US Senators introduce new bill to create infra bank

Four prominent Democratic and Republican US senators, led by Senator John Kerry of Massachusetts, have proposed the creation of a government-owned agency that would work with the private sector to fund major transport, water and energy projects.

US Senator John Kerry, a Democrat from Massachusetts, has introduced legislation that would establish a federal government agency to support the development of over $600 billion worth of transportation, water and energy infrastructure projects across the country.

Senators Kay Bailey Hutchison, a Texas Republican, Virginia Democrat Mark Warner, and Lindsey Graham, a South Carolina Republican, are co-sponsoring the legislation.

The bank, called the American Infrastructure Financing Authority (AIFA), would be funded initially with $10 billion, according to a statement on Kerry’s website. The AIFA would provide loans and loan guarantees to infrastructure projects. It would not provide more than 50 percent of a project’s costs, and “in many cases would provide much less, just enough to bring in private investment”, according to the statement.

The bill has also garnered the support of US Chamber of Commerce President Thomas Donohue and Richard Trumka, the president of the AFL-CIO, an influential federation of US labour unions.

Both Trumka and Donohue appeared alongside Kerry, Hutchison and Warner in a press conference announcing the legislation last week.

“Reliable, modern infrastructure isn’t a luxury,” Kerry said. “It’s the lifeblood of our economy.”

Kerry said the bank would support infrastructure projects of “regional and national significance” and estimated that it could create as much as $640 billion worth of investments in ten years.

Donohue, the US Chamber of Commerce president, said that such an agency could provide the stable investments that the private sector is seeking.

“This bank can be much better than we even think now because there is capital all over the world looking for things to get a mandatory return,” Donohue said.

Kerry, who ran for president on the Democratic ticket in 2004 and chairs the Senate Foreign Relations committee, said the bill was an attempt “to make a bi-partisan issue bi-partisan once again”. The proposal stipulates a seven-member voting board for the agency, with no more than four members from the same political party.

“Democrats and Republicans, business and labour, are united to support the establishment of an American infrastructure bank in the United States in order to leverage investment, and once again make America the world’s builders,” Kerry said.

In the House of Representatives, Connecticut Democrat Rosa DeLauro also introduced legislation in January to create an institution like the European Investment Bank to fund US infrastructure projects. But the bill's list of 40 co-sponsors is entirely composed of Democrats. A similar proposal introduced by DeLauro in 2009 failed in Congress. 

President Barack Obama emphasised infrastructure spending in his 2012 budget proposal, including a $30 billion commitment over the next six years to fund a National Infrastructure Bank.

One of Obama's stated goals is to bring high-speed rail to 80 percent of the country in the next 25 years, but since December, three US Republican governors have turned down federal high-speed funds totaling $3.6 billion.

To be considered by the AIFA, projects would generally have to require an investment of over $100 million, though rural projects need only have an investment size of $25 million, according to a statement.