U.S. Sens. Roger Wicker (R-MS) and Michael Bennet (D-CO) joined Sens. Roy Blunt (R-MO), Debbie Stabenow (D-MI), Shelley Moore Capito (R-WV), Tim Kaine (D-VA), and Cynthia Lummis (R-WY) in reintroducing legislation that would create a new way to finance infrastructure projects.
The American Infrastructure Bonds Act would improve on the “Build American Bonds” model by creating “direct-pay” taxable municipal bonds, where the U.S. Treasury would pay a percentage of the bond’s interest to the issuing entity, as a way to reduce costs for state and local governments.
“Empowering local leaders to launch new infrastructure projects is a proven way to support local economic growth,” Wicker said. “This legislation would improve upon previous efforts to expand investment in the state and local bond market by increasing flexibility for communities and adding assurances for bondholders. As our nation looks to invest in public works, now is the right time for Congress to allow state and local governments to seize this opportunity and renew infrastructure across the nation.”
The bonds could be used for a wide range of infrastructure projects, the senators said, from roads and bridges to water systems to broadband internet.
“To build an economy that delivers opportunity for all, we have to invest in 21st century American infrastructure. This bipartisan proposal builds on a proven and successful model for drawing investment in our infrastructure – from our roads and bridges to our water systems and broadband,” Bennet said. “The American Infrastructure Bonds Act would help state and local leaders finance the much-needed projects that are critical to building stronger and more resilient communities.”
The legislation is expected to boost investment in infrastructure and other public projects by providing affordable access to the large taxable bond market. Higher interest rate offered by the taxable AIBs increase their expected value to some investors, which would expand the market for municipal bonds and increase private investment in the public sector.