Wednesday, October 1st, 2014

The Obameter

Create a $60 billion bank to fund roads and bridges


"Will address the infrastructure challenge by creating a National Infrastructure Reinvestment Bank to expand and enhance, not supplant, existing federal transportation investments. This independent entity will be directed to invest in our nation's most challenging transportation infrastructure needs. The Bank will receive an infusion of federal money, $60 billion over 10 years, to provide financing to transportation infrastructure projects across the nation. These projects will create up to two million new direct and indirect jobs and stimulate approximately $35 billion per year in new economic activity."


Updates

Road bank didn't get much traction

During his 2008 presidential campaign, President Barack Obama promised to create a "National Infrastructure Bank to expand and enhance, not supplant, existing federal transportation investments.”

Obama promised to provide $60 billion to the fund over the next 10 years for transportation projects across the nation, saying the fund would create up to two million jobs and "stimulate approximately $35 billion per year in new economic activity.”

Obama made infrastructure a priority with the 2009 stimulus act, which allocated almost $100 billion towards transportation and infrastructure projects. However, the way an infrastructure bank works is very different from how the administration's grant-based stimulus functioned.

"The stimulus money was essentially grants to local and state governments to do projects. And none of that's going back” to the federal government, said Richard Little, director of the Keston Institute for Public Finance and Infrastructure Policy at the University of Southern California.

But, Little said, an infrastructure bank instead makes loans with the expectation that the projects will bring in revenue to pay back the government.

"The idea behind an infrastructure bank is that it's a financing authority, not really a funding source,” Little said.

Obama has repeatedly tried to create a national infrastructure bank, though he's found little success so far.

The president has asked for the creation of a national infrastructure bank with initial funding of up to $30 billion in each of his budget proposals from fiscal years 2010 to 2013. However, each of those proposals was rejected in Congress, and a national infrastructure bank has yet to be included in a budget deal.

Obama also proposed a $10 billion infrastructure bank as part of the proposed American Jobs Act in 2011, a bill which ultimately was rejected in the Senate. Sen. John Kerry also proposed an infrastructure bank as part of his BUILD Act, a bill that initially received bipartisan support but has yet to be acted on.

Given that track record, Robert Puentes, a senior fellow at the Brookings Institute's Metropolitan Policy Program, said that he doesn't think a national infrastructure bank will be created by the end of Obama's term.

Absent action on a national infrastructure bank, Congress has attempted to expand infrastructure loan programs already in place.

One example is the work done with the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, a federal effort started in 1998 that has provided $122 million in loans annually for infrastructure projects across the country, and the Railroad Rehabilitation & Improvement Financing Program.

Puentes said that although funding hasn't increased for these programs, the administration has been innovative in linking them together to fund large projects, one example being a $300 million project funded by loans from the TIFIA and RRIF programs to restore and improve transit at the Denver Union Station in Colorado.

When it comes to the promise, though, although the administration has repeatedly attempted to create a national infrastructure bank, it appears unlikely to happen by the end of Obama's first term. For now, we rate this a Promise Broken.

Sources:

Interview with Robert Puentes, senior fellow at the Brookings Institute.

Interview with Richard Little, Director of the Keston Institute for Public Finance and Infrastructure Policy at the University of Southern California.

ProPublica, "Stimulus Infrastructure Funding Short-Changes States With High Unemployment,” Feb. 15, 2009.

BUILD Act, full text

New York Times, "White House Seeks $4B for Transportation Infrastructure Bank,” Feb. 1, 2010.

CNN, "Obama vows to break jobs plan into separate bills after Senate setback,” Oct. 11, 2011.

Federal Railroad Administration, "Railroad Rehabilitation & Improvement Financing Program,” Accessed April 20, 2012.

Inside Real Estate News, "Union Station gets $300 million in funding,” July 23, 2010.

The Journal of Commerce, "TIFIA Grant Requests Outpace DOT Supply 107-1,” Feb. 15, 2012.

The Journal of Commerce, "House Republicans Unveil Five-Year Transport Plan,” Jan. 31, 2012.

New York Times, "House to Vote on High-Speed Rail Funding, National Infrastructure Bank,” July 23, 2009.

White House, "Department of Transportation: Fiscal Year 2012 Budget,

U.S. House of Representatives Committee On The Budget, "Highlights of the President's Fiscal Year 2013 Budget,” Feb. 14, 2012.   

White House, "Five Facts About National Infrastructure Bank,” Nov. 3, 2011.

Infrastructure bank in 2010 budget

Even before the full dimensions of the economic crisis were apparent in 2008, candidate Barack Obama said the United States needed to make great investments in its infrastructure, including railways, highways, bridges, airports and neighborhood streets.

As part of that, Obama proposed what he called a "National Infrastructure Reinvestment Bank," proposing to fund it with $60 billion over 10 years.

After winning election, President Obama signed off on an economic stimulus bill that sent $27.5 billion to highway construction and about $20.5 billion for air, rail, public transportation and other state projects. That money is intended to be spent quickly to stimulate the economy.

In addition to the stimulus, Obama's budget outline includes money for a National Infrastructure Bank.

The outline, which was released Feb. 26, 2009, shows new funding of $25 billion over 10 years. The budget says the money will "expand and enhance existing federal infrastructure investments," so it could exceed his stated goal of $60 billion.

There's stilll a lot of ground to cover here. We'll be watching to see if Congress approves Obama's budget, and whether other funds get Obama to his goal of $60 billion. Meanwhile, we rate this promise In the Works.

Sources:

U.S. House of Representatives, Joint Explanatory Statement: Section A ,  Feb. 12, 2009 (pdf document)

Office of Budget and Management, Budget Documents for Fiscal Year 2010 , accessed Feb. 26, 2009