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This week’s proposal by a bipartisan group led by Senator John Kerry (D-MA), Senator Kay Bailey Hutchison (R-TX), and the Chamber of Commerce to create an infrastructure bank has the potential to be one of the only meaningful pieces of legislation to move forward in this Congress. Modernizing America’s crumbling transport, energy and water infrastructure could put Americans immediately back to work and create the conditions for long-term growth; however, this process has been held back by a lack of financing from both the public and private sector. The proposed infrastructure bank would leverage both US government public funds and private capital to kick-start investment in American infrastructure. Today’s GR Energy and Climate Brief highlights some of the key developments that have transpired this week in Washington regarding the resuscitated infrastructure bank proposal and previews its chances of becoming law.
Source: Congressional Budget Office
Introduction of the “Build Act”: Supporters of the new proposal, dubbed the “Build Act”, argue that it could leverage $10 billion dollars in public spending to spur more than ten times that amount in private infrastructure spending for major infrastructure overhauls. The bank is modeled after the US Export-Import Bank, which invests in public-private-partnerships abroad. It would pull private money into backing public projects, insuring that investments are smart, risks are spread, and private investors ensure that the decisions are defensible.
The Gap: A 2009 study, post-economic downturn, by the American Society of Civil Engineers argued that the country would have to spend $250 billion a year over the next 50 years just to meet surface transportation needs, and that currently the United States spends only 2 percent of gross domestic product on infrastructure, compared to 5 percent for Europe and 9 percent for China. Many across the political spectrum agree that business as usual is not going to fill this gap.
See full article here.
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