Moving Ahead for Progress in the 21st Century Act

Floor Speech

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Mr. WYDEN. Mr. President, we all understand that our country faces an array of major economic challenges, and I made the judgment quite some time ago that it was simply impossible to have big league economic wealth with little league transportation systems. All across the country--I know the distinguished Presiding Officer has seen this in Minnesota, where he has been doing good work on infrastructure and bridges--we have seen this in every corner.

When the Senator from North Dakota came to the Senate, I had the good fortune to begin to have discussions with him with respect to some new ways to address the question of how to generate funds for the critical transportation work that needs to be done and to generate those funds in a fashion that would be acceptable to the American people.

I think we all understand that with this kind of an economy and with skyrocketing gasoline prices, it is not very likely that folks will be marching outside our Senate offices anytime soon carrying signs saying: Senator, please raise the gas tax; that is what I hope you will spend your time doing. So we have this challenge given the fact that the traditional system of funding transportation--user fees--of course, in a tough economy, is going to be hard to suggest as a route to generate additional funds.

So for quite some time I have been devoted to the cause of trying to find a way to secure the possibility of getting additional funds through transportation bonds. They, of course, have been used at a variety of levels of government, particularly State and local, over the years.

About 8 years ago, I put forward the first proposal for looking at paying for transportation projects with our former colleague, Senator Jim Talent, a Republican from Missouri, and we called them Build America Bonds. Senator Talent and I thought at that time that this was an opportunity to come up with a fresh and attractive way to pay for transportation projects. We sought to work with the private sector to find some way to use Federal tax credit bonding for these projects, and over the years Senator Talent and I were able to attract a number of Senators on both sides of the aisle for this cause. To give an idea of just how bipartisan this effort has been over the years, Senator Thune, Senator Vitter, our former colleague Senator Dole, Senator Collins, Senator Wicker, and our former colleague Senator Coleman are just a few on the Republican side who were part of the effort. And on the Democratic side, Senator Klobuchar, our former colleague Senator Dayton, Senator Cardin, and Senator Rockefeller have been just a few of those who have supported the bonding efforts.

In 2009 the Congress decided to test a version of Build America Bonds. In effect, as a member of the Senate Finance Committee, I had brought it up so many times with Chairman Baucus and Senator Grassley, who was then the ranking member, I think the two of them said: Well, let's give this a try as part of the Recovery Act. In effect, it would essentially go from the middle of 2009 until the end of 2010.

Late in the evening, as Chairman Baucus and Senator Grassley were working to put together the details on the Recovery Act, I was asked what I thought might be the results of the Build America Bonds program, and I said: Well, it is not going to last all that long. It is going to take the Internal Revenue Service a period of time to put together the rules. And I said: I am just making this up, but why don't we just estimate that it might generate $6 billion to $10 billion worth of transportation and infrastructure investments.

Everybody said: It is an experimental program, sounds promising, go ahead. Let's give it a try.

Well, between April 2009 and the end of the program at the end of 2010, there was more than $181 billion worth of Build America Bonds issued. It was just a little bit more than 18 times what was predicted.

You don't often have this kind of challenge, but, in effect, one of the issues we had to deal with was Build America Bonds became so popular that there was an effort to use them for a variety of other kinds of projects, many of them very laudable but they were not projects that focused specifically on transportation, and, of course, that was the original intent of Build America Bonds. Also, there was no cap on them. Nobody realized they would be so popular.

So there was a concern that this was more than colleagues on both sides of the aisle had bargained for.

We do want to note that the Treasury Department issued their final report on Build America Bonds earlier this year, and they said that Build America Bonds issuers saved well over $20 billion in borrowing costs on a present value basis as compared to tax-exempt bonds.

So clearly there was something to work with in terms of trying to take the next step, and when the Senator from North Dakota arrived here, I said: It would be great to have an opportunity to work with a partner and look specifically at trying to rebuild the concept of focusing specifically on transportation in a way that would generate a substantial amount of new revenue and would be acceptable to colleagues across the political spectrum and those who follow these issues.

As the Senator from North Dakota knows, we have now come up with a new approach called Transportation and Regional Infrastructure Project Bonds. Chairman Baucus and Senator Hatch have been good enough to include them in the finance title of this year's Transportation Funding Program, and we wanted to take a few minutes to talk a little bit about how this would work.

Given the fact that we have been able to attract a number of folks on the progressive side of the political spectrum--folks in labor, for example--Doug Holtz-Eakin has issued a very helpful paper that I hope will also bring conservatives to this cause. We have shared that paper with Senators on both sides of the aisle.

The way the TRIP bonds would work is, first, they are tax credit bonds created specifically for transportation projects. We would allow infrastructure banks that already exist in nearly every State to issue these bonds. This time we are looking to really focus on the States. The States are the primary vehicle for ensuring that these projects would have local support and would really meet the long-term needs the States have identified.

We would pay for the bonds with a sinking fund comprised of State matching contributions and Customs user fees. In the proposal that was accepted by the Finance Committee, we would cap the total amount of bonds issued at $50 billion, giving each State 2 percent of the total. In effect, what the Finance Committee has done is put a placeholder in their bill for us to go forward with this effort.

Each State would get at least $1 billion in bonds to issue on projects at their discretion. States can also band together to bond for larger projects or ones that would have the benefit of addressing a concern of States in a region. This would give the States the incentive and the ability to invest in their own transportation and does so in a way that leverages private investment and costs little to our government in lost revenue.

We would give private investors who show a willingness to help build our roads, bridges, and rail systems a tax credit for their commitment. What Build America Bonds taught us is that there is a real market out there, and what we would like to do is look at a different approach now, focusing on the States, focusing on an approach that would drive these projects, not in Washington, DC but at the local level.

The Joint Committee on Taxation has told us this is an approach that would produce a particularly good deal for American taxpayers.

We can get a transportation bill done. We can put folks back to work. But we are going to have to find a way to come up with more creative approaches to generate additional revenue. If we do not, I think we are going to continue to see, in every corner of the country, critically needed projects simply go unaddressed. We are going to continue to see traffic jams in areas of the country nobody could have even dreamt a traffic jam would be.

I hope Senators, as we go forward with this debate, particularly after the President's Day break, will join my colleagues. Senator Begich has been very supportive of this approach as well. We think this is an approach with a proven track record given what we saw with Build America Bonds. We believe this is a chance to take the lessons we learned from that experience and, by changing the focus so it zeros in more directly, one, on transportation, two, on the States, and looks to some creative features--it is possible, for example, for someone to strip the credit from the underlying bond and to sell the credit--so this provides a lot more flexibility in terms of finding a way to get the private sector into the transportation area.

I hope my colleagues, when we come back, will be supportive of this effort. It has won, as I have indicated, support from across the political spectrum.

I want to thank my partner from the State of North Dakota. I have very much enjoyed working with him both on the Energy Committee and on this issue. As a former Governor, I think he understands particularly well the role of the States in terms of infrastructure.

We will be talking to colleagues between now and the time the Transportation bill comes up, and I thank my friend from North Dakota for his support.

With that, I yield the floor.

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Mr. WYDEN. Mr. President, I thank my colleague from North Dakota for his statement. This is bipartisan. It is a bicameral effort. My colleague's point at the end, in terms of our being open to additional ideas and suggestions, is particularly appropriate.

What the challenge is going to be on this transportation issue for years to come is to try to find a way to generate the additional money for the work that needs to be done in a fashion that is acceptable to the American people. If it was so easy, everybody would be just ripping through one idea after another.

The two of us have spent many months trying to take the lessons we have learned from the Build America bonds effort to try to come up with a fresh approach, a fresh bipartisan approach, that would be acceptable to colleagues on both sides of the aisle. We think we have done it. We do not think this is the only way. We are certainly open to ideas and suggestions. But the model of trying to focus on the States, to build on the support we have from folks in business and labor unions, and a whole host of groups at the local level--mayors and county commissioners--strikes us as the way to go.

We are open to additional ideas and suggestions. Our staffs will be working all through this week, the period of the President's Day recess, to refine our proposal, to deal with the various issues related to scoring. But this is a genuinely new approach to generating revenue. It is bipartisan; it is bicameral, with the support of folks in labor and business. We hope colleagues will be supportive, and we are interested in their ideas and suggestions over this period between now and when we start voting on the Transportation bill.

So, again, I thank my friend from North Dakota. It has been great to work with him.

I yield the floor.

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