Keeping hopes alive

Despite a push for budget cuts, new legislation in the US still envisions the establishment of a national infrastructure bank – albeit with fewer powers and guarantees.

In the past few months, three newly-elected state governors have rejected a total of $3.6 billion in federal high-speed rail funds and members of the Republican-controlled House of Representatives have vowed to slash budgets. Speaker of the House John Boehner, an Ohio Republican, has saluted two of those Republican governors as models of fiscal discipline who offer “bold solutions worthy of serious consideration”. 
The third governor Boehner praised was New Jersey’s Chris Christie, who cancelled his state’s $8.7 billion tunnel to New York, even though the project had secured $6 billion from the federal government and the New York/New Jersey Port Authority.
So the current US political climate doesn’t seem favourable for creating a massive, government-sponsored institution to identify and channel funding into crucial infrastructure projects across state borders.
Renewed calls

But President Barack Obama and other Democrats continue to fight for a national infrastructure bank, and have renewed their calls over the past month.
In January, Rosa DeLauro, a Democratic representative from Connecticut, introduced new legislation to establish an infrastructure bank, modifying an earlier 2009 proposal that failed in Congress.
The new bill envisions a weaker form of the bank than the one proposed two years ago, perhaps in acknowledgement of the country’s current difficulties. The changes also address perceived concerns about creating a government-sponsored bank in the wake of massive government bailouts of US financial institutions. 
The 2009 bill would have created a bank backed by the full faith and credit of the US government, but the 2011 bill includes an explicit “No full faith and credit” clause. The current iteration of the proposed bank cannot pool and sell securities on the global market.
Even with those changes, the bill has not garnered significant Republican support in the House. Its 34 co-sponsors are all Democrats.
“I remain hopeful that with a strong push from the White House and a true bipartisan effort we can create such a bank and make these needed investments for long-term economic growth in all areas of infrastructure,” DeLauro said.
Obama has been an avid supporter of infrastructure spending as well as the idea of an infrastructure bank. His 2010 budget included a proposal for a $5 billion National Infrastructure Bank, but Congress declined the proposal because of its “complexity”.
The 2011 budget included a $4 billion infrastructure fund, but Congress failed to pass that budget, and instead used a continuing resolution to fund government programmes.
But the President’s most recent budget did not give up on the concept. The proposed 2012 budget includes $30 billion over six years for a national infrastructure bank as part of a $556 billion plan for a reauthorisation of existing surface transportation legislation. 
The bank would be “a substantial departure from the practice of funding projects based on more narrow considerations”, and would give grants and loans to projects of “regional or national significance to the economy”, Obama said in his budget proposal. 

Both Obama and DeLauro have said the US needs infrastructure to maintain long-term economic competitiveness. 
“I refuse to accept second place to China. A National Infrastructure Development Bank will provide a sustainable source of revenue from unique public-private partnerships and rebuild America,” DeLauro said last month.
But it remains to be seen whether that view can defeat stubborn opposition to government spending.
Florida governor Rick Scott recently announced that he would reject $2.4 billion in federal high-speed rail funds. In his announcement, he expressed his feelings in no uncertain terms.
“Government has no resources of its own. Government can only give to us what it has previously taken from us,” he said.