President Obama’s proposal for a Build America Bond-like program for infrastructure has its roots in a proposal by the Los Angeles County Metropolitan Transportation Authority, and some infrastructure analysts say it represents a pro-business pivot from the White House.
The taxable, direct-pay America Fast Forward bonds proposed by the Obama administration on Wednesday is a part of the larger America Fast Forward initiative proposed by LA Metro last year, which included a $45 billion, ten-year, taxable tax-credit bond program, as well as an expanded Transportation Infrastructure Finance Innovation Act. The credits on the bonds would equal their interest rates.
The TIFIA expansion was authorized by the surface transportation funding legislation that was enacted last year, and now there is some hope that the bond program’s business-oriented approach could attract bipartisan support, something that BAB reinstatement attempts failed to garner.
Michael Likosky, a senior fellow at the Century Foundation, said Obama’s intention to expand a federally-subsidized bond program to include qualified private activity bonds and other policy initiatives represent a new evolution in the president’s stance on infrastructure investment.
“There’s a totally different policy justification,” Likosky said, noting that the White House’s stated goal is to attract more private investment and more business. Such a set of policies and programs, should it become reality, would be a major boon to the growth of public-private partnerships in the U.S., he said.
“It’s quite different than what he’s talked about before,” Likosky said. “He hasn’t really embraced [public-private partnerships] in this way to date. “This stuff can move through Congress.”
Republicans have repeatedly rejected attempts to resurrect the BABs program, which expired at the end of 2010, including an Obama proposal to reinstate the popular bonds at a 28% subsidy rate, rather than the initial 35% rate.
Metro officials have acknowledged that a key figure in advancing the AFF bonds will be Rep. Bill Shuster, R-Pa., who chairs the House Committee on Transportation and Infrastructure. Shuster, who is in his first few months as chairman, has made it a point not to take funding options off the table prematurely, but is so far lukewarm on Obama’s AFF bond proposal.
“I welcome the president’s interest in improving our infrastructure,” Shuster said in a statement. “However, the president’s plan appears to be only a short-term proposal for long-term challenges.”
Janet Kavinoky, executive director of transportation and infrastructure at the U.S. Chamber of Commerce, hinted that the fact that the proposal represents more government growth could hinder it.
“We would rather see comprehensive plans robustly funded through public and private sources than to establish another fund, another plan, and another set of criteria alongside our core program,” she said “That’s a prescription for duplication and waste and yet another debate over concepts like ‘stimulus’, ‘pork’ and ‘shovel ready,’ which we don’t need.”
Kavinoky said legislators and the president have other critical infrastructure matters to focus on, such as a water resources bill that could contain a TIFIA-style pilot program.
Metro’s government relations office says it will continue to work closely with the White House and with lawmakers on both sides of the aisle to attempt to advance the program, and will continue to try to get more local stakeholders on board.