DALLAS — A bipartisan pair of lawmakers have reintroduced a bill to capitalize a $50 billion national infrastructure bank with sales of 50-year taxable bonds bearing 1% interest.
Co-sponsors Reps. John K. Delaney, D-Md., and Mike Fitzpatrick, R-Pa., said the American Infrastructure Fund that would be created by their Partnership to Build America Act, H.R. 413, could provide credit support to state and local governments for transportation, water, and school projects.
Proceeds from the 1% bonds could be leveraged on a 15:1 basis, Delaney and Fitzpatrick said, providing $750 billion of assistance to local infrastructure projects.
Local governments would apply directly to the AIF for assistance.
The measure is almost identical to a bill filed by Delaney in May 2013, H.R. 2084, that did not make it out of a House committee despite having 40 Republicans and 40 Democrats sign on as co-sponsors.
A similar Senate measure, S. 1957, introduced in January 2014 by Sens. Michael Bennett, D-Colo., and Roy Blount, R-Mo., also failed to gain traction in the 113th Congress.
To support public-private partnerships, 35% of the infrastructure projects being funded must have at least 10% of their financing through private debt or equity.
This latest proposal for a national infrastructure fund has deep bipartisan support in Congress, Delaney said. "We think this thing has a real shot," he said.
The 1% bonds, which would be issued by the Treasury Department, would be a way to increase investment in public infrastructure at no cost to the taxpayer, Fitzpatrick said. "This bill provides an innovative way to finance hundreds of billions of dollars in infrastructure projects with no new appropriated costs," he said.
Corporations buying the bonds could bring in oversea earnings tax-free on a one-time basis, Delaney said. The multiplier for the amount of tax-free repatriated earnings would be determined through a reverse-Dutch auction process, with the offer beginning low and then getting higher until an agreement is reached. A 4:1 ratio would allow $4 of foreign earnings into the U.S. with no tax liability for $1 of debt purchased, he said.
The proposed 1% bonds are not intended to be a good investment on their own, Delaney said. However, the bond buyers could sell or transfer the tax credits.
"The incentive is tied to the changes to the international tax system," he said. "In other words, it allows them to bring back some of their money from overseas provided they put some of that up in infrastructure."
Delaney cited a 2013 estimated by the American Society of Civil Engineers that the U.S. needs to spend $3.6 billion on its infrastructure by 2020.
"Engineers think we need about a $3 trillion investment to bring ourselves up to a standard we can all be proud of," he said. "This bill doesn't do all that, but it does about a third of it. It can really move the needle."
