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U.S. Congress considers infrastructure bank

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by Journal Of Commerce

A piece of legislation that would create a national infrastructure bank is gaining support as it slowly works its way through the United States Congress.
U.S. Congress considers infrastructure bank

Column | Korky Koroluk

A piece of legislation that would create a national infrastructure bank is gaining support as it slowly works its way through the United States Congress.

The details are still under debate, but the bill’s appeal seems to be growing, promising, as it does, a stable, long-term means for funding that allows the private sector to leverage public money earmarked for infrastructure projects of national, state and regional importance.

It’s an idea that has been around for a long time, but this time it has the support of President Obama, as well as such diverse, but powerful, groups as the U.S. Chamber of Commerce and the Building and Trades Council of the AFL-CIO, plus the American Society of Civil Engineers and the Association of General Contractors.

It also has the backing of two politically powerful state governors, Ed Rendell of Pennsylvania and Arnold Schwarzenegger of California.

The bill was sponsored by Rosa DeLauro, a congresswoman who has been championing the idea for three or four years. And last week, speaking to a congressional committee, she fleshed the idea out a bit.

The bank she is proposing, she says, “is not a silver bullet.” Rather, it is an important way to supplement other federal programs. Starting with federal seed money of $5 billion a year for five years, it would have the authority to issue federal bonds and use the proceeds to offer loans and loan guarantees to transportation, environmental, energy and telecommunications projects.

It would also have the authority to buy and sell infrastructure-related loans and securities, “creating a secondary market for U.S. infrastructure development and increasing investments in these sectors.”

That structure is somewhat similar to the European Investment Bank (EIB) which has been investing successfully in European transportation, energy and telecommunications infrastructure projects for over 50 years. In 2009, the EIB lent $81 billion to finance projects. The figures for 2009 aren’t all in yet, but the target for the year was $112 billion.

The bank DeLauro envisages would also be backed by an additional $225 billion available on call from the federal treasury department. Altogether, she estimates the bank could potentially issue up to $625 billion in bonds.

All this shows that at least some American politicians are capable of looking beyond the next election and taking a long-term view of the country as a whole. DeLauro herself says she believes there is a “growing understanding” of the need for long-term investment in infrastructure “if we are going to rebuild this country and move from recovery to long-term economic growth.”

Some of the ideas being kicked around involve projects that would help the U.S. reduce greenhouse gas emissions — things like high-speed rail (both passenger and freight), a new electric grid, a national broadband network and improved light-rail transit in major cities.

It’s a grand vision, and there will be many roadblocks in its path, but the people who support it understand that the present way, the old way, simply doesn’t work well anymore.

It’s also something that Canadians should watch closely since there are lessons to be learned.

We’ve spent a tonne of stimulus money in the last while, but we have to look beyond that. We need a national vision of stable, long-term funding for infrastructure projects of national, provincial and regional importance.

We have a Trans-Canada Highway that, in many places, is in deplorable condition. We have the idea of a high-speed rail corridor between Quebec City and Windsor that is being studied to death. We have another such corridor between Edmonton and Calgary. All could be prime candidates for loans from some sort of national infrastructure bank.

It’s an idea we should think about. Seriously.

Korky Koroluk is an Ottawa-based freelance writer. Send comments to editor@dailycommercialnews.com

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