Bipartisan Bill Encourages Local Infrastructure Investment

In his address to a joint session of Congress, President Trump made it clear that infrastructure would be a top priority for his first term. Less clear is what an infrastructure overhaul would actually look like under his administration.

Trump pledged $1 trillion infrastructure investment that would usher in a new era of renewal for America’s crumbling roads, bridges, highways, hospitals, airports and everything in between.

But skeptics were quick to point out that even $1 trillion wouldn’t come close to fixing the nation’s concrete ailments. In fact, it wouldn’t even come close to sprucing up New York City alone. And with Congress hesitant to sign off on such a huge expenditure, the jury is still out on where exactly the money will come from.

Congressman Luke Messer (R-Ind.) isn’t waiting to find out. He and Rep. Carolyn Maloney (D-N.Y.) recently introduced bipartisan legislation encouraging investment in local communities by rolling back a burdensome federal banking regulation.

H.R. 1624 would require banking regulators to classify municipal bonds as high quality liquid assets so that financial institutions may hold them as part of their liquid set-asides. While that technical language may sound confusing, it simply means that local projects would have a far greater chance of receiving funding from the private financial sphere.

As the left-leaning Brookings Institution reported last year, building better infrastructure with better bonds is the path of least resistance in a political environment as stagnated and muddy as Congress is today.

Messer’s bill works from that assumption, nimbly skipping past the infrastructure-funding question altogether and instead offering incentive for financial institutions to provide indirect investment into local projects for mutual benefit of both parties. Wall Street and Main Street would be working together.

What’s more, R. Richard Geddes of the American Enterprise Institute, a right-learning think tank, found that using municipal bonds as a kind of buffer between investors and the actual infrastructure projects serves to dampen overall risk. The reason is investors would be investing in the municipality as a whole, rather than one specific project, which means risk is spread out—just the way careful investors like it.

As it stands, financial institutions are discouraged from holding municipal bonds — the bonds that many state and local governments sell to help pay for projects like improved roads, bridges, hospitals and schools — due to Obama-era regulations passed in the wake of the Great Recession. This means that local governments have a far more difficult time borrowing money to pay for these projects, a bill that is ultimately passed on to the taxpayers.

“This senseless federal regulation is hurting Hoosiers by making it more difficult and costly to build new schools, hospitals, bridges and roads,” Messer said in a statement. “This bipartisan bill will ensure the federal government isn’t standing in the way of local investment and growth.”

Already the bill has found local support in Indiana, as State Treasurer Kelly Mitchell concurred that the plan was both cost-effective and sorely needed.

“This bill allows banks to keep the costs of borrowing low for our communities, which strengthens local government’s ability to complete essential projects throughout our state,” Mitchell said.