The Nonpartisan Policy Alliance had the privilege of hosting a distinguished panel at George Washington University yesterday. The speakers included representatives from the Brookings Institution, the American Society of Civil Engineers, McKinsey and Company, and the American Chemistry Council.
While the discussion covered numerous topics related to infrastructure funding, there was one issue which has become a constant refrain whenever infrastructure is discussed. That issue is the Build America Bonds (BABs) program which existed for a brief shining moment in the wake of the 2008 economic collapse.
The BABs program provided federal subsidies to municipal bonds, drastically increasing their value and appeal. This model, as opposed to tax-exempt bonds, was extremely attractive to a wide range of investors. Typical municipal bonds provide a tax exempt benefit to investors, so those who do not pay US taxes (foreign sovereign wealth funds, endowments, pension funds, etc.) do not have significant desire to purchase them. BABs provided competitive returns on one of the safest investments that anyone in the world can make- US infrastructure bonds.
There are trillions of dollars around the world looking desperately for a safe and beneficial investment such as this. Reauthorizing this program could create the substantial infrastructure spending that the White House and Congress are hoping to realize. Congress should reauthorize the Build America Bonds program as part of any infrastructure bill that it passes.