WASHINGTON — The chairman of the House Transportation and Infrastructure Committee warned Wednesday that “a national infrastructure bank as proposed” in President Obama’s jobs bill “is dead on arrival in the House of Representatives.”
“If you want a recipe for not getting people to work, adopt that proposal,” Rep. John Mica, R-Fla., said at a hearing titled “National Infrastructure Bank: More Bureaucracy and Red Tape,” held by the subcommittee on highways and transit.
Republicans on the panel demonstrated their united opposition to a bank, giving credence to Mica’s warning.
Obama proposed in his jobs bill that the federal government invest $10 billion in the creation of the American Infrastructure Financing Authority as one way to help with infrastructure project financing and encouraging private investment.
Democrats on the subcommittee supported the bank proposal as an addition to the toolkit for federal transportation aid to states and localities.
Rep. Peter DeFazio, D-Ore., said that while “many people touted an infrastructure bank as the solution, it isn’t. It can be a useful adjunct. Before Wall Street destroyed the economy, most states could borrow on their own at good rates. That’s not the case now and they need help.”
Panel members and five witnesses — four against a bank and one for it — ran though a familiar series of arguments.
The most prominent argument from opponents was that the federal government already has what amounts to an infrastructure bank in the Transportation Infrastructure Finance and Innovation Act program. It provides direct loans and loan guarantees to finance surface transportation projects of national and regional significance, according to the Department of Transportation, which administers the program.
The jobs bill establishes the financing authority with the same language: “AIFA shall provide direct loans and loan guarantees to facilitate infrastructure projects that are both economically viable and of regional or national significance.”
Oklahoma Transportation Secretary Gary Ridley, in his testimony against the AIFA, said, “The proposition that an additional federal authority is necessary to organize, support, and provide states with insight into innovative financing options is ill-conceived.”
Each of the long-term transportation bills expected to be introduced in the House and Senate are to propose expanding TIFIA from $122 million per year to $1 billion per year.
Scott Thomasson, economic and domestic policy director of the Progressive Policy Institute, warned that super-sizing TIFIA would have problems of its own.
“It is timely to ask,” he said, “whether these programs can improved by simply throwing more money at them, or whether an additional credit platform is needed.”
Turning a common anti-bank Republican argument back against them, Thomasson said the Department of Energy’s failed loan guarantee to Solyndra “suggests that we should be wary of believing an existing program can deliver on the promises of a mass expansion in loan approvals.”
Ronald Utt, research fellow at the Heritage Foundation, warned of the risk to taxpayers of bailouts like those of Fannie Mae and Freddie Mac. He saw “little added value beyond modest reform” of existing programs without adding risk.
Countering Utt’s warning, Thomasson said the AIFA “will not be another Fannie or Freddie risk.” It will be wholly government-owned and similar to the export-import bank, which provides similar help to U.S. companies, he said. “It will not borrow money and will have no resemblance to shareholder-owned government-sponsored enterprises such as Fannie and Freddie.”
One thing Democrats and Republican panel members and witnesses agreed on was that an infrastructure bank is about providing long-term job growth, not immediate stimulus.
The infrastructure bank controversy is just part of the general struggle over how to restructure federal transportation aid as revenue declines.
A Government Accounting Office report released Wednesday said that from 2005 to 2009, every state received more funding for highway programs than they contributed to the highway account of the Highway Trust Fund. That was possible because as fuel tax revenues declined, Congress also appropriated general funds to the fund.
