How we can make more infrastructure loans available
House Republicans recently released our “Commitment to America,” containing over 150 policy proposals. Before the pandemic, the nation was enjoying its best economy in a generation.
Under the Commitment to America, House Republicans will rebuild our economy, which includes upgrading and modernizing our infrastructure.
We recently proposed a creative, budget-friendly idea that will infuse private capital into public projects — HR 7231, the Infrastructure Bank for America Act. New efficient technologies to create revenue-generating opportunities can help to rebuild and expand our nation’s failing infrastructure.
Coupled with traditional methods of engineering and construction, game-changing techniques and novel materials, this can make our infrastructure better than ever.
The primary difference between H.R. 7231 and prior attempts to create a national infrastructure bank is that our legislation is not supported by federal funding and enables the bank to be self-sustaining.
With guardrails and oversight to ensure sound risk practices and appropriate oversight by the Federal Reserve Board, the bank will operate based on market-driven principles to invest in worthy projects throughout the nation while providing an attractive vehicle to pension funds and other long-term investors.
The IBA will complement, not replace, existing state and federal funding programs. This will encourage states and municipalities to pursue all available funding sources.
The bank is structured similarly to the Federal Home Loan Bank System and will be established as a government-sponsored enterprise to serve as a wholesale lender to infrastructure projects through state and local governments, state infrastructure banks and private entities. The IBA will provide equity investments, direct loans and loan guarantees for the construction or maintenance of collateralized infrastructure projects in the United States.
Revenue pledges, collateral and guarantees will be required to secure bank investment. The IBA will also have the authority to issue equity securities and bonds. As a wholesale lender, the IBA will have access to lower costs of funds, which would be a benefit to state and local borrowers.
The IBA encourages private investment through tax incentives for those investments made in the bank during the first three years of operation. This will help capitalize the bank. In turn, the IBA’s investments could help finance surface transportation projects, airports, railways, electric grid security, broadband connectivity, port expansion, the revitalization of Main Street, USA, and more.
The IBA will support industries and projects critical to the structure, growth and resurgence of the U.S. economy. While the IBA is restricted from engaging in commercial or investment banking activities, investments are not restricted to specific projects. Rather, the legislation allows the IBA to invest in all infrastructure projects, with a minimum of 7% set aside for rural areas.
It will also help state and local entities that struggle to secure capital to cover the state matching requirement when receiving federal infrastructure funds.
Both parties agree that infrastructure investment is needed. Currently, other countries, particularly China, are attracting U.S. investments to the tune of hundreds of billions of dollars toward infrastructure projects. We should provide incentives for these investments to be made in U.S. infrastructure instead.
The IBA will be the sound and secure investment mechanism to accomplish this without putting the burden on taxpayers.
As we share this idea with our congressional colleagues, we are hopeful this innovative and market-based approach will receive bipartisan support. The Infrastructure Bank for America will help rebuild our nation and strengthen our economic competitiveness with the rest of the world.
U.S. Rep. Dan Meuser, a Republican, represents the 9th District, which includes Carbon and Schuylkill counties, and serves on the House Committee on the Budget. U.S. Rep. Daniel Webster, of Florida, is a senior member of the House Committee on Transportation and Infrastructure.