WASHINGTON — President Obama’s nominee for assistant secretary of the Treasury Department for financial markets suggested Tuesday that he is willing to work with lawmakers on developing tax-credit bonds such as the transportation and regional infrastructure project, or TRIP, bonds.
“Improving infrastructure in this country is something that the administration has been very focused on,” Matthew Rutherford, who has been nominated for the post after serving as deputy assistant secretary for three years, said during a confirmation hearing before the Senate Finance Committee.
“I do think the spirit of what you are trying to achieve with these TRIP bonds is something that is definitely worthy of consideration and if confirmed I would be happy to continue to work with you on this topic. I share your desire to improve infrastructure in this country.”
Rutherford made the remarks when asked about tax-credit bonds by Sen. Ron Wyden, D-Ore., who along with Sen. John Hoven, R-N.D., introduced legislation to authorize state infrastructure banks to issue TRIP bonds to fund transportation projects after it became clear that Republicans would not support reinstating the Build America Bonds program.
“In the recent budget, the support dedicated to an infrastructure bank was important in this respect, as well as the administration’s belief that we should continue to extend those Build America Bonds,” Rutherford told Wyden.
The TRIP bond legislation was included in the $109 billion highway bill that passed the Senate in mid-March.
It authorizes the issuance of tax-credit bonds for certain transportation projects, but contains no specific allowances for how much state infrastructure banks could issue. There is no projected revenue estimate.
Wyden emphasized the success of BABs and said he was encouraged by Obama’s fiscal 2013 budget to permanently extend the program.
However, he conceded that “it can’t pass, particularly in the House.”
Republicans have repeatedly declared that BABs are dead on arrival.
BABs were created in 2009 by the American Recovery and Reinvestment Act and expired at the end of 2010. Issuers sold more than $181 billion of of the bonds and received subsidy payments from the federal government equal to 35% of their interest costs.
“Your positive reaction to be willing to look at other approaches is very helpful and very constructive,” Wyden said. “Having been the author of BABs the first time with lots of other colleagues, I wish we could go there but we are going to have to look at some other approaches.
Rutherford has served in his current position for three years where his primary duty has been managing the Treasury’s Office of Debt Management. He has been responsible for making policy decisions on how the Treasury finances the country’s borrowing needs.
Meanwhile, Obama’s nominee for assistant secretary of the Treasury for tax policy, Mark Mazur, said that the administration is not currently working on a plan to revamp the tax code.
“We’d be negligent if we weren’t doing foundational work .... but at this point there is no plan that’s been developed and we’ll see how this plays out,” Mazur said, adding that the Treasury is in the “early stages of developing public support.”
Wyden questioned Mazur’s sense of urgency on tax reform and said federal lawmakers have already passed the “early stages” with various congressional hearings and reports that have been issued on the topic.
Mazur said given the long-term fiscal challenges the country faces, comprehensive tax reform will be more difficult than it was in 1986 when reform was “revenue-neutral.”
“We are going to need to modestly increase revenue and modestly constrain spending,” he added.