As the debt ceiling talks reach a crescendo, President Barack Obama is rightly pointing out that we need to pursue policies that put Americans back to work. He rightly continues to call on Congress to pass legislation creating a national infrastructure bank that could build roads, ports, schools, broadband lines and smart-energy grids.
I have long championed legislation to create a national infrastructure bank and strongly agree that now is the time to establish such an entity as part of a national growth strategy. Every day we fail to do so is another day we lose our edge to global competitors in China, India, Brazil, Europe and elsewhere who are investing far more heavily in 21st-century infrastructure.
My proposal recognizes that current financing options are not enough to meet what the American Society of Civil Engineers identifies as a $2.2 trillion infrastructure investment deficit. It represents a new way to fund our nation’s critical projects at a time when fiscal constraints at all levels of government are making financing projects by conventional means difficult.
The bank I propose would leverage private investment toward public infrastructure by issuing federal bonds to institutional investors, such as pension funds looking for low-risk and long-term investments, and then using the proceeds to provide loans and loan guarantees to fund projects. In addition, the bank would encourage public-private partnerships in which the private sector could partner with regional, state or local governments to borrow from the bank, while adding its own private equity to a given project.
The bank would also depoliticize our investment decisions, providing financing to transportation, water, energy and telecommunications projects of regional and national significance with clear economic, environmental and social benefits. It would finance projects with identifiable and reliable revenue streams, allowing it to become a self-sustaining entity that does not have to rely on federal funding.
The concept has broad support from the business, finance and labor communities, as well as mayors and governors from across the country. A bipartisan counterpart to my bill has laudably been introduced by Sens. John Kerry (D-Mass.) and Kay Bailey Hutchison (R-Texas).
Yet, the House majority has not made infrastructure investment a priority. While China plans to invest $1 trillion in high-speed rail, highways and other infrastructure in five years, the chairman of the House Transportation and Infrastructure Committee recently unveiled an outline for an approximately $230 billion, six-year surface transportation bill that the U.S. Chamber of Commerce called “unacceptable,” as it would destroy jobs and drag down the gross domestic product.
This has left those who are serious about infrastructure investment to think outside the box for ways to capitalize a bank. One idea that has gained traction of late is to pursue a “repatriation” tax holiday, which would allow U.S. multinational corporations to bring overseas profits home at a lower tax rate, rather than at the usual 35 percent rate, and to use the incoming revenue to capitalize a bank.
Unfortunately, the downsides to this idea appear to outweigh the benefits. Repatriation was tried in 2004, and it did nothing then to create jobs or promote economic growth. In fact, companies benefiting from the holiday used the repatriated funds to line the pockets of shareholders while some actually laid off workers.
Moreover, the nonpartisan Joint Committee on Taxation estimates that repatriation would add billions to the deficit because, in part, it would further incentivize corporations to keep more of their profits overseas in wait of another holiday. Moving jobs offshore to finance a bank that would create jobs at home is counterproductive.
Yet, for the 14 million people unemployed in this country, we must find a way, through the tax code or otherwise, to capitalize a national infrastructure bank. Doing so is critical for creating jobs, fostering economic growth that allows us to compete globally and helping to rebuild America. Now is the time to make this vital investment in our nation’s future.
Rep. Rosa DeLauro (D-Conn.) is a member of the Appropriations Committee and is sponsor of legislation (H.R. 402) to create a national infrastructure development bank.