Freshman Rep. John Delaney, a Maryland Democrat, has a unique distinction in Washington: He’s the only former CEO of a publicly traded company serving in Congress. That experience, he says, gives him insight into the power of finance, which he’s using to pitch a plan that could address the country’s infrastructure struggles.
Delaney’s new bill, dubbed the Partnership to Build America Act, would create a $50 billion infrastructure fund that would provide low-interest loans, direct investment, and loan guarantees for state and local infrastructure projects—all without any federal appropriations. So where would the money come from?
Hear Rep. Delaney explain the origins of his infrastructure legislation.
The idea is that the infrastructure bank would sell $50 billion worth of 50-year bonds that pay a low interest rate—just 1 percent—and wouldn't be guaranteed by the federal government. Ordinarily, that would be a bad deal for any business. But the twist is that for every $1 a private company invests in those bonds, it would be able to repatriate a certain amount of money currently being held overseas tax-free. “In order to address this problem, we need a lot of tools in the toolkit,” Delaney says of the country’s infrastructure struggles. “One of the tools that I felt was missing was a large-scale, flexible financing mechanism.”
The proposal comes as the topic of overseas tax havens is increasingly gaining the attention of lawmakers. A recent Wall Street Journal analysis of U.S. profits “parked abroad” estimated that 60 of the largest U.S. companies kept $166 billion overseas last year, shielding more than 40 percent of their profits from taxation. Apple CEO Tim Cook was recently grilled about the practice at a congressional hearing this spring.
But while Delaney’s bill has gotten the attention of the press and his colleagues—it has 30 bipartisan cosponsors—it remains stuck in committee and faces several hurdles. For example, some have questioned whether the bill has too narrow a focus. Repatriation is a controversial topic, and some members of Congress will likely think the issue should be tackled in a more systematic way or that repatriated funds should go towards other priorities, like deficit reduction.
State and local governments stand to be the bill’s biggest beneficiaries, according to Delaney. Still, not everyone working in states and localities has signed on. The American Association of State Highway and Transportation Officials, for instance, has yet to officially endorse the bill. It’s currently analyzing the legislation to pinpoint the benefits the proposal could add to existing infrastructure financing mechanisms. Indeed, the feds already have a strong federal program for transportation loans—the Transportation Infrastructure Finance and Innovation Act (TIFIA)—and there’s not a high demand for bond insurance. Delaney says his plan is more flexible than TIFIA, which is limited to transportation programs, and it would be governed by a board empowered to develop creative products that would respond to the market.
Emil Frankel, a former assistant secretary for transportation policy under George W. Bush, says Delaney’s bill is reflective of a broader trend in Congress: a growing focus on financing tools rather than robust, long-term funding sources. While Delaney’s bill won’t hurt efforts to build, some infrastructure experts say, it’s not likely to be a boon either, since funding is the biggest obstacle to many projects, not financing. “If we really want to focus our energy, we need to focus on stuff that will make a real difference,” says Joshua Schank of the Eno Center for Transportation.
For his part, Delaney says his legislation isn’t designed to be a cure-all—he’s well aware of the challenges facing the Highway Trust fund—but says it could be one way to help.