The idea of a national infrastructure bank was pitched to delegates and other political figures at the Democratic National Convention by supporters who believe in its potential to address the nation’s growing infrastructure needs. The National Infrastructure Bank Coalition made efforts to raise awareness about the bill proposed by Rep. Danny Davis, D-Illinois, and emphasized the importance of establishing a federal financing tool to support infrastructure projects across the country.
Advocates of the national infrastructure bank argue that it is essential to have a financial institution authorized to provide low-cost loans to state and local entities for infrastructure development. They propose capitalizing the bank with existing Treasury debt to address the nation’s ailing infrastructure, especially as the expiration of the Infrastructure Investment and Jobs Act looms in 2026. The question remains, “What will happen after the IIJA expires?”
The proposed bill, H.R. 4052, aims to establish a $5 trillion national bank that would provide loans for eligible infrastructure projects to public entities, states, utilities, and public-private partnerships. The bank would be funded by issuing stock subscribed by holders of outstanding Treasury securities and municipal bonds, with the Treasury Department serving as an “on-call” subscriber. The bank would facilitate economic planning groups to identify infrastructure needs and priorities and finance projects in various categories, from lead pipe replacement to a national high-speed rail system.
Gaining Support and Facing Opposition
The National Infrastructure Bank Act of 2023 has garnered support from 37 Democratic co-sponsors and numerous state legislatures and city councils, including California. However, some municipal market groups, like the Bond Dealers of America and the American Securities Association, have voiced opposition to the bank. They question the need for a national infrastructure bank, citing the traditional role of the municipal market in infrastructure finance and advocating for the reinstatement of tax-exempt advance refunding bonds.
A Long-Standing Idea with Renewed Interest
The concept of a national infrastructure bank dates back decades, with President Obama proposing one in 2008 and 2010. The recent push for the bank has gained momentum, but its future remains uncertain. While advocates hope to reintroduce the bill in the next session with existing support, the road ahead is filled with challenges and differing perspectives on the best approach to addressing the nation’s infrastructure needs.