General Discussion

ProSense

(116,464 posts) Mon Jan 9, 2012, 12:13 PM Jan 2012

Stimulus: Congress should pass these proposals by Senators Kerry and Lautenberg

SUMMARY

The Building and Upgrading Infrastructure for Long-Term Development Act (BUILD Act) will help close America’s widening infrastructure gap, create millions of jobs in the next decade, and ensure America’s global competitiveness in the 21st century.

AMERICA FACES UNPRECEDENTED INFRASTRUCTURE CHALLENGES

Americans confront the need for better infrastructure every day they use our outdated roads, bridges, trains, and airports. American businesses experience it too: our economy loses $80 billion every year because of blackouts on outdated transmission and grid infrastructure and traffic on our roads and highways. And our urban sewage systems are overflowing due to aging water infrastructure.

Today, the United States spends less than 40 percent of what we need to meet our infrastructure needs. The American Society of Civil Engineers has estimated that in the next five years alone we’ll fall $2.2 trillion short in the funding necessary to bring American infrastructure to even adequate condition. Over the next 50 years, our population will increase by 120 million people, who will require even more infrastructure for transportation, water, and energy. We need an annual investment of $250 billion from federal, state and local governments to keep up with transportation infrastructure alone.

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KEY PROVISIONS OF THE BUILD ACT

Independent, non-partisan operations

While AIFA would be a government-owned entity, it would not be controlled by any federal agency and instead would operate independently. It would be led by a Board of Directors with seven voting members and a chief executive officer.
No more than four voting members of the board could be from the same political party.
Board members would have to be U.S. citizens with significant expertise either in the management of a relevant financial institution or in the financing, development, or operation of infrastructure projects.

Strong oversight by Congress and the Federal government

The Board and CEO would be appointed by the President, with one board member designated as chairperson. All candidates would have to be confirmed with the advice and consent of the Senate.
The Majority Leader of the Senate, the Minority Leader of the Senate, the Speaker of the House of Representatives, and the Minority Leader of the House of Representatives would each recommend candidates.
An Inspector General would oversee AIFA’s operations, an independent auditor would review AIFA’s books, and AIFA would submit an assessment of the risks of its portfolio, prepared by an independent source.
The General Accounting Office would also conduct an evaluation of AIFA and submit a report to Congress no later than five years after the date of enactment.

Broad eligibility for infrastructure

Eligible projects would include transportation infrastructure; water infrastructure; and energy infrastructure.
In general, projects would have to be at least $100 million in size and be of national or regional significance.
Projects would have a clear public benefit, meet rigorous economic, technical and environmental standards, and be backed by a dedicated revenue stream.
Geographic, sector, and size considerations would also be weighed.

Unbiased project selection

The CEO would be responsible, in consultation with professional staff, for reviewing and preparing the eligible project applications.
The Board would be responsible for the ultimate approval or disapproval of the eligible projects that are submitted to the Board by the Chief Executive Officer and staff.

Strong rural protections

Rural projects would only need to be $25 million in size.
Five percent of the initial funding of AIFA would be dedicated to helping rural projects.
AIFA would include an Office of Rural Assistance to provide technical assistance regarding the developing and financing of rural projects.
Projects would still have to have a clear public benefit, meet rigorous economic, technical and environmental standards, and be backed by a dedicated revenue stream.

Addressing market gaps for infrastructure financing

AIFA would issue loan and loan guarantees to eligible projects.
Loans issued by AIFA would use approximately the same interest rate as similar-length United States Treasury securities and would have a maturity of no longer than 35 years.
Loans and loan guarantees could be subject to additional fees or interest rate premiums based largely on the costs of the loan to the Federal government, as determined by AIFA in consultation with the Office of Management and Budget.
AIFA would finance no more than 50 percent of the total costs of the project, in order to avoid crowding out private capital.

Self-sufficiency of AIFA

AIFA is set up to be self-sufficient after the first few years.
To achieve self-sufficiency, the CEO of AIFA would establish fees for loans and loan guarantees. These fees could be in the form of application fees or transaction fees, and could include an interest rate premium associated with the loan or loan guarantee.
However, AIFA would receive an initial funding of $10 billion, which would earn interest. This initial funding would be used both to offset the cost of the loans to the Federal government and to cover administrative costs.
Funding under the Act would be subject to the Federal Credit Reform Act, except that it would be exempted from the requirement that appropriations are needed for subsequent loans and loan guarantees.

Additional BUILD Act provisions

The BUILD Act also addresses private activity bonds. These bonds are frequently used to finance infrastructure projects. Under current law, interest on tax-exempt private activity bonds is generally subject to the Alternative Minimum Tax (AMT). This, in turn, limits the marketability of these bonds and causes states to issue bonds at higher interest rates. This Act would extend the current exemption to bonds that are issued in 2011 or 2012.

http://kerry.senate.gov/imo/media/doc/BUILD%20Act%20Summary.pdf

Lautenberg Introduces 21st Century WPA Job Creation Legislation
Job Creation Must be Top Priority for Economic Recovery

WASHINGTON, D.C. — Today, U.S. Senator Frank R. Lautenberg (D-NJ) introduced legislation to establish a national job creation program modeled after President Franklin D. Roosevelt’s highly successful Works Progress Administration (WPA). Lautenberg’s bill would create a 21st century WPA to train and hire unemployed Americans to build infrastructure and enhance public safety throughout the country.

“Our economy will not recover and our nation will not move forward until we put jobs first. Establishing a 21st Century Works Progress Administration would immediately put Americans to work rebuilding our nation and strengthening our communities,” Lautenberg said. “Across the country, we continue to benefit from projects completed under President Roosevelt’s WPA, which employed more than three million Americans during a time of great need. A 21st Century WPA would tackle our nation’s job crisis head-on and accelerate our economic recovery.”

Lautenberg’s “21st Century WPA Act” would:

award funding to economically-beneficial job creation project proposals;
provide businesses unable to locate a worker with suitable skills with a WPA fellow, who would receive on-the-job training from the business and be paid by the WPA;
provide funding to communities to improve public safety by hiring unemployed Americans as firefighters and police officers;
be fully paid for through a surtax on income exceeding $1 million ($2 million for joint filers); and
provide $250 billion for job creation over the next two years and reduce the deficit by approximately $133 billion over 10 years.

Projects awarded funding by the 21st Century WPA would have to generate a high number of jobs per dollar of total cost, contribute to economic growth after completion, and rapidly recruit needed workers from among the ranks of the unemployed. Examples of programs that could be funded by the WPA include residential and commercial building weatherization; transportation infrastructure repair and maintenance; school, library and firehouse construction; and National Park and trail maintenance. In order to be eligible to participate, an individual would have to be unemployed for at least 60 days.

U.S. Senators Tom Harkin (D-IA), Richard Blumenthal (D-CT), Jack Reed (D-RI) and Bernie Sanders (I-VT) are original co-sponsors of the bill.

A copy of the legislation can be found here.

http://lautenberg.senate.gov/newsroom/record.cfm?id=333977