Rep. Delaney Proposes $50 Billion Infrastructure Finance Bill
There’s a new entrant in the field of ideas for how to pay for infrastructure investment. Rep. John Delaney (D-Md.) is proposing a bill to provide $50 billion in loans and loan guarantees, financed by the sale of infrastructure bonds.
There’s a new entrant in the field of ideas for how to pay for infrastructure investment.
Rep. John Delaney (D-Md.) is proposing a bill to provide $50 billion in loans and loan guarantees, financed by the sale of infrastructure bonds.
The Partnership to Build America Act, which Delaney and more than 20 co-sponsors will introduce today, would fund infrastructure for energy, communications, water and education, as well as transportation.
The bonds would have a 50-year term and pay a fixed rate of 1 percent. They would not be guaranteed by the federal government, according to a backgrounder from Delaney’s office.
Delaney, who has a background in finance, is proposing to give corporations an incentive to buy the bonds by letting them repatriate some of their overseas earnings tax-free.
The bill would set up an auction mechanism that would allow the market to determine the tax-free rate per bond.
If, for example, the auction set a rate of $4 in tax-free repatriation for every $1 in bonds purchased, the company’s effective tax rate on repatriated funds would be about 8 percent and the $4 could be spent however the company chooses, the backgrounder says.
The fund would leverage the $50 billion at a 15:1 ratio for up to $750 billion in loans or guarantees to states or local governments. At least a quarter of the projects would have to be public-private partnerships.
A board composed of private and government appointees would make decisions about loan applications, said Delaney spokesman Will McDonald. He said the board would be established along the lines of the Export-Import Bank, an independent agency chartered by Congress.
The bill’s sponsors hope to move it forward as a stand-alone measure, without waiting for the surface transportation reauthorization bill due in October 2014, McDonald said.
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