T4America Blog

Kerry-Hutchison-Warner infrastructure bank would leverage private investment for revenue-generating projects

This month, a bipartisan group of U.S. Senators introduced a variation of the national infrastructure bank touted by President Obama.

The BUILD Act is sponsored by Senator John Kerry, the 2004 Democratic presidential nominee from Massachusetts; Texas Republican Kay Bailey Hutchison; and Virginia Democrat Mark Warner, a former governor with a history of prioritizing transportation infrastructure.

The infrastructure bank would start out with $10 billion, with the goal of generating private investment to match the federal commitment. Leveraging private capital is a recurring theme in discussions about transportation finance and a notable point of agreement between President Obama and House Transportation and Infrastructure Committee Chairman John Mica.

While the plan resembles what the President had proposed, the Kerry-Hutchison-Warner bill would only include loans, not grants. Only revenue-generating projects would be funded, a concession Kerry has said is necessary due to the current political appetite for less domestic spending. The bank would operate independently of the U.S. Department of Transportation.

In an enthusiastic endorsement of the proposal, the New York Times editorialized that the bank would allow officials with limited resources to pursue needed repairs.

By providing low-cost capital to states, cities and authorities, the bank would help these strapped governments kick-start projects that are now unaffordable, while attracting investments from pension and private-equity funds that are looking for stable money-generating ventures in which to invest.

The Times also put the proposal into a broader context, citing the very real possibility of future tragedy absent the proper maintenance, and the misplaced priorities of tax cuts over investment.

…already conservatives are railing against what some have called a “boondoggle,” a phrase used to demonize virtually any public investment. What will these opponents tell voters when the dams break and the bridges fall? Before more lives are lost, lawmakers should ask themselves whether they used their public office only to slash spending (and taxes for the wealthy), or to spend money wisely.

A recent Boston Globe op-ed authored by former Massachusetts homeland security adviser Juliette Kayyem also made a strong case for the bank, and Streetsblog covered the bill’s release here.

Photo courtesy of the Center for American Progress.