Democrats in the House of Representatives have introduced the National Infrastructure Development Bank Act of 2011, which would create a central authority to evaluate and channel both public and private funds into infrastructure projects.
Rosa DeLauro, a Democratic Representative from Connecticut, introduced the bill last week. The bill already has 30 co-sponsors, all Democrats.
DeLauro at a press conference
DeLauro has been promoting a national infrastructure bank since 1994, according to a statement. The envisioned institution would be “similar to the European Investment Bank”, according to a statement. She introduced similar legislation in May 2009, but the bill died in Congress.
The bulk of DeLauro’s newest infrastructure bank bill is identical to the 2009 counterpart, but there are a few key changes. The 2009 bill said that the infrastructure bank’s bonds and obligations would be backed by the “full faith and credit” of the US, meaning that taxpayers would be on the hook if any of the obligations went bad. DeLauro’s 2011 infrastructure bank bill does away with this by containing an explicit “no full faith and credit of the United States” clause.
A Congressional aide said the change was made to avoid some concerns about creating another government-sponsored entity like mortgage lenders Fannie Mae and Freddie Mac, which were not backed by the full faith and credit of the United States but were nevertheless bailed out by the US government during the height of the financial crisis.
The aide said that another clause had also been eliminated because of post-financial crisis concerns: The 2009 bill allowed the bank to pool and sell securities on global markets. That power has been deleted from the current bill.
President Barack Obama has touted the idea of a centralised authority to support infrastructure funding. He proposed a $5 billion infrastructure bank in his fiscal year 2010 budget proposal for the Federal government but when Congress passed the budget it left out the infrastructure bank because of “the complexity of this proposal”.
Obama again proposed an infrastructure bank in his 2011 budget: a $4 billion National Infrastructure Innovation and Finance Fund. But the government is currently operating under a continuing resolution of the previous year's budget, which doesn’t include that $4 billion fund, according to a spokesperson for the Department of Transportation.
A recent statement on the White House website said Obama will introduce a six-year transportation spending agenda as part of his budget due in mid-February. That agenda will include “transformational investments such as an infrastructure bank that will revolutionise infrastructure finance, leveraging government resources through attracting private capital to build projects of national and regional significance”, according to the statement.
Florida Republican John Mica, who recently replaced Minnesota Democrat James Oberstar as House Transportation and Infrastructure Committee Chairman, has said that he wants to have a reauthorisation of the existing surface transportation legislation by the end of this year.
The bill could serve as an alternative avenue for enacting the bank if DeLauro’s stand-alone legislation doesn’t pass Congress. In 2009, former Chairman Oberstar included in his proposed reauthorisation the creation of an infrastructure bank, but Congress didn’t move on the bill, leaving its future up to Mica and the now-Republican controlled committee.
“I am encouraged by House Transportation and Infrastructure Committee Chairman John Mica’s commitment to moving a transportation bill and interest in leveraging private dollars toward those investments. I believe that a National Infrastructure Bank, which has the support of both the business and labor communities, should be seriously considered,” DeLauro said.