development Act of 2011, or for short: The BUILD Act.
Kerry and Hutchison announced the BUILD Act today in a packed Senate hearing room, flanked by the heads of the U.S. Chamber of Commerce and the AFL-CIO, who both endorsed the proposal and spoke about the shared need that business and labor have for Washington to move beyond its political dysfunction to address the urgent needs for building and maintaining the backbone of our economy and help create jobs. Senator Mark Warner is as an original co-sponsor of the bill and also joined the press conference. Senator Warner issued a similar warning that he delivered at PPI’s infrastructure conference last fall, explaining that we must reverse the decline in U.S. infrastructure investment to make our country a more competitive place for attracting capital investment and jobs in the global economy.
The BUILD Act represents an entirely new approach to the idea of creating a National Infrastructure Bank, one that goes a long way to reconcile the huge levels of needed investment with the very real spending constraints facing the current Congress. Given the realities of the current political environment, their proposal launches the bank on a fiscally responsible scale, while preserving the best principles of political independence and economics-based decision making that make the bank worth doing in the first place. They do this by structuring their bank as a financing authority under the Federal Credit Reform Act, a model used by the U.S. Export-Import Bank and other existing federal lending entities, that allows the bank to shift enough lending risk to borrowers to keep the burden on the government and taxpayers low, which avoids the large capital requirements of traditional infrastructure bank proposals.
By combining a smart financing structure with a 50% cap on the federal share of any project’s total funding, the BUILD Act avoids the high price tag that other infrastructure financing bills often carry. That makes it an innovative approach that needs to be a part of the upcoming debates on the already underfunded transportation bill. As Chamber President Tom Donohue said today, it’s an invaluable part of the solution to how we pay for maintenance and improvements that we can’t afford to ignore, but it can only work if added to a strong foundation of spending in the transportation bill, which he said will also require increasing our 17 year-old gas tax, to meet our current needs and adjust to lower fuel consumption by more efficient vehicles.
PPI has long supported the idea of a National Infrastructure Bank, including the current House bill sponsored by Rep. Rosa DeLauro, the long-time champion for infrastructure in Congress. DeLauro joined other top political, business, and labor leaders to discuss the bank proposal at our infrastructure conference last fall. Economist and infrastructure heavyweight Ev Ehrlich released an excellent paper at that conference laying out some of the key benefits to the bank approach. The experts who participated in that conference agreed that there were many approaches to structuring a bank that would be acceptable and achieve the benefits Ehrlich described, with the caveat that we could not afford to abandon the principles of independence and project selection based on economics, not political logrolling. Senators Kerry and Hutchison have managed to apply those principles in crafting a workable proposal during this time of fiscal austerity, and we at PPI applaud them for their resourcefulness and leadership.