Key test today for Obama's infra plans

The US Senate is poised to vote on President Obama’s $447bn Rebuild America Jobs Act. The legislation has its opponents, however, and these challenges could further postpone greater participation of private capital in infrastructure development.

With the US senate set to vote later today on the $447 billion Rebuild America Jobs Act, which is meant not only to create new employment opportunities but also revamp the nation’s archaic transportation infrastructure, the legislation is sure to be met with some resistance. 

President Obama touted the plan – which also calls for a $10 billion national infrastructure bank – on November 2 in front of the 90-year old Francis Scott Key Bridge, which connects Washington DC and Virginia and is in urgent need of repair. However, his is not the only infrastructure proposition on the table.

Nonetheless, politicians in support of the president’s bill, including Nevada Senator Harry Reid, urged bipartisan support of the White House plan. Much of the opposition to the bill derives from opponents of an additional tax that would be imposed on wealthy Americans to fund the jobs act – citizens who according to Senator Reid would be willing to pay for the infrastructure programme.  Others argue that a surtax would hamper business development.

US Transportation Secretary Ray LaHood mirrors Senator Reid’s sentiments. “There’s no such thing as a democratic or republican bridge, and there’s no such thing as a democratic or republican job when it comes to rebuilding our aging infrastructure,” LaHood said in a statement. 

“Congress needs to pass the transportation portion of the American Jobs Act as soon as possible so we can continue to modernise our transportation systems and keep our economy moving forward,” he added.

Competition for the jobs act includes the Building and Upgrading of Infrastructure for Long-term Development Act, or BUILD, introduced last spring. BUILD is a bi-partisan plan co-sponsored by Texas Senator Kay Bailey Hutchison, Massachusetts Senator John Kerry, Virginia Senator Mark Warner and South Carolina Senator Lindsey Graham.

In a speech before the Senate on Wednesday, Senator Hutchison calls recent changes to the president’s plan “untenable” and goes on to state the she “cannot support the plan.”

A point of contention between the BUILD Act and the president’s plan is that the former contains no bailout funds unlike the White House plan, which includes $50 billion in stimulus capital, according to Senator Hutchison. Instead, the bi-partisan proposal foregoes any grant funds in favour of issuing loans.

The loans deriving from the BUILD Act fund in no way resemble micro-lending status. Instead, Senator Hutchison is clear that the legislation is designed for large-scale projects worth upwards of $100 million. There is an exception to projects in rural cities that would allow for smaller loans of about $25 million.

The Texas senator was also adamant that “revenue service” would be a key focus on the programme. The Build Act earmarks some $160 billion to be directed at building transportation landmarks, such as highways and bridges, which earn revenue via collecting tolls, in addition to water and electricity providers that generate income from billing residents, for instance.

If an agreement is not reached soon, the US could suffer the consequences of inadequate roads, tunnels and power grids for years to come. The American Society of Civil Engineers estimates that it will take a capital injection of more than $2 trillion to sustain “adequate” infrastructure development in coming years, according to Senator Hutchison.