Trump’s $1 trillion infrastructure fund opens bank/bond debate

US President Donald Trump’s plan to spend up to US$1 trillion upgrading the country’s infrastructure has triggered the first serious bipartisan debate in Congress on whether the United States should establish a National Infrastructure Bank and/or a national bond authority. The chairman of the House of Representatives Transportation and Infrastructure Committee, Republican Bill Shuster, says he opposes the establishment of a National Infrastructure Bank, while Democratic Senator Mark Warner is pressing for such a bank or independent financing authority. Trump’s proposed US infrastructure fund is the brainchild of Warner, a former Virginia governor and private-equity principal, who quietly proposed a $1 trillion fund to be managed by a public-private National Infrastructure Bank in February 2010. Warner proposed banks putting between $100 billion and $200 billion into the fund and the US government financing the rest through leverage. Federal Transportation Secretary Elaine Chao and Maryland Governor Larry Hogan (see video below) have said the $5.6 billion, 25.7-kilometer suburban Purple Line light railway connecting Maryland’s Montgomery county and Prince George’s county is a model that could be used for public-private partnerships (PPPs) across the US.Chao noted that while such projects are the norm around the world, public-private financing of public infrastructure is even banned in some US states. Hogan said he personally told Trump that his administration needed to use the successful public-private Purple Line project as an example of best practices for the proposed $1 trillion infrastructure bank/authority. Paris-based Meridiam leveraged its vast experience of major infrastructure projects in Africa and Europe to take over the project financing and financial control of the Purple Line, Meridiam founding partner and chief executive Thierry Déau (video below) told Capitol Intelligence/BBN in an interview during annual meetings of the International Monetary Fund and World Bank in Washington. Meridiam is uniquely positioned to benefit from Trump’s plan to invest $1 trillion in US infrastructure via PPPs along with other infrastructure funds such as Australia’s Macquarie, the Abu Dhabi Investment Authority and Singapore’s Temasek Holdings. The Port of Baltimore is viewed as a model for PPP as its partnership with Oaktree Capital Management unit Highstar Capital allowed the State of Maryland to reap $1.8 billion in economic benefits and create 5,700 jobs without spending a cent of taxpayer money. Baltimore’s deep-sea Panamax facility has become the most efficient port on the United States’ east coast. Like Warner, US Senator Chris Van Hollen, a Maryland Democrat (video below), says he strongly supports the creation of a National Infrastructure Bank and points to the Port of Baltimore as an example of a successful public-private financing of a strategic US infrastructure project.
Warner’s proposal, while it was supported by president Barack Obama and his treasury secretary Timothy Geithner, faced insurmountable opposition from liberal Democrats against private-sector infrastructure funding and neoconservative/Tea Party opposition to government-sponsored corporate welfare. Trump’s rival Hillary Clinton lifted much, if not all, of Warner’s proposal in her campaign for the presidency, and the $1 trillion figure was quietly re-appropriated by President Trump and highlighted during his first State of the Union address to Congress on February 28. “I will be asking the Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States,” he said on that occasion. One solution aimed at winning support from Shuster is to bring back and expand the scope of Build America Bonds.

Peter K Semler is the chief executive editor and founder of Capitol Intelligence.

Source : Asia Times


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