Build America Bonds

Floor Speech

Mr. WYDEN. Mr. President, these days the country's attention has rightly been focused on turning its financial fortunes around and getting people back to work. The President, his advisers, folks in the agencies, and in Congress have been working night and day to find the solutions that will help the nation climb out of the financial hole it is in.

I would like to point out that there is one portion of the American Recovery and Reinvestment Act that is doing just that, but it is not getting a lot of attention. It is a creative solution. It is putting jobs back in our economy. And, most importantly, it is working.

The Build America Bonds portion of the Recovery Act has been a great success, allowing State and local governments to issue more than $9.5 billion worth of these innovative bonds. They have already begun shoring up our infrastructure and putting jobs back in communities where times are tough. That $9.5 billion of investment supports more than 3,000 jobs.

Build America Bonds have been such a quiet success, so some of you might not be familiar with what they do. The provision that ended up in the Recovery Act is based on a bill that, first Senator Talent, and now Senator Thune and I have been working on for a number of years.

As included in the economic recovery package, the Build America Bonds provision allows any State or local government that can issue tax exempt bonds to issue what are called Build America Bonds. These bonds can offer either a tax credit for investors or a Federal subsidy to issuers, of 35 percent of the interest earned over the life of the bond.

The bonds can only be issued through the end of 2010, but during that time there is no limit on the number or amount of Build America Bonds that can be issued. One of the reasons I am talking to my colleagues today about them is that the clock is ticking on that deadline, and I want to make sure every Senator here knows how much Build America Bonds can benefit the folks back home. The end of 2010 will be here before you know it.

As communities deal with the recession, they need new tools to finance essential construction projects. Build America Bonds has put a new tool in their toolbox.

Before these bonds started being issued, the market for normal municipal bonds was frozen. It was very hard to sell municipal bonds, but that didn't mean the need for financing infrastructure wasn't still there.

Tax credit bonds, in the form of Build America Bonds, were designed to help thaw the bond markets.

And it has worked. They are selling like hotcakes.

Tax-exempt or tax-deferred investors, such as pension funds and IRAs, aren't usually interested in municipal bonds. But by providing the option of a direct payment instead of tax-exempt interest, Build America Bonds have opened up new markets for State and local governments.

I am not surprised that Build America Bonds are proving to be very attractive to investors. They are a good deal for both the investors and our communities. They have freed up financing for badly needed infrastructure construction and created jobs and a foundation for long-term economic growth.

So far, more than $9.5 billion worth of Build America Bonds have been issued, making it easier and cheaper for cash-strapped State and local governments to access capital and grow jobs. The State of California, the New Jersey Turnpike Authority, the University of Virginia, and the Milan Area School District in Michigan are just some of the issuers of Build America Bonds since the passage of ARRA.

Build America Bonds have earned support from organizations across the country that understand how the urgent need is to shore up our infrastructure and create jobs: the American Association of State Highway and Transportation Officials, the Chamber of Commerce, and the National Association of Manufacturers. I appreciate that support.

We recently had another positive milestone in the story of Build America Bonds. The Treasury Department gave cities and counties around the country the authority to issue $10 billion worth of Recovery Zone Build America Bonds.

Recovery Zone Bonds are like Build America Bonds. They provide a Federal tax credit to the buyer or a subsidy to the issuer, but with an even more generous subsidy of 45 percent of the interest.

Only areas hurt by the weakened economy can issue these bonds. They are very targeted to the places they can do the most good. Treasury allocated them based on employment declines in 2008. So the harder an area has been hit, the more Recovery Zone Build America Bonds it can issue, creating jobs where they are needed most.

In some cases, these bonds will make the difference between whether these projects come to fruition or not. In other cases, they will lower the cost of projects and allow the community to reinvest those savings in other projects.

As with the regular Build America Bonds, Recovery Zone bonds are only authorized under current law through the end of 2010.

That is why I am encouraging State and local governments that are going to issue bonds to sit down and do the math so they can see if Build America Bonds will work for them. And if they do, I encourage those governments to take advantage of them while they are available. There is no time like the present to strengthen the Nation's infrastructure and our communities with the jobs folks back home need.

I also encourage my colleagues in Congress to begin working now to continue the success of Build America Bonds. As Congress struggles to find funding for a new transportation bill, innovative approaches like Build America Bonds should be part of the solution. Recently, the Obama administration has proposed delaying the Transportation reauthorization bill for 18 months. If that were to happen, and I hope it doesn't, Build America Bonds could provide additional funding to bridge the gap between our Nation's transportation needs and current funding levels.

Mr. President, I hope my colleagues in Congress will also look into the benefits of Build America Bonds and ensure these unsung financial tools will continue to work helping their constituents and their communities from coast to coast. They are effective. They give benefits to both those who issue them and those who buy them. And most of all, they solve the kinds of problems that affect the daily lives of every American.

Build America Bonds are an example of the creative solutions people are looking for Congress to implement during these uncertain economic times. I urge my colleagues and your constituents to use them.

Source