A fund to jump-start the economy
Washington has gotten so used to political theater that many here have lost the ability to spot real chances to do the right thing. The budget conference is an opportunity for Congress to craft a bipartisan compromise that serves the common good. Despite low expectations, the conference should be taken seriously.
The facts before the conferees are clear: Millions of Americans are out of work, growth remains stagnant, our long-term fiscal trajectory is unsustainable and the American people have said, loudly, that Washington is broken. Policy and political needs are aligned: Washington and the country desperately need a bipartisan, pro-growth compromise.
The conferees ought to consider a bipartisan solution that would create jobs in the short term, improve long-term economic growth and lower barriers for private-sector investment. The Partnership to Build America Act (H.R. 2084) is such a solution. The bill has 25 Republican and 25 Democratic co-sponsors, which may make it the most significant piece of unfinished bipartisan economic-oriented legislation in the House.
Right now, the loudest voices in the room are also the most partisan. We need to encourage real compromise. I came to Congress after having started and run large publicly traded companies. In my experience, the best deals in business are achieved when both sides feel like they gave up something. Effective process is about compromise and negotiations and being respectful toward your neighbors. That’s the way to get things done.
My bill would create an American Infrastructure Fund, a large-scale financing capability that could act like a bond insurer or bank for state and local governments to build transportation, energy, water, communication and educational infrastructure. The fund would be capitalized with $50 billion that could be leveraged 15 to 1 to create a $750 billion infrastructure financing capability. Over 50 years, the AIF could finance $2 trillion worth of infrastructure and create more than 3 million jobs.
The $50 billion of capital would be funded not by government but by private companies that purchase 50-year bonds at 1 percent interest that are not government-guaranteed. No taxpayer money would support the American Infrastructure Fund. As an incentive to purchase these below-market bonds, buyers would be allowed to repatriate a certain amount of overseas earnings tax-free. The specific ratio would be established by auction, which would encourage interested companies to bid against one another, guaranteeing a fair deal for the government. The winners of the auction would be the companies that bid the lowest exchange ratio. I expect the winning ratio to be in the neighborhood of 4 to 1, based on what companies would be willing to pay as an effective tax. This means that if Company X purchases $1 billion in infrastructure bonds, it would be able to bring back $4 billion in overseas earnings tax-free. If the bonds are worth 20 cents on the dollar to the company, then the cost to Company X is the equivalent of a 13 percent tax.
This would help private and public sectors. Almost $2 trillion of corporate cash is sitting overseas. Many large companies would like to bring home some of this money and reinvest it. By tying that repatriation to infrastructure, we guarantee that jobs would be created.
Good economic policy is crafted at the intersection of principle and compromise. This legislation addresses tax policy concerns that Republicans have voiced for decades while increasing infrastructure investment, which Democrats have pushed since the 1990s.
This measure also would get our economy moving and make our country more competitive.
If U.S. ports can’t meet the demands of global commerce, jobs will leave our shores. If U.S. schools fall apart, American students will fall further behind. And if U.S. roads remain in disrepair, commutes will grow longer. Infrastructure is a good investment; for every $1 spent on infrastructure, the economy receives $1.92 in benefit.
Pro-growth economic policy helps address our national debt in a politically feasible manner. Under current trajectories, we will face extremely tough choices after 2020, when interest on the debt and unreformed entitlement programs will threaten to crowd out our ability to pay for anything else. Economic growth, coupled with additional reforms, would lead to fiscal stability and ensure that the next generation has a chance to live the American dream.
Bipartisan compromise is possible, but it won’t happen simply by wishing that the other side will change its mind and address your party’s agenda. In working on this legislation, I had more than 100 one-on-one meetings with Republicans. Working with my colleagues in good faith, we found a way forward.
Both parties have long called for a budget conference. Now that we have one, we should seize the opportunity to strengthen the economy. Congress has staged enough tragedies this year. Let’s come together and give the American people an ending worthy of our audience.
The writer, a Democrat, represents Maryland’s 6th District in the House.