The Obama administration is bringing back to Washington a key advocate for the Build America Bond program to help strategize the president’s job-creation initiatives.
Alan B. Krueger has been named chair of the president’s Council of Economic Advisors, the White House announced Monday. He was previously assistant secretary for economic policy and chief economist at the Treasury Department from May 2009 to November 2010.
Known in the economics community as an employment and labor specialist, Krueger last year returned to Princeton University, where he worked before his stint at the Treasury.
Appointees to the three-member council need to be confirmed by the Senate.
While announcing Krueger’s new position, Obama said Monday that next week he will lay out plans to kick-start job creation with bipartisan ideas. The president indicated his plans may include federal infrastructure investments to redirect former housing construction workers into transportation projects.
Krueger was the administration’s most vocal defender of the taxable BAB program, especially as critics pointed out the bonds resulted in higher underwriting fees compared to tax-exempt transactions. Krueger also worked to stamp down the uproar among issuers over BAB subsidy payment offsets.
His efforts could not get a BAB extension approved by the Senate. Though the program was renewed twice by the Democratic-led House in 2010, Republican senators stymied the program after issuers and market participants believed some manner of the program would live on once most American Recovery and Reinvestment Act provisions expired at the end of 2010.
Krueger “was a major supporter of Build America Bonds within the administration,” said Michael Decker, managing director and co-head of the municipal securities division at the Securities Industry and Financial Markets Association. “He made it clear that he recognizes the value that Build America Bonds played.”
Obama’s fiscal 2012 budget called for the BAB program to be reinstated permanently at a 28% subsidy rate. Democratic lawmakers in the House have introduced bills for a second act of BABs with varying federal subsidy rates. But even one of the program’s staunchest supporters in the Senate, Ron Wyden, D-Ore., has acknowledged BABs are dead for now.
Decker said a BAB revival in the current political climate will be “difficult to achieve. We’re realistic about the prospects for reviving the program.”
State and local governments sold $182.5 billion of BABs during the life of the program, according to Thomson Reuters.