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1 1 (July 30, 2020)

handle is hein.crs/govdbew0001 and id is 1 raw text is: July 30, 2020 National Infrastructure Bank: Proposals in the 116th Congress ,' ,r : z,-o d R., ct:i ', ,'3 The term infrastructure generally refers to long-lived, capital-intensive systems and facilities in the areas of transportation, energy, water, and telecommunications. Some broader definitions also include facilities for education, recreation, and health. Although the condition and performance of these systems are generally thought to be important forthe nation's well-being, there is less agreement on the optimallevel of infrastructure investment, how to maximize the effectiveness of spending, and the appropriate role of the federal government. State and local governments and the private sector provide the bulk of infrastructure investment. The federal role in infrastructureinvestmentis important but limited in size and scope. For example, the federal govemment was responsible for 26% of total government highway outlays in 2017. The federal government supports infrastructure investment in four ways: (1) direct investmentin federally owned infrastructure; (2) grants to nonfederalentities, especially state and local governments; (3) tax preferences that forgo federalrevenue to provide incentives for nonfederalinvestment in infrastructure; and (4) loans and other types of credit as sistance to nonfederal entities. A national infrastructure bankis typically seen as a way for the federal government to provide loans, loan guarantees, and lines of credit to support infrastructure projects being carried out by nonfederal entities. Many different formulations have been proposed over the years, but policy choices typically include the following: Infrastructure type. Some proposals focus on one type, such as transportation or energy, but most would support a wider spectrumofsectors. Institutional form and governance. Most current proposals would create a wholly owned government corporation overseenby a board whose members are selectedby thePresident or Congress. But other rmdels exist, including placingthe bankinside an existing federal agency and creating a govenment-sponsored enterprise with an independent board. Funding source. Under the Federal Credit ReformAct of 1990 (FCRA; 2 U.S.C. §661(a)), credit assistance bythe bank would be supportedby an appropriation that pays the subsidycost and federal adminis trative cost. According to FCRA, the subsidy cost is theestimated long-termcost to the governmentof adirect loan oraloan guarantee... calculated on anet present value basis. An appropriation would leverage larger loan amounts fromthe U.S. Treasury. Assuming a 10% subsidy cost, every $1 appropriated beyond the amount of administrative costs would enable the bankto lend $10 to projects. Loan repayments would go to the Treasury (not the bank). Alternatively, abankcould operate as a revolving fund, suchthat credit assistance and administrative costs are limited to the size of the appropriation, but funds fromborrowers' payments could be used to make newloans. In some formulations, an infrastructurebankwould raise its own capitalthrough bond issuance. Advantages of a national infrastructure bankpotentially include the leveraging of state, local, and private-sector investment, data-driven project selection, and ahighly skilled staffwith expertise in infrastructure financing. Drawbacks might include the limited number of suitable projects for support, the duplication of existing programs, and pressure to allocate loans according to political criteria. A bankmay also not be the lowest-cost means of increasing infrastructure spending. The Congressional Budget Office notes that a special entity is suing its own debt would not be able to offer the low interest and issuance costs of the U.S. Treasury. Some see a larger federalrole in infrastructure as a drawback as well, and suggest that Congress might enhance theoperation ofstateinfrastructure banks as an alternative. Most infrastructure bankbills introducedin the 116t Congress would create a financing entity to support projects across several infrastructure sectors. These include the National Infrastructure Development BankActof2019 (H.R 658, Representative DeLauro);the National Infrastructure Investment Corporation Act of 2019 (H.R. 4780, Representative Carbajal); the National Infrastructure Bank Act of 2020 (H.1 6422, Representative Danny Davis); the Infrastructure Bank for America Act of 2020 (H.R 7231, Representative Webster); and the Reinventing Economic Partnerships and Infrastructure Redevelopment (REPAIR) Act (S. 1535, SenatorWarner). Severalother bills would create an entity to support infrastructure projects that aimto improve resilience andreduce greenhouse gas emissions. These include the National Green BankAct of 2019 (H.R. 3423, Representative Himes); the National Climate BankAct (H.R 5416, Representative Dingell); and the National Climate Bank Act (S. 2057, Senator Markey). Details of five selectedbills can be seen in Table 1. The REPAIR Act, for example, would create the Infrastructure Financing Authority (IFA), a wholly owned government corporation, with a $10 billion appropriation and the ability to collect fees fromborrowers. The IFA's funding would leverage a larger amount fromthe Treasury. Because loanrepayments go to the Treasury, the IFA would likely require future appropriations. Infrastructure sectors supported would include transportation, energy, and water, but with the board of directors authorized to modify this A A '2 k

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