Build America Bonds

Floor Speech

Mr. WYDEN. Mr. President, I rise to talk about a great success story that not a lot of people have heard about. It is the story of a program that's helping create jobs and solve a lot of problems at the same time. It is the story of Build America Bonds.

These bonds came about from a piece of legislation I introduced last year as a way to shore up our Nation's crumbling infrastructure, and, at the same time, put people back to work.

In my home State of Oregon, infrastructure projects have proven to be an economic engine. People get back to work building a bridge, for example, and all the businesses near the construction site get more activity from the people who need their services. Then, once the project is finished, private investment follows that public investment. That bridge makes it easier for folks to get to work or take their kids to school, and communities grow.

Now, when I initially proposed Build America Bonds, I thought they would sell $10 billion worth, but the most recent report on the bonds has shown they are selling like hotcakes. Build America Bonds dollars are flowing into local communities, creating jobs and helping to strengthen America's infrastructure.

To date more than $50 billion worth of these innovative bonds have funded hundreds of projects in 38 States: fixing our roads and bridges, rebuilding our schools, and upgrading our utilities.

For example, in Oregon's Dayton School District they have already used Build America Bonds to employ up to 150 people building and remodeling classrooms. By using Build America Bonds, the school district saved an estimated $1.2 million in interest costs.

The city of De Pere, WI, was able to use Build America Bonds and lower its financing cost by 2.3 percent, allowing it to move forward with plans to upgrade roads, sewers, and buildings. The city's finance director, Joseph G. Zegers, told Business Week magazine that without Build America Bonds, ``some projects might not be done,'' and ``There would be less employment.''

Recently, the CBO highlighted other benefits from Build America Bonds. In an October report, the CBO found that tax-credit bonds, like Build America Bonds, can be more cost-effective than tax-exempt bonds. The report also concluded that because these bonds are more attractive to investors they are more efficient at raising capital.

Not only are these funds being raised efficiently, they are being put to work quickly. Due to Federal spending guidelines, all bond funds must be spent within 2 years of the bond being issued. This means that money is not only flowing into projects, it is being spent in the short term, funding projects and putting people back to work with little delay.

Before these bonds started being issued, the market for normal municipal bonds was frozen. It was very hard to sell municipal bonds, but that didn't mean the need for financing infrastructure wasn't still there.

Build America Bonds have changed that.

These bonds provide the option of a tax credit to investors or Federal subsidy to issuers of 35 percent of the interest earned over the life of the bond. This has proven to be a strong incentive and opened up new markets for State and local governments, giving financiers a new and profitable opportunity to invest in America.

Build America Bonds have also gained support from the private sector, including the Chamber of Commerce and the National Association of Manufacturers.

While this program has given local governments a powerful new tool in fighting the recession, time is running out. These bonds can only be issued until the end of 2010 and I urge communities to take advantage of this landmark program. Although there is no limit on the number or amount of bonds that can be issued, the clock is ticking and the end of 2010 will be here before you know it.

I am not surprised that Build America Bonds are reinventing the municipal bond market. They are a good deal for investors and our communities. They have freed up financing for badly needed infrastructure construction, and ensured long-term economic growth.

I would also like to highlight the Recovery Zone Build America Bonds program. Recovery Zone Bonds are much like Build America Bonds but are designed to help communities most adversely affected by the recent recession.

These highly targeted bonds offer an even more generous subsidy of 45 percent of the interest to investors. Treasury allocates these bonds based on employment declines in 2008. So, the harder an area is hit, the more Recovery Zone Bonds it can issue, creating jobs where they are needed most.

In some cases, these bonds will make the difference between whether these projects come to fruition or not. In other cases, they will lower the cost of projects and allow the community to reinvest those savings in other projects.

As with Build America Bonds, Recovery Zone Bonds will only be issued until the end of 2010. That is why I am encouraging communities facing high unemployment to take advantage of the billions of dollars available in Recovery Zone Bonds.

I also encourage my colleagues in Congress to begin working now to continue the success of Build America Bonds. As Congress struggles to find funding for a new transportation bill, innovative approaches like Build America Bonds should be part of the solution.

The Build America and Recovery Zone Bond programs are working. They are providing much needed jobs to folks in our communities while strengthening essential infrastructure. They have given investors a profitable opportunity to invest in America. They are giving our children better schools, building energy efficient power grids, providing cleaner water and better roads. In short, they work.

Build America Bonds are examples of how Congress can innovate creative solutions to rebuild our country and our economy. I urge my colleagues and our constituents to use them.

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