WASHINGTON — President Obama on Thursday proposed legislation that would create a national infrastructure bank and provide more resources for federal loans and grants to transportation projects among several proposals to create jobs.
In a much-anticipated speech,, Obama outlined a $447 billion American Jobs Act that he plans to send Congress next week. He said the legislation should receive bipartisan support because these proposals have previously been supported by Republicans and Democrats. Obama said he plans to pay for the bill by asking the Joint Committee on Deficit Reduction to come up with additional cuts to the deficit. Obama also said that in two weeks said he will send Congress a more ambitious deficit reduction plan that stabilizes the nation’s debt as a share of the economy.
The president indicated that his national infrastructure bank would be modeled after the one proposed in legislation introduced in March by Sens. John Kerry, D-Mass., Kay Bailey Hutchinson, R-Texas, and Mark Warner, D-Va.
Kerry applauded the president’s plan in a statement, saying,“There’s almost $200 billion in private capital sitting on the sidelines that could be invested in our infrastructure, but it will take this bank to unlock private investment for bridges, roads, and rail,”
The infrastructure bank would be capitalized with $10 billion. Kerry’s bill proposed that loans and guarantees would be secured by toll revenues, user fees, or other dedicated revenue sources. Eligible projects would include transportation, water, and energy facilities, and would need to cost at least $100 million, or $25 million in rural areas.
But muni market participants said before the speech that an infrastructure bank will likely not have the job-creating effect because it will take some time to get a federal infrastructure bank into action.
Obama “is on the right track” with the call for an infrastructure bank, Geoffrey S. Yarema, a partner with Nossaman LLP in Los Angeles, said after the speech. “We already have a national infrastructure bank — it’s called the TIFIA program,” Yarema said referring to the Transportation Infrastructure Finance and Innovation Act program.
The plan calls for additional funding for TIFIA and the Transportation Investment Generating Economic Recovery, or TIGER program, without giving specifics.
In other state and local government aid, Obama proposed $35 billion to prevent teacher and first responder layoffs at the state and local government level. He also called for $25 billion to be dedicated for school modernization projects, ranging from energy efficiency to asbestos removal.
As expected, a key component of the president’s plan includes an extension of the two percentage point reduction payroll withholding taxes. The president also called for an extension of emergency unemployment benefits, which are scheduled to expire in January.
Obama indicated that his more ambitious deficit reduction proposal would include tax increases for the wealthy, tax reform, and “modest adjustments to health care programs like Medicaid and Medicare.