Supporters of a national infrastructure bank have been advocating for the establishment of one, with a bill by Rep. Danny Davis, D-Ill., that would set it up. The pitch for this idea was made to numerous delegates and politicians at the Democratic National Convention, aiming to capitalize on the increasing momentum for the issue. During the event, members of the National Infrastructure Bank Coalition took advantage of the opportunity to hold panels, set up booths, and engage in discussions at various delegate events to promote the idea of a federal financing tool. Their primary argument revolves around the necessity of creating a national bank that can offer low-cost loans to state and local entities, which would be capitalized using existing Treasury debt.
The National Infrastructure Bank Act of 2023, introduced by Davis, proposes the establishment of a $5 trillion national bank that would provide loans for financing, developing, or operating eligible infrastructure projects to public entities such as states, utilities, and public-private partnerships. The bank’s capitalization would involve issuing stock that is subscribed to by holders of Treasury securities of three years or more maturity or municipal bonds of states or municipalities with five years or more maturity. Additionally, the bank would maintain a discount line of credit with the Federal Reserve System and collaborate with regional economic accelerator planning groups to identify infrastructure needs and priorities across the nation.
The necessity for a national infrastructure bank stems from the impending expiration of the Infrastructure Investment and Jobs Act in 2026. With this expiration looming, advocates argue that there needs to be a sustainable mechanism in place to address the nation’s infrastructure needs regardless of political changes. The idea of a national infrastructure bank has gained traction due to the country’s high amount of debt and pressing infrastructure requirements that cannot solely rely on expensive infrastructure bills passed by Congress. Advocates emphasize the importance of having a dedicated institution that can address the growing infrastructure demands effectively and efficiently.
Support and Opposition
The bill has garnered 37 co-sponsors, all from the Democratic party, and has received backing from various state legislatures and city councils, with California being the most recent supporter. However, some groups within the municipal market, such as the Bond Dealers of America and the American Securities Association, have expressed skepticism about the need for a national infrastructure bank. They argue that the traditional role of the municipal market in infrastructure finance should be maintained and that federal efforts should focus on reinstating tax-exempt advance refunding bonds and expanding current financing tools instead.
While the bill may not pass this year, advocates are optimistic about its reintroduction in the next legislative session given the existing support it has garnered. The concept of a national infrastructure bank is not new, with proposals for one dating back to President Obama’s administrations in 2008 and 2010. The recent push for such an institution reflects the growing recognition of the urgent need to address the country’s infrastructure deficiencies in a comprehensive and sustainable manner. As the discussions around the bill continue, it remains to be seen how policymakers and stakeholders will navigate the complexities of infrastructure financing in the years to come.