Senators express bipartisan interest in reviving infrastructure financing tool

Senators on both sides of the aisle on Tuesday said they are interested in reviving an Obama-era bond program to help finance infrastructure projects.

Both Senate Finance Committee Chairman Ron Wyden (D-Ore.) and ranking member Mike Crapo (R-Idaho) expressed interest in renewing the Build America Bond (BAB) program, which was created by former President Obama’s 2009 stimulus law. Their comments come as lawmakers and the Biden administration debate how to pay for infrastructure spending.

“This is an approach that Congress has to return to because it works,” Wyden said at a Finance Committee hearing.

Crapo said a short time later that he agreed with Wyden’s comments about the program.

“They can be a significant way of incentivizing private capital into our infrastructure,” he said.

Under the BAB program, state and local governments could issue taxable bonds in 2009 and 2010 and receive a subsidy from the federal government for a portion of their interest costs. The program was popular, with about $180 billion of bonds issued, but was not renewed when it expired.

Some lawmakers on both sides of the aisle over the years have expressed interest in reviving the program. They see it as a way to attract private capital in infrastructure and compliment direct federal funding for transportation projects.

Lawmakers are now renewing their calls to revive the BAB program as Republicans and Democrats are divided on other options for financing and funding infrastructure investments.

Biden has proposed paying for his $2.25 trillion infrastructure plan through corporate tax increases, but Republican lawmakers view raising corporate taxes as a non-starter. Republicans have expressed interest in paying for infrastructure spending through user fees, but Democrats argue that such fees would increase tax burdens for the middle class.

Sen. Michael Bennet (D-Colo.) said that the comments from Wyden and Crapo on BABs gives him “some hope going forward.” 

Bennet has introduced legislation with Sen. Roger Wicker (R-Miss.) to create a new type of bond that would be similar to BABs. He said that his proposed bonds could be attractive to investors who don’t benefit from traditional tax-exempt bonds, such as pension funds.

The subsidies provided for BABs have been reduced by federal spending cuts known as sequestration, but the bonds that Bennet and Wicker are proposing would have their subsidy payments exempted from sequestration.

Lawmakers in the House area also interested in renewing the BAB program. House Ways and Means Committee Chairman Richard Neal (D-Mass.) has long been a proponent of reviving the infrastructure-financing option.