Support Grows to Revive Build America Bonds Program
By Larry Jones
February 14, 2011
Democrats in the House led by Rep. Gerry Connolly (VA) introduced the Build America Bonds to Create Jobs Act (H.R. 11) February 10. This legislation would reinstate the program for two years. The proposal is similar to legislation adopted by the House last year. It would reinstate the program to help continue to spur job growth to put Americans back to work. On another positive note, White House officials told Conference of Mayors staff last week that the Administration will include language in the 2012 budget, which will be released February 14, reinstating the Build America Bonds (BAB) program. Further, the new Republican Chairman of the House Transportation and Infrastructure Committee, Rep. John Mica (FL), has expressed intensions to reinstate the program.
Approved two years ago as part of the economic stimulus package, the BAB program proved to be very popular among mayors and other local officials in that it provided a direct federal subsidy to local governments equal to 35 percent of their interest payments. This not only reduced their borrowing costs but in many cases enabled local governments to take action on large'scale infrastructure projects while creating hundreds of thousands of jobs. Over $181 billion in BABs have been issued since 2009 to help build or renovate critical infrastructure at the local level including hospitals, schools, bridges, roads, water and sewage systems and transit projects.
Because the program was so successful, several attempts were made to extend it. President Barack Obama included language in his 2011 budget request to make the program permanent, the House passed two separate jobs bills last year extending the program and ten Democratic Senators urged that language be included in the tax extenders legislation that passed at the end of last year. But due to strong opposition led by Senator Jon Kyl (AZ), the extension was not approved, so the program expired on December 31, 2010.
Although partisan politics played a role in blocking an extension of the program, it has for the most part enjoyed strong bipartisan support in the past. It appears for now that bipartisan support is building to reinstate the program.