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NATIONAL INFRASTRUCTURE BANK: 

MORE BUREAUCRACY AND MORE RED TAPE 

(112–55) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HIGHWAYS AND TRANSIT 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

OCTOBER 12, 2011 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JOHN L. MICA, Florida, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ANDY HARRIS, Maryland 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

JAIME HERRERA BEUTLER, Washington 

FRANK C. GUINTA, New Hampshire 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

CHIP CRAVAACK, Minnesota 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BILLY LONG, Missouri 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

JEFFREY M. LANDRY, Louisiana 

STEVE SOUTHERLAND II, Florida 

JEFF DENHAM, California 

JAMES LANKFORD, Oklahoma 

REID J. RIBBLE, Wisconsin 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

NICK J. RAHALL II, West Virginia 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

STEVE COHEN, Tennessee 

LAURA RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

(II) 

SUBCOMMITTEE ON HIGHWAYS AND TRANSIT

JOHN J. DUNCAN, JR., Tennessee, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

ANDY HARRIS, Maryland 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

JAIME HERRERA BEUTLER, Washington 

FRANK C. GUINTA, New Hampshire 

LOU BARLETTA, Pennsylvania 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BILLY LONG, Missouri 

BOB GIBBS, Ohio 

RICHARD L. HANNA, New York, Vice Chair 

STEVE SOUTHERLAND II, Florida 

JOHN L. MICA, Florida (Ex Officio) 

PETER A. DEFAZIO, Oregon 

JERROLD NADLER, New York 

BOB FILNER, California 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

MICHAEL E. CAPUANO, Massachusetts 

MICHAEL H. MICHAUD, Maine 

GRACE F. NAPOLITANO, California 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

STEVE COHEN, Tennessee 

LAURA RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

NICK J. RAHALL II, West Virginia 

(Ex Officio) 

(III) 

(V) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

Ridley, Hon. Gary, Secretary of Transportation, Oklahoma Department of 

Transportation ...................................................................................................... 11 

Roth, Gabriel, Civil Engineer and Transport Economist, The Independent 

Institute ................................................................................................................ 11 

Thomasson, Scott, Economic and Domestic Policy Director, Progressive Policy 

Institute ................................................................................................................ 11 

Utt, Ronald D., Ph.D., Herbert and Joyce Morgan Senior Research Fellow, 

The Heritage Foundation .................................................................................... 11 

Yarema, Geoffrey S., Chair, Infrastructure Practice Group, Nossaman LLP .... 11 

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Johnson, Hon. Eddie Bernice, of Texas .................................................................. 47 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Ridley, Hon. Gary .................................................................................................... 50 

Roth, Gabriel ............................................................................................................ 59 

Thomasson, Scott ..................................................................................................... 67 

Utt, Ronald D., Ph.D. .............................................................................................. 79 

Yarema, Geoffrey S. ................................................................................................. 90 

SUBMISSIONS FOR THE RECORD 

Ridley, Hon. Gary, Secretary of Transportation, Oklahoma Department of 

Transportation responses to questions from Hon. John J. Duncan, Jr., a 

Representative in Congress from the State of Tennessee, and Hon. Mazie 

K. Hirono, a Representative in Congress from the State of Hawaii ................ 55 

Roth, Gabriel, Civil Engineer and Transport Economist, The Independent 

Institute: 

Supplementary remarks submitted for the record.................................. 38, 41 

Responses to questions from Hon. John J. Duncan, Jr., a Representative in Congress from the State of Tennessee, and Hon. Mazie 

K. Hirono, a Representative in Congress from the State of Hawaii . 65 

Utt, Ronald D., Ph.D., Herbert and Joyce Morgan Senior Research Fellow, 

The Heritage Foundation, responses to questions from Hon. John J. Duncan, Jr., a Representative in Congress from the State of Tennessee, and 

Hon. Mazie K. Hirono, a Representative in Congress from the State of 

Hawaii ................................................................................................................... 87 

Yarema, Geoffrey S., Chair, Infrastructure Practice Group, Nossaman LLP: 

Supplementary remarks submitted for the record ................................. 39 

Responses to questions from Hon. Mazie K. Hirono, a Representative 

in Congress from the State of Hawaii, and Hon. Laura Richardson, 

a Representative in Congress from the State of California ............... 97 

ADDITIONS TO THE RECORD 

American Society of Civil Engineers, written statement ..................................... 100 

Hutchison, Hon. Kay Bailey, a U.S. Senator from the State of Texas, letter 

to Hon. John L. Mica, a Representative in Congress from the State of 

Florida, October 12, 2011 .................................................................................... 105 

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(1) 

NATIONAL INFRASTRUCTURE BANK: MORE 

BUREAUCRACY AND MORE RED TAPE 

WEDNESDAY, OCTOBER 12, 2011 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HIGHWAYS AND TRANSIT, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, Washington, DC. 

The subcommittee met, pursuant to notice, at 10:00 a.m. in Room 

2167, Rayburn House Office Building, Hon. John J. Duncan, Jr. 

(Chairman of the subcommittee) presiding. 

Mr. DUNCAN. The subcommittee will come to order. I ask unanimous consent that members of the Committee on Transportation 

and Infrastructure who are not on the Subcommittee on Highways 

and Transit be permitted to sit with the subcommittee at today’s 

hearing, offer statements, and ask questions. And without objection, that will be so ordered. 

Today the subcommittee is convening to receive testimony from 

transportation financing experts on the administration’s proposal 

to create a national infrastructure bank as part of the American 

Jobs Act of 2011. The national infrastructure bank proposal would 

create a new Federal bureaucracy that would distribute loans and 

loan guarantees to eligible entities for transportation, water, and 

energy projects. Capitalized with $10 billion, the projects would be 

selected by a board of directors that are appointed by the President. 

Many people are skeptical that bureaucrats in Washington would 

have any idea of which transportation projects are the most worthy 

of receiving a Federal loan. We are going through many hearings 

and so forth about the Solyndra right at this time. This skepticism 

is why Congress already has established the State infrastructure 

bank program in SAFETEA–LU. A State infrastructure bank allows the States to use their Federal aid funding to capitalize the 

State infrastructure bank, and to provide loans and loan guarantees to appropriate transportation projects that the State deems 

most important. It is not a one-size-fits-all; it would vary from 

State to State. 

The Transportation Infrastructure Finance and Innovation Act 

program, or TIFIA, was established in 1998 to provide loans and 

loan guarantees to surface transportation projects. In fact, the 

TIFIA program is so popular, that it has received 14 times the 

amount of project funding requests in fiscal year 2011 than the 

program has available to distribute. Why not give these established 

programs more funding, in order for them to reach their full potential? 

2 

Also, there is no guarantee that transportation projects would be 

favored over the water and energy projects that the President’s national bank proposal would set up. This proposal seems to many 

simply just another distraction as Congress pushes for a long-term 

surface transportation reauthorization bill. The administration 

should be focused on helping Congress to pass this much-overdue 

legislation, and give the States some long-term funding certainty 

that a national infrastructure bank would most certainly not accomplish. 

We believe that we will soon be passing a major transportation 

bill, and we believe we’ve got a good proposal that we are working 

with right now, and one that expands funding for State infrastructure banks, along with an expansion of the TIFIA program. 

I want to thank our witnesses for being here today, and I look 

forward to hearing your testimony. 

Now we will proceed to Mr. Coble, our—now we will go to the 

gentleman from North Carolina, Mr. Coble. 

Mr. COBLE. Thank you, Mr. Chairman. I appreciate that. I want 

to thank you for convening the hearing, and thank you for the work 

you are doing to help create a jobs through long-term and accessible highway infrastructure planning. I also want to welcome the 

panel of witnesses, and look forward to hearing their testimony on 

a very timely subject, which, of course, is jobs. 

I don’t want to be a naysayer, Mr. Chairman. I try to avoid being 

a naysayer most of the time. But once again we are reminded of 

the fundamental problem with the current philosophy of the White 

House. To quote an old adage, why build one when you can build 

two at twice the price? The White House plan duplicates the efforts 

already found in the Transportation Infrastructure Finance and Innovation Act. It makes no sense, it seems to me, to create a completely new bureaucracy costing upwards of $270 million, when the 

Transportation Infrastructure Finance and Innovation Act already 

accomplishes that goal. 

Mr. Chairman, I look forward to learning more today about the 

President’s plans for an infrastructure bank, and hope our panel 

can help provide us with pertinent information to make an informed decision. Again, I thank you for having called the hearing, 

and yield back the balance of my time. 

Mr. DUNCAN. Thank you very much. We will now recognize the 

Ranking Member DeFazio. 

Mr. DEFAZIO. Thank you, Mr. Chairman. Sorry I wasn’t here 

promptly on time. My iPhone is on West Coast time; it didn’t wake 

me up properly. The hazards of transcontinental commuting. 

Thank you for holding this hearing. 

You know, for a number of years many have touted an infrastructure bank as the solution to our massive infrastructure deficit 

in this country. It isn’t. However, it can be a useful adjunct. 

Before Wall Street destroyed the economy, I had said, I really 

don’t see why we need an infrastructure bank. Most of the States 

have good credit, and they can go out and borrow on their own at 

very good rates. But that isn’t the case any more. The States need 

guarantees. They need help. Many are against their borrowing limits. And most of the banks who were generously bailed out by ConVerDate Aug 31 2005 09:59 Apr 25, 2012 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\HT\2011\10-12-~1\70681.TXT JEAN
3 

gress—not by me; I didn’t vote for it—aren’t lending. So—and the 

credit bond markets are tight. 

So, an infrastructure bank could be more useful for the States in 

that sort of a circumstance. The question is the form of the infrastructure bank and the mission. Remember, again, for those who 

think it solves all problems, an infrastructure bank is a bank. That 

means it expects to be repaid; that means there are interest and 

principal payments due. 

If you look at the TIFIA program, we can do forbearance on repayment during construction and even after construction under extraordinary circumstances. Well, that is a pretty good model. 

Maybe we should be using TIFIA and enhance the funding there. 

On the other hand, an infrastructure bank could be particularly 

useful for projects which do have a revenue stream. Those could be 

PPPs in the case of transportation. They could be tolled projects for 

those States or entities that choose to build a tolled individual 

project. However, we are not going to toll the existing interstate, 

so it is not going to deal with the 150,000 bridges that need repair 

and replacement now. We are not going to toll the existing interstate, so it is not going to take care of the 40 percent of the pavement that needs restoration. 

You know, transit systems lose money. This isn’t going to help address the $70 billion backlog of capital improvements necessary 

just to bring transit systems up to current operating state of good 

repair, let alone new investments, because transit systems don’t 

make money anywhere in the world, except, I’m told, one subway 

in Hong Kong. 

Not going to pay for rail. You know, most of the rail problems 

we are talking about don’t make money. 

Could be particularly good to help with sewer, water, electrical 

transmission, other things like that, that are legitimate infrastructure needs. 

So we should keep this discussion in context today. That is, an 

infrastructure bank could be useful to help this country deal with 

a massive infrastructure deficit that isn’t just in transportation, it 

is in many other areas. But an infrastructure bank has its limits, 

and I would hope that the testimony will address the problem in 

that way. 

What are the limits? What could it be good for? And what other 

programs do we have that could help us with the transportation 

deficit? 

Thank you, Mr. Chairman. 

Mr. DUNCAN. Thank you very much. We are always honored to 

have the chairman of the full committee here with us, and I would 

like to call on Chairman Mica for any statement he wishes to make 

at this time. 

Mr. MICA. Well, thank you, Chairman Duncan and Ranking 

Member DeFazio, for holding this subcommittee hearing on a very 

important topic. And I think the administration’s proposal for a national infrastructure bank deserves our review and consideration. 

I have been a strong proponent of creative and innovative financing 

methods, especially in a time when we have limited Federal resources, and States are scrambling to provide adequate financing 

for infrastructure projects, that we take and use every mechanism 

4 

possible to move projects forward and expand our financing capability. Financing is an important key. Process is also important. 

And I hope to talk about those briefly. 

I have looked at the Kerry-Hutchison proposal from the Senate, 

basically the administration proposal. I think it mirrors the House 

proposal by Ms. DeLauro and some others. And I have given a 

great deal of thought to creating a new national infrastructure 

bank. I wish the administration had spent a little bit more time 

consulting with Members of Congress, myself and others, before 

moving forward with this. And as much as—consideration I have 

given it, unfortunately I am afraid that a national infrastructure 

bank, as proposed either by this legislation or the administration, 

is dead on arrival in the House of Representatives. The reason is— 

there are several reasons. 

First of all, if you review the existing legislation, it creates more 

bureaucracy. If you don’t think we have enough bureaucracy, we 

have got a chart somewhere that shows the existing bureaucracy 

of the Department of Transportation, and it is over 100 agencies’ 

activities. And I guess this is supposed to be quasi-independent, it 

would be out to one side. But if you just look at the chart of existing Federal agencies and activities, we have tons of them. 

And you can use this chart now. We have 33 States that have 

existing infrastructure banks. And Mr. DeFazio, in his opening remarks, said they are up against the wall. Most of them, like the 

Federal Government, don’t have the monies to finance these infrastructure banks. This chart shows what we already have in place. 

The problem is they don’t have the funds. So, rather than create 

a national new bureaucracy, another agency, I think we can utilize 

the existing infrastructure banks. 

You will hear from the Oklahoma secretary of transportation 

shortly, and he will tell you they have the bank, they don’t have 

the money. So we have existing capability. 

The other thing, too, is what is all this about? This is about trying to get people to work immediately. To create this new infrastructure, Federal infrastructure bank, it is estimated a minimum 

of a year. This requires setting up a bureaucracy, staffing it—there 

is over 100 positions—a cost of $270 billion. Now, if we could leverage that out, it is worth probably $1.5 billion, even in a State that 

doesn’t do very good leveraging. 

So, at the cost of $270 billion, when I already have in place infrastructure banks that can make immediate decisions—what they 

need is the financial backing—so these are some of the reasons I 

think a Federal infrastructure bank is dead on arrival at this time, 

if we want to get people working. 

Now, if you want a recipe not to get people to work, adopt that 

current proposal. If you want a recipe to put off job creation, adopt 

that national infrastructure bank proposal. And we can do just the 

opposite. We can get people working right away. 

Let me just talk about what we have got, as far as existing financing structure. These are existing programs. And I thought we 

had a pretty good agreement, both with the House and Senate, 

TIFIA, transportation infrastructure financing. We have a loan program, and we have a guarantee program. And I think we have 

agreed on the 33 percent Federal participation can be increased. I 

5 

will go to 49, I will consider others. So we can finance with existing 

structures if we modify it. We have a successful example that needs 

some improvement, and it does also have a loan guarantee program. 

The RRIF program—I checked yesterday—railroad infrastructure financing—has $34 billion in capacity. It doesn’t work. The joke at 

Federal Railroad Administration that administers this program, 

the joke is that they have had more FRA administrators than they 

have had RRIF loans granted. That is one of the problems. 

So, we can make this work. It exists. We don’t have to create a 

new infrastructure bank. We have private activity bonds. And 

again, I think they need backing. GARVEE, Government-advanced 

revenue, where you can dedicate a stream of Federal dollars to 

projects, we can increase the amount of money that is available for 

commitments to States, and they can go ahead and get people 

working and do projects. 

Harbor Maintenance Trust Fund—and that had a balance as of 

yesterday of $6 billion-plus—existing program. 

So those are some things, as far as existing finance programs. 

Let me go to grants, because again, the Kerry-Hutchison bill calls 

for loans, loan guarantees, and grants. Well, the last time I 

checked, folks, none of my banks have been willing to give me a 

grant. I don’t know any banks that are giving free money out right 

now, or grants. But the Federal Government has all of these agencies now giving grants. So we have a grant mechanism. What do 

I need to create another one? 

They are also specialized. Most of them do a pretty good job, too. 

The Federal Aviation Administration people are critical of agencies 

getting their money out. They are the exception. They have actually got just about all of their money out through AIP money. Most 

of it is funded through a trust fund. And there are examples of getting grant money out. We have got plenty of agencies that can do 

that. 

So, we have TIFIA that works—we can make it work better— 

RRIF that works. Sometimes it can work a lot better. Harbor Maintenance Trust Fund, we have got a good example of a grant program with AIP. 

Finally, we have got a situation where we can get money, we can 

be creative, we don’t have to create huge bureaucracy. But what we 

do need is some reform in the process of getting money out. We 

still have—and even if I create another—even if I put more money 

in these infrastructure banks at the State level, or we created a 

Federal new infrastructure bank, we created the stimulus program 

with $63 billion for infrastructure out of $787 billion. As of September 1, there was $22 billion still in Washington, DC, after 21⁄2

years. You can’t get the money out. 

In the past bills that we have done authorization from this committee, I have asked the staff to total up how much money is still 

sitting there—TEA–21, TEA–LU, ISTEA—there is $8.5 billion. So 

there is $30.5 billion sitting there that we can’t spend that we 

have. So we can do a better job in getting money out that we already have. 

Yesterday the administration announced they are freeing up 14 

projects for expedited process. Shovel-ready, as you know, has beVerDate Aug 31 2005 09:59 Apr 25, 2012 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\HT\2011\10-12-~1\70681.TXT JEAN
6 

come an national joke, because we don’t have projects that are 

shovel-ready. Now, while they advocated and allowed 14 projects to 

move forward, they left thousands of projects behind. So we have 

got to revise the process and truly make projects shovel-ready, or 

you can have all the money in the world—and we have money here, 

sitting in Federal accounts that can’t be spent, because projects 

aren’t shovel-ready. So, we have got to address the twofold issue 

of financing and being creative and leveraging, and secondly, process. 

So with that, I look forward to working with folks, and I think 

we can find a bipartisan bicameral solution to get money out, 

projects moving, and people working in this country. And I yield 

back the balance of my time. 

Mr. DUNCAN. Thank you very much, Mr. Chairman. And next on 

the Democratic side is Ms. Hirono. 

Ms. HIRONO. Chairman Duncan and Ranking Member DeFazio, 

thank you for scheduling this hearing. I would also like to thank 

our witnesses for being here today. The proposal we are examining 

today was laid out by President Obama in his American Jobs Act. 

And that bill would provide $10 billion to establish an American 

Infrastructure Finance Authority, AIFA, also known as a national 

infrastructure bank. 

Right now, our country can borrow at historically low interest 

rates. And if we take advantage of this situation, we could fund 

this bank and it could be self-sustaining. 

His proposal is modeled on bipartisan legislation introduced by 

Senators Kerry and Hutchison. And I would like to note that the 

President’s proposal provides for loans or loan guarantees, not 

grants, as contained in the Senate bill. 

Increasing our national capacity to invest in infrastructure is 

what our country needs right now. Over 14 million of our neighbors 

are unemployed, nearly 40,000 in Hawaii. The American Society of 

Civil Engineers estimates that we need $2.2 trillion in infrastructure investments to remain competitive. In Hawaii alone, we are 

facing an infrastructure funding shortfall of $14.3 billion. And since 

2005, the U.S. has dropped from number 1 to number 15 in the 

World Economic Forum’s rankings of national infrastructures. 

So, bipartisan proposals that will put people to work, meeting the 

vital needs of our Nation are proposals we should be fighting hard 

to see enacted. I have been a supporter of establishing this type of 

bank for some time. This proposal has bipartisan support in Congress and among various industry and labor groups. In fact, establishing an infrastructure bank is one of the few matters that both 

the AFL–CIO and the Chamber of Commerce agree on. So I am 

sorry to hear that this idea, which has promise, is dead on arrival 

in the House. 

Establishing the AIFA will add a powerful tool for financing 

large-scale, multiyear infrastructure projects, the type of gamechanging investments that will increase our Nation’s competitiveness in the 21st century. 

Of course this one proposal won’t solve all of our infrastructure 

challenges. We shouldn’t pretend that it will. I know that some will 

argue that providing additional funds to State infrastructure 

banks, or expanding the budget of TIFIA will do the trick. They are 

7 

both worthy proposals, and I support them, as well. But they won’t 

do the trick on their own, either. 

What we need is a balanced approach to meeting our infrastructure needs. We need Federal, State, and private sector coordination. Contrary to what some may claim, none of these entities can 

finance the upgrades we need by themselves. Given its focus on regional, national, and rural projects, the AIFA will supplement 

State infrastructure banks. As envisioned, it will have a broader 

project scope, including transportation, energy, and water projects 

that will help support TIFIA’s focus on transportation. 

So, together, these three programs could help support the kind 

of large-scale investment in our economic future without being subject to the congressional appropriation process, or taking funds allocated under our multiyear surface transportation bills. These are 

investments we need at a time when we need them badly. We need 

to put our people to work. 

I look forward to working with all of you, and I am sorry to say 

that I have a scheduling conflict, so I will be submitting questions 

to the panel in writing. Thank you. 

Mr. DUNCAN. Thank you very much. Next we will call on Mr. 

LoBiondo. 

Mr. LOBIONDO. No statement, Mr. Chairman. 

Mr. DUNCAN. All right. Next, Mr. Sires. 

Mr. SIRES. Thank you, Chairman Duncan. I will be very brief. 

You know, this creative proposal I have certain questions, and I am 

hoping that, as the committee moves forward, that I can get some 

answers. 

For example, municipalities are allowed to go to this bank. Municipalities already have the bonding capacity to do any infrastructure project. Could a municipality circumvent their bonding capacity by going to this bank and getting themself into more debt? 

So, you know, these are just questions that I hope that, you, be 

answered as the committee moves forward. Thank you very much. 

Mr. DUNCAN. Thank you. Mrs. Capito. 

Mrs. CAPITO. Thank you, Mr. Chairman. I don’t have an opening 

statement. I look forward to the witnesses. 

Mr. DUNCAN. Mr. Capuano. No statement? Mr. Harris? 

Dr. HARRIS. No statement, Mr. Chairman. 

Mr. DUNCAN. All right. Mr. Nadler is next. 

Mr. NADLER. Thank you, Mr. Chairman. Mr. Chairman, I am 

going to be very brief. As is mentioned, the American Society of 

Civil Engineers says we have—estimates we have a $2.2 trillion 

backlog of infrastructure that we have to make. We are investing 

about 1.5 percent of GDP and infrastructure annually. China is 

something like 6 or 7 percent. Our infrastructure, as we all know, 

is falling behind our international competitors. It makes our economy less competitive, as well as making daily life more stressful 

and more expensive. We have got to start investing a lot more. 

The country has fiscal stringencies. The chairman’s mark for the 

service transportation bill would be a 35-percent cut in funding. 

That is exactly the wrong direction to be going in. How could we 

make up for this? 

We have to leverage private funds. I am not saying this is a substitute for public funds. It is not. I certainly do not support the 

8 

chairman’s mark of that low level of funding. We should have a 

much higher level of Federal funding. But we also have to leverage 

private funds as much as we can, and the I–Bank, the infrastructure bank, could be a very useful tool for this. TIFIA should be expanded, but the I–Bank is a very useful tool. 

At the same time, it is not a panacea. We are going to have a 

fight on our hands to preserve the transportation funds that we do 

have. And we have to make sure that they are spent as wisely as 

possible. 

I have a number of questions about the I–Bank. And I think 

some of the claims made for it are somewhat questionable. But on 

balance, I think it is a very good idea. 

For example, I support this in addition to but not instead of a 

section in the infrastructure—in the reauthorization bill on projects 

of national and regional significance. I do not want all decisions 

taken away from Congress and given to people in the Department 

of Transportation or in the new infrastructure bank bureaucracy 

that you might set up. 

We have to be careful about falling prey to lofty rhetoric about 

somehow finding a magic formula, a magic non-political formula for 

project selection. Every decision carries with it a value judgment. 

How do you determine, for example, whether a transit project that 

moves millions of commuters is more deserving than a port access 

project that moves millions of freight containers? Well, the commuters vote, the containers don’t, but that is not the valid criteria. 

Or, NextGen, that improves safety and efficiency in the aviation 

system. How do you calculate the cost and benefits? Do we fund 

only projects that have a revenue source and can repay a loan? 

That is one of the weaknesses of this I–Bank proposal, in that it 

does loans only, or loan guarantees only, and therefore can only 

help where you have a revenue stream. 

But what if you don’t have an adequate revenue stream on a 

project that is necessary to finance? How do we ensure that important projects with significant public benefits but maybe not the direct economic return as defined by an official in the I–Bank or in 

TIFIA also get funded? 

I am sure that many others in this room have at some point 

questioned the decisionmaking of agencies. No matter who is making the decisions, there is always a political component. And putting a lot of money that is critical to the economy in the hands of 

unelected bureaucrats is not always the best idea. Many of the 

things I have supported in the past came to my attention because 

there was a specific need that was not being met by Albany or by 

Washington for any number of reasons. As long as the process is 

open and transparent, there should still be a role for Congress and 

elected officials to direct funding for worthwhile projects and programs. 

Whatever we do, we must do it soon, and we must not lose sight 

of the necessity to pass a long-term transportation bill that will repair and sustain and improve our Nation’s infrastructure systems, 

and provide a crucial boost in job creation and economic development. 

With these caveats, that it must not be the only decisionmaking 

agency, that it must be supplemental to, not instead of normal 

9 

project financing and congressional decisions, I think an infrastructure bank such as the President has proposed could make an excellent addition to our armory of tools to address our infrastructure 

needs. I thank you, and I yield back. 

Mr. DUNCAN. Thank you very much, Mr. Nadler. Mr. Petri. Oh, 

he is not—all right. We have got—I don’t believe anybody else on 

our side. So Ms. Johnson? 

Ms. JOHNSON OF TEXAS. Thank you very much, Mr. Chairman 

and Ranking Member DeFazio. I am glad to see that the Highway 

and Transit Subcommittee addressing such an important subject as 

the proposal for the national infrastructure bank. And I want to 

thank you for its consideration. 

However, I am greatly disappointed to see that the current majority of this subcommittee seems to have already reached a conclusion on this topic by entitling the hearing, ‘‘National Infrastructure 

Bank: More Bureaucracy and More Red Tape.’’ This is certainly a 

prematurely formed opinion on this matter, and I hope that the 

majority will keep an open mind on the proposal of a national infrastructure development bank, moving ahead. 

The creation of the national infrastructure development bank to 

leverage private and public capital to finance nationally and regionally significant infrastructure projects is a proposal that I have 

been highly supportive of for many years, and I have cosponsored 

legislation that would achieve exactly this. And I have been a vocal 

supporter of the President’s American Jobs Act that includes this 

proposal. 

So, the creation of a national infrastructure development bank is 

an idea that enjoys bipartisan support. The President’s proposal, as 

a part of the American Jobs Act, is based on legislation introduced 

by Democratic Senators Kerry and Rockefeller, with the support of 

Senators Graham and Republican Senators Hutchison and Lautenberg. 

The House legislation for this Congress, H.R. 402, has been introduced by Congresswoman Rosa DeLauro, and currently has 70 

cosponsors, including myself. 

The President’s national infrastructure development bank proposal would create American infrastructure financing authority to 

provide direct loans and loan guarantees to expedite regionally or 

nationally significant projects, in partnership with the existing 

Transportation Infrastructure Finance and Innovation Act program. While the TIFIA program focuses on helping fund traditional 

surface transportation projects with Federal credit assistance, the 

AIFA would expand eligibility, eligible infrastructure projects, to 

include not only highways and bridges, but also transit projects: 

airports, inland waterways, and rail systems, and water infrastructures, dams and levees, as well as energy infrastructure and others. 

These national programs would work with State infrastructure 

banks to enhance our country’s aging infrastructure system. They 

are regional proposals to improve the financing expensive infrastructure projects and enjoy the support of Democrats, Republicans, 

and Independents. 

So, I look forward to hearing the witnesses today, and I thank 

you very much for the hearing, again. I yield back. 

10 

Mr. DUNCAN. Well, thank you very much, Ms. Johnson. I will tell 

you that I was not the one who came up with the title for this 

hearing, but there may be better ways to fund these projects. 

I did not overlook Mr. Lankford, though. We are saving him to 

the last, so he can introduce our first witness. 

I will say that we have a very distinguished panel here today, 

and I will introduce the other witnesses. We have Mr. Ron Utt, 

who is the senior research fellow at the Heritage Foundation, Mr. 

Geoffrey Yarema, who is a partner at Nossaman LLP, Mr. Gabriel 

Roth, who is a civil engineer and transportation economist with the 

Independent Institute, and Mr. Scott Thomasson, who is director of 

public policy for the Progressive Policy Institute. 

And now, I call on Mr. Lankford for any opening statement he 

wishes to make, and then request that—Mr. Lankford, that you introduce our first witness at the conclusion of your opening statement. 

Mr. LANKFORD. Well, thank you, Mr. Chairman. I am glad to be 

a guest of this committee today. I am on the full Committee for 

Transportation, but a guest of this subcommittee, since we have 

the finest secretary of transportation in the Nation, Mr. Gary Ridley, that is here from Oklahoma, who absolutely does set the standard for planning and long-term research, and looking out on the horizon to see what is coming up on things. 

I am glad that we are taking the time to discuss the issue of the 

national infrastructure bank, as well, before we get in a hurry to 

do something, and end up creating another labyrinth of red tape 

and another Federal program to solve the previous labyrinth of red 

tape and the previous old Federal program. In the past, Government high-risk loans were used for activities like nuclear power 

plants, but had such a high cost and high regulation that lenders 

were slow to put capital at risk, because of the uncertain political 

environment. 

Now, apparently, the regulation and political risk is high on asphalt pavement. What have we become, as a Nation, when we have 

driven the cost of construction up so high, increased the construction time through regulations so long, and burdened the State 

budget so much that we need a Federal loan program to offset the 

risks of lending for a bridge? This is a prime case of the Federal 

Government creating the problem, and then running in with a solution that will really just create more problems. 

It is my concern that this loan program is designed to bail out 

States that cannot get credit because of bad budgeting decisions in 

the past, so they are at high risk. Or it is another way to shuttle 

additional money to States that already receive a high proportion 

of transportation dollars. 

There is a legitimate role for the Federal Government in transportation and facilitating interstate commerce. But creating a new 

infrastructure bank with the start-up cost of $270 million and 100 

new employees to do what normal transportation funding, TIFIA, 

and many State infrastructure banks already do, I do not believe 

is one of them. 

States do not need yet another way to increase their debt from 

the Federal Government. They need answers to the problem. They 

also don’t need a group from Washington determining which 

11 

projects get funding, based on the decisions of another yet-to-benamed group from the administration. The last thing we need is 

another Government enterprise like Fannie Mae and Freddie Mac, 

or another loan program like the Department of Energy’s loan to 

Solyndra. 

The Federal infrastructure bank is also not shovel-ready. It 

would take a significant amount of time to select directors, get established, do the studies, hire the large staff, then start giving taxpayer-backed loans. In the meantime, what is really needed is a 

long-term reauthorization bill, a funded TIFIA program, and a 

streamlined construction process so they can get started. 

I do look forward to the testimony today, Mr. Chairman, and I 

thank you for allowing me to be able to be here, and to be able to 

introduce Mr. Ridley of Oklahoma, a great secretary of transportation. I look forward to his testimony, and the testimony of the 

others. 

Mr. DUNCAN. Thank you. Thank you very much, Mr. Lankford. 

And I would like to welcome all of our witnesses and thank them 

for being here today, and ask unanimous consent that our witnesses’ full statements be included in the record. And unless there 

is objection, that will be so ordered. 

Since your written testimony has been made a part of the record, 

the committee requests that you limit your opening statements, the 

summary of your opening statements, to the 5 minutes. And Mr. 

Ridley, we will begin with you. 

Secretary Ridley. 

TESTIMONY OF THE HONORABLE GARY RIDLEY, SECRETARY 

OF TRANSPORTATION, OKLAHOMA DEPARTMENT OF TRANSPORTATION; RONALD D. UTT, PH.D., HERBERT AND JOYCE 

MORGAN SENIOR RESEARCH FELLOW, THE HERITAGE 

FOUNDATION; GEOFFREY S. YAREMA, CHAIR, INFRASTRUCTURE PRACTICE GROUP, NOSSAMAN LLP; GABRIEL ROTH, 

CIVIL ENGINEER AND TRANSPORT ECONOMIST, THE INDEPENDENT INSTITUTE; AND SCOTT THOMASSON, ECONOMIC 

AND DOMESTIC POLICY DIRECTOR, PROGRESSIVE POLICY 

INSTITUTE 

Mr. RIDLEY. Mr. Chairman, members of the committee, my name 

is Gary Ridley. I am the secretary of transportation in Oklahoma. 

I am here today to testify on behalf of the Oklahoma Department 

of Transportation. 

First, we want to thank you, Mr. Chairman, for your efforts to 

ensure that transportation infrastructure is a priority of the Nation. We appreciate you, Congressman Lankford, other members of 

the committee, to recognize the important contribution of the transportation system in improving the Nation’s economy, viability, and 

sustaining our quality of life. 

Dedicated public funding, innovative financing, and opportunistic 

partnerships have important roles in the development and management of modern world-class transportation system. Depending on 

the condition, each method can be equally effective in delivering infrastructure improvements, and each has both positive aspects and 

drawbacks. 

12 

Considering the Nation’s transportation system, it is imperative 

that we recognize the success of dedicated funding initiatives, financing methodologies and partnerships. All are dependent on the 

identification and stability of long-term supporting revenue 

streams. Therefore, as we turn our attention to the work of identifying ways to modernize, expand, maintain our aging and deteriorated infrastructure, we must remain mindful that dedicated, longterm, and consistent transportation funding is critically important. 

Today a variety of financing methodologies can be brought to 

bear in order to help successfully deliver significant transportation 

improvements that are out of reach of the immediate availability 

of transportation funding sources. In recent times, the utilization 

of grant-anticipated revenue vehicle bonds, referred to as GARVEE, 

transportation infrastructure finance and improvement financing, 

referred to as TIFIA, public-private partnerships, Build America 

bonds, State infrastructure banks, and other such methodologies 

have proven effective in financing certain well-defined transportation system needs. 

Focusing specifically on the successes of TIFIA, the structure and 

organization of the program seems to hold particular promise for 

assisting with financing of transportation improvements. Recognizing extension acts and continuing resolutions, TIFIA currently 

receives $122 million each year, and can support an estimated $1 

billion in average annual credit assistance. 

In recent years, more widely accepted and mature—in recent 

years, a more widely and mature TIFIA program has received a 

considerable level of interest, and has participated in many important transportation improvement projects. Most recently, in 2011, 

the program received $14 billion in letters of interest for participation in projects with an estimated value of more than $48 billion. 

Based on the summary information currently available, both the 

House and Senate reauthorization bills include a plan to build 

upon and improve a TIFIA loan program. It is very appropriate to 

utilize the existing and successful program and format to deliver 

an enhanced financing opportunity, along with a more robust set 

of eligibility criteria. 

Providing additional funding for TIFIA will help meet the demand for credit assistance for transportation projects, and enable 

an increased leveraging of Highway Trust Fund dollars with State, 

local, and private sector funding. 

Conversely, the concept of a new Government corporation and 

Federal authority will somehow enhance the ability to finance infrastructure seems untimely and entirely unnecessary. Especially 

when considering that many of the ideas encompassed by the proposed authority already appear to be closely paralleled provisions 

of other existing Federal financing programs. 

In addition, recognizing the apparent Federal duplication and administrative control of the proposed national infrastructure bank, 

most States already have and can easily obtain the expertise necessary to facilitate infrastructure banks and other innovative transportation financing methodologies. States can choose to work with 

existing Federal bureaucracies, or seek assistance of private financial institutions, knowledgeable investors, or even experience of 

other States. 

13 

In Oklahoma, we have been effectively and efficiently arranging 

financing for transportation improvement projects within our borders for more than 50 years. Again, it is important to acknowledge 

the difference between identifying new sources of transportation 

revenue and creating new ways to incur debt without providing for 

new revenue streams capable of retiring that debt. None of the referenced financing opportunities specifically provides for any new 

additional funding. Bonds still must be repaid with interest. Government-guaranteed loans are still loans. And the associated longterm repayment plan reduces the availability of future resources. 

Capitalizing an infrastructure bank duplicates other financing 

methodologies, and does not generate new revenue. For financing 

transportation projects, States only require clear Federal guidance 

in the law and continued and enhanced utilization of existing financing opportunities. A bold new vision will be necessary to meet 

the increasing transportation challenges ahead, and it is unlikely 

that such a vision will be defined by an easy payment plan. 

It is much more likely that efficiencies can be gained through 

regulatory reforms and red tape reductions, rather than through 

the creation of a new Government corporation and additional bureaucracy. 

Mr. Chairman, thank you for the opportunity to provide testimony. I would be happy to answer any questions that the committee may have. 

Mr. DUNCAN. Thank you very much, Mr. Secretary. 

Mr. Utt, you wrote a real fine column on this issue that I read 

in the Washington Times. And thank you for being here with us 

today. You may begin your testimony. 

Mr. UTT. Well, thank you for having me. Chairman Duncan, 

Ranking Member DeFazio, and members of the subcommittee, 

thank you for inviting me to express my views on the various proposals to create a national infrastructure bank. My name is Ronald 

Utt. I am a Herbert and Joyce Morgan senior research fellow at 

The Heritage Foundation. The views I express in this testimony 

are my own, and should not be construed as representing any official position of The Heritage Foundation. 

Until recently, Federal interest in infrastructure banks has been 

limited to the creation of funding of State infrastructure banks, 

several of which were created in the 1990s, and are still in operation. Congressional focus has since shifted to a Federal infrastructure bank. Several bills have recently been introduced in Congress 

to create such an entity. Added to this are the several plans President Barack Obama has proposed since taking office. 

What these Federal-level proposals all have in common is the 

goal of attempting to muster a greater volume of financial resources for various types of infrastructure. But beyond that, they 

all differ significantly in how they would operate, who would run 

them, the volume and source of funds, what they can invest in, and 

what types of infrastructure would be eligible for support. 

I have reviewed these proposals and believe that there is little 

added value from them beyond what could be achieved by modest 

alterations in existing transportation programs. Reasons for my 

skepticism are as follows. 

14 

First, the Federal Government has created a number of credit 

entities over time, and most have been challenged by serious financial failure involving taxpayer bailouts. Fannie Mae and Freddie 

Mac are the most recent and perhaps the most catastrophic of all, 

with bailout costs totaling about $150 billion so far. Would an infrastructure bank be immune from these risks? 

In this regard, what is noteworthy about the typical infrastructure bank proposal is that all will begin with risks and deficiencies 

that could exceed those confronting the Federal finance entity cited 

above. Fannie Mae, for example, was supposed to be investing only 

in conforming mortgages, thought by most to be safe, conservative 

investment, providing a steady stream of revenue. 

With the exception of some well-established toll roads, bridges, 

and tunnels, most transportation infrastructure earns no revenue, 

and must be supported through taxes or related user fees. Most 

roads are still free to users, and will likely remain so, while fares 

earned on even the best run transit systems recover none of their 

debt service, and only about half of their operating costs. 

As such, the inevitable source of revenues to an infrastructure 

bank seem likely to be taxes. And, of course, this would be the case 

with any grants by banks, as some proposals would allow. 

Senator Inhofe, ranking member of the EPW committee noted 

that ‘‘banks don’t give out grants, they give out loans. There is currently a mechanism for giving out Federal transportation grants. It 

is called the Federal highway program.’’ 

My second concern reflects the Senator’s, and that is to wonder 

what the value added would be of creating another Federal transportation program when you already have one that has a half-acentury of experience and has served the Nation reasonably well. 

If credit availability is the issue, then a quick review of existing 

Federal transportation infrastructure credit programs reveals that 

there are several programs in existence, including the TIFIA program, GARVEE bonds, tax-exempt private activity bonds, tax-exempt State municipal revenue bonds, or tax-exempt general obligation bonds. If current levels of credit availability for existing programs are deemed insufficient, why not propose that these existing 

channels be improved or expanded? 

Third, I am perplexed by how such a bank would aid in the economic recovery. For some advocates, these banks are seen as a 

mechanism to propel the economy forward out of the lingering recessions and into an era of greater prosperity and more jobs. Sadly, 

all evidence indicates that this isn’t so. In large part, such programs have been a disappointment because of time delays in getting underway, projects identified, projects approved, and money 

spent. 

Supporters of the American Recovery and Reinvestment Act 

claim that it would focus on shovel-ready projects, but USDOT recently reported to this committee that, as of July 2011, 21⁄2 years 

after the enactment of the legislation, just 61 percent of authorized 

transportation funds had been spent. Yet the stimulus funds were 

spent through existing Federal, State, and local channels by departments, managers, and employees with many years of experience in the project approval business. 

15 

In the case of the proposed infrastructure banks, no such administrative infrastructure exists. And one will have to be created from 

scratch, once the enabling legislation is ultimately enacted. As a result, delays would be even longer in getting projects underway. 

That concludes my oral remarks, and I would be pleased to discuss them further during questions and answers. Again, thank you, 

Mr. Chairman, for the invitation. 

Mr. DUNCAN. Thank you very much, Mr. Utt. 

Mr. Yarema. 

Mr. YAREMA. Thank you, Mr. Chairman, Ranking Member 

DeFazio, and members of the subcommittee. It’s an honor to be 

here today. I appreciate the invitation. 

I am a partner in a law firm that has the privilege of representing State and local transportation agencies around the country. They are all struggling with the same basic problem: how do 

they deliver our largest and most important new infrastructure 

projects, while minimizing the use of Federal gas tax dollars? 

We have been fortunate to have been successful in helping them 

deliver signature projects doing just that. In addition, I had the 

privilege to serve on the National Surface Transportation Infrastructure Financing Commission, appointed by the U.S. Secretary 

of Transportation Mary Peters, of which I was proud to be a part. 

Our unanimous and bipartisan report to Congress and the administration was completed 2 years ago. So my testimony today reflects 

my firm’s experience on the ground, representing public transportation agencies in your districts, as well as the work I did with the 

Commission. 

As the subcommittee is well aware, the role of the Federal Government in delivering our largest transportation infrastructure 

projects is changing. Historically, the function of the Federal Government has been to provide funding to the States and then regulate how they use it. As those Federal resources have declined in 

very real dollars, States and localities have been faced with deferring those large projects for decades or filling the ever-growing gap 

with their own resources instead. 

Thus, the Federal role is evolving away from a traditional apportionment-based funding paradigm and toward a credit assistance 

and incentive-based model that leverages as few Federal dollars as 

possible into the maximum State, local, and private contributions 

to projects of regional and national significance. In other words, the 

Federal role is getting the States themselves to do now what the 

Federal Government used to do much more itself. 

This shift in thinking is evidenced best by the policy underlying 

one of the key components of the President’s proposed Jobs Act, the 

national infrastructure bank. The President is certainly right—we 

can create hundreds of thousands of badly needed jobs and build 

critically important infrastructure with a federally supported bank. 

What is ironic, however, is that we already have a national infrastructure bank for transportation. And as you have heard today, it 

is called TIFIA. And Congressman Johnson has been one of the 

longest standing supporters of TIFIA, and we can’t thank you 

enough for your steadfast commitment. 

This program has been operating successfully for 12 years. Every 

$100 million of TIFIA credit subsidy creates approximately $1 bilVerDate Aug 31 2005 09:59 Apr 25, 2012 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\HT\2011\10-12-~1\70681.TXT JEAN
16 

lion in the face amount of loans, which States, localities, and private entities use to create about $3 billion in project finance plans. 

Thus, the Federal Government gets a 30 to 40 times multiplier for 

every TIFIA dollar that it provides. 

The problem today is that TIFIA is terribly underresourced. Currently, the program has a backlog of applications for over $30 billion in projects of regional and national significance in districts all 

over the country. Instead of going to the cost, the delay, and the 

bureaucratic struggles to create a new institution, why not just add 

to TIFIA, size it to meet the demand that we project, and clear out 

the backlog now? At the same time, we can simply take the opportunity to fine-tune the program based on the successful 12 years 

of experience we have had with it, and modernize its mechanics. 

For related reasons, it is hard to listen to the President’s statements supporting an infrastructure bank concept without some degree of consternation. The U.S. Department of Transportation actually has had the opportunity to expand the TIFIA resources that 

it has available today with shares of its TIGER funds, but has simply chosen not to do so. 

Under TIGER I it could have added $250 million in credit subsidy to TIFIA, which would have produced $2.5 billion more in 

TIFIA loans, or $7.5 billion in project value, than the base TIFIA 

program had resources for. But it elected to award less than a 

quarter of that. 

Under TIGER II the U.S. DOT could have added up to $150 million or $1.5 billion in loans to the program, but again, despite excellent applications, awarded less than 15 percent of that. 

Now, under TIGER III, Secretary LaHood has the discretion 

today to award up to $150 million, or $1.5 billion in loans for 

projects totaling over $4.5 billion in project costs. These projects, 

which will otherwise be delayed or canceled, will produce literally 

hundreds of thousands of jobs, not for modest repaving jobs, but for 

projects of regional and national significance, making a material 

contribution to our critical mobility needs and economic growth. 

The letters of intent for that TIGER III program go in on October 

31st. If the President really believes in the national infrastructure 

bank concept, he should tell the Secretary to fully fund TIFIA out 

of the TIGER III program. Whether the Secretary does that or not 

really should be a litmus test for whether the President really supports a national infrastructure bank concept, and wants to maximize job creation. 

Thank you for the opportunity. I am happy to answer questions. 

Mr. DUNCAN. Thank you very much, Mr. Yarema. 

Mr. Roth. 

Mr. ROTH. Good morning. I would like to start by thanking you, 

sir, and Ranking Member Peter DeFazio, for inviting me to testify 

before this subcommittee. I would also like to thank the other witnesses for their informative and helpful testimony. Having heard 

the case against the new infrastructure bank, I am looking forward 

to hearing the case in support. 

But, as for myself, I am also against the President’s proposed 

American infrastructure financing authority. This is not because of 

any objection to an infrastructure bank. My disagreement is with 

17 

the idea that the Federal Government should finance such a bank. 

My disagreement is for four principal reasons. 

First, the Federal Government, having run out of money, should 

not finance facilities that can be financed by others. 

Second, because U.S. transportation systems have a long userpays tradition, having been financed over long periods by private 

investors and by user-funded, dedicated road funds. As you all 

know, the Federal Highway Trust Fund was set up in 1956 with 

great care to avoid subsidies from general revenues. And this 

seems to me to be a precedent worth following. 

Third, Government involvement can actually delay projects, and 

even politicize them, so that the most urgently needed projects do 

not get funded. This point is pertinent, because the executive 

branch seems to have a problem in identifying viable projects on 

which to spend taxpayers’ money. Job creation does not justify all 

projects. And the private sector actually tends to be good at finding 

those with benefits that exceed costs. 

In my testimony I suggest that priority be given to relieving 

urban traffic congestion by providing express toll lanes, the tolls 

being collected electronically and varied to ensure free flow on the 

lanes at all times. 

Finally, Federal involvement raises costs, for example, because of 

numerous regulations, including those arising from the DavisBacon and ‘‘Buy American’’ acts. Therefore, for projects that cannot 

be financed by private investment, it seems to me that financing 

by individual States seems preferable to Federal financing. 

This subcommittee has important responsibilities. I am sure that 

all of us testifying today wish its members all success in encouraging the provision of urgently needed transportation projects at 

the highest possible speeds and the lowest possible costs. Thank 

you. 

Mr. DUNCAN. Thank you very much, Mr. Roth. 

Mr. Thomasson. 

Mr. THOMASSON. Thank you. I thank the subcommittee, especially Chairman Duncan and Ranking Member DeFazio, for holding 

this hearing today. I hope the committee members find today’s discussion helpful to fully understanding this important proposal to 

enhance our national strategy for infrastructure spending and investment. 

There is no better symbol of the recent dysfunction of our political system than the partisan divide on funding infrastructure. Infrastructure has long been a shared bipartisan priority, but Congress now finds itself unable to pass critical transportation funding 

bills that expired years ago. Swift rejections from Republicans to 

the proposals President Obama offers for infrastructure render 

many good ideas ‘‘dead on arrival,’’ simply because the President 

was the one to suggest them. 

The latest target of this rush to judgment is the President’s proposal in the American Jobs Act for a national infrastructure bank. 

Although leaders throughout the U.S. and around the world support infrastructure banks as a smart investment tool, the idea is 

still new and unfamiliar to many here in Washington. The infrastructure bank proposal has generated a lot of confusion and misinformation, with opponents often painting a misleading picture of 

18 

what this type of bank would look like. Many of the criticisms now 

lobbed against the President’s proposal are arguments about older 

infrastructure bank legislation, and they have little to do with the 

current version in the jobs bill. 

So, let’s set the record straight on what the President’s bank proposal is and is not. When he introduced the jobs bill, President 

Obama explained that the bill included a bipartisan Senate proposal to create a national infrastructure bank. That bipartisan approach is taken directly from the BUILD Act, which was introduced 

by John Kerry, Kay Bailey Hutchison, Lindsey Graham, and Mark 

Warner. 

The bipartisan infrastructure bank represents a new approach to 

the idea of creating a bank. Its funding and operations are kept to 

a fiscally responsible scale, while preserving the best principles of 

political independence and merit-based decisionmaking to make the 

bank worth doing in the first place. And the bipartisan proposal is 

also limited to loans and loan guarantees, and would not issue 

grants, as full committee Chairman Mica said in his statement 

today. That is just not accurate for the version in the jobs bill. 

The bipartisan infrastructure bank will not be a sprawling Federal bureaucracy that entangles States and regulations in red tape. 

It will be an optional financing tool that is available to empower 

States and local governments to invest in transportation, energy, 

and water projects, and it will be staffed by financial professionals, 

not bureaucrats. 

The bipartisan infrastructure bank will also not be a policy-driven subsidy program designed to pick winners or dictate planning 

decisions to States. It will invest in pouring concrete, not propping 

up companies. It will do so independent of political pressure and 

influence, evaluating projects based on their economic merits, using 

the same bottom-up approach as DOT’s successful TIFIA program, 

which we have heard so much about today. 

The bipartisan infrastructure bank will not be another Freddie 

and Fannie type entity that runs the risk of a taxpayer-funded 

bailout. It would be a Government-owned corporation, similar to 

the U.S. Export-Import Bank. It would draw on a familiar Treasury-based lending mechanism, and it would not borrow its own 

money to leverage its lending. This structure ensures that the bank 

bears no resemblance whatsoever to shareholder-owned GSEs like 

Fannie and Freddie. 

The approach of the bipartisan infrastructure bank is new and 

innovative. But there is nothing new about broad support for infrastructure banks. The infrastructure bank is an idea that has already been widely adopted in countries around the world, and by 

many States here in the U.S. There is strong support for a national 

bank here in America that includes broad coalition of top corporate 

CEOs, Wall Street investors, organized labor, and local government 

leaders. Just this week, the President’s Jobs Council, an all-star 

team of CEOs and top leaders from the U.S. economy, recommended we create a national infrastructure bank that can ‘‘invest aggressively and efficiently in cutting-edge infrastructure.’’ 

Even the U.S. Chamber of Commerce wants a national infrastructure bank. Chamber president Tom Donohue has said that the 

bank would be an invaluable part of the solution to how we pay 

19 

for maintenance and improvements that we can’t afford to ignore, 

but it can only work if it is added to a strong foundation of spending in the transportation reauthorization bills. 

Now more than ever, Congress needs to consider the full range 

of options we have to increase U.S. infrastructure investment. And 

the new national infrastructure bank proposal in the President’s 

jobs bill deserves to be part of any discussion about the solutions 

on the table for solving our enormous investment challenges. 

I thank the committee for the chance to testify today, and I look 

forward to answering your questions about this important bipartisan proposal. 

Mr. DUNCAN. Thank you very much, Mr. Thomasson. I am going 

to yield my time at this point to Vice Chairman Hanna for any 

questions or comments that he might wish to have. 

Mr. HANNA. Thank you, Mr. Chairman. Mr. Thomasson, thank 

you for being here. What separates this from a subsidy, in your 

mind? I mean why is it the case that if something could happen 

in the natural marketplace, and the Government has to step in 

with what amounts to lower interest loans, which, in my mind, is 

a subsidy, why should we permit that to happen if, as you say, they 

are self-supporting? 

Mr. THOMASSON. Well, first of all, there is no direct subsidy in 

these loans. Most of the loans under the bipartisan proposal are 

‘‘self-pay,’’ similar to the 1703 proposal program in DOE, as opposed to the subsidized 1705 proposal. 

But to address your question about the market being able to handle these projects, there are certain market failures, if we could call 

them that, for large projects of national and regional significance 

that some States can’t handle on their own, that many banks and 

investment funds can’t handle because they have diversification requirements that just can’t stretch as far as some of these projects 

need. 

And, obviously, there are coalitions that can do that. You have 

seen many States and governments at every level around the world 

partnering with private sector, partnering with different Government agencies to fund these large-scale projects, and that is part 

of the role that this national infrastructure bank would play. 

As Congressman Nadler said—I couldn’t say it better—it would 

be an excellent addition to our armory of tools. And State infrastructure banks want this—the ones I have talked to—as an additional tool. They understand that it doesn’t solve all their problems, 

but there is a need for it that markets aren’t currently addressing. 

Mr. HANNA. You say that there are multinationals and national 

companies that are perfectly capable of handling this magnitude of 

project. So your reason for this is because they are just too big for 

the general marketplace. Doesn’t that suggest, then, that the risk 

is too big, also? 

Mr. THOMASSON. In part. And also, for some of these large 

projects, in part because of the risk, and in part because the local 

financing costs for local governments are higher than the Federal 

Government’s, and also the higher cost of private capital—private 

capital expects higher returns than, typically, the bond market 

does, and those higher costs make some of the economics of these 

projects not work out so well. 

20 

And when you introduce lower cost Federal lending as part of 

this equation, it really, on the margins, allows certain projects to 

become economically rational, to pass that market test, and—— 

Mr. HANNA. Obviously, that is the premise. And I would agree 

with you, that as long as the Government wants to subsidize a 

lower rate of interest, based on the full faith and credit of the country—that, incidentally, has a multitrillion-dollar debt in its own 

right—that they wouldn’t work without that. That is what you are 

saying. 

Mr. THOMASSON. Well, I think you have seen the demand for 

this, with the TIFIA program. I mean TIFIA is over-subscribed, has 

a backlog of applications. If the private sector can handle this without the economics of the Federal Government working, then the 

TIFIA program would not have the demand—— 

Mr. HANNA. And therefore, the Federal Government assumes 

that marginal risk. 

Mr. THOMASSON. Well, the Treasury is made whole for that risk 

under the Federal Credit Reform Act, which this proposal would be 

subject to. And through the loan repayments, the subsidy fee under 

the Federal Credit Reform Act would be repaid into the Treasury, 

and taxpayers would be made whole for that default risk that they 

take on. 

Mr. HANNA. Mr. Utt, are there any circumstances under which 

you would feel good about this type of loan guarantee? 

Mr. UTT. No, but we already have loans and loan guarantee programs run by the Federal Government. And some of them are quite 

large, and particularly the railroad one. And I have argued that 

they should be either—particularly the railroad one—cut back or 

substantially reduced from the current level, which is $35 billion. 

I think that there is an enormous amount of money in the private sector that would be available for a well-conceived project in 

a State with accommodating legislation for public-private partnerships. The case in point is the State of Virginia, which has very 

early experience on this, and has enacted accommodative legislation, has tweaked that legislation, and has established the expertise in the Virginia Department of Transportation, slowly but surely, to do these deals. 

Right now, not too far away from us, a $2 billion project on the 

beltway is coming to an end and it received $400 million worth of 

private funding to supplement TIFIA money, private activity 

bonds, and input from the State. They are also involved in a huge 

tunnel in the Hampton Roads area, which was another public-private partnership, and may soon be getting underway HOT lanes on 

I–95, 395, which is another multibillion-dollar project. 

So, it can be done. But it has got to be the right project. Not 

every project lends itself to that kind of self-financing or revenue 

stream that will pay off the debt. 

Mr. HANNA. Thank you, sir. I yield back. 

Mr. DUNCAN. Thank you very much. Mr. DeFazio. 

Mr. DEFAZIO. Thanks, Mr. Chairman. This isn’t the direct subject, but I just want to address one issue here, because it rankles 

me. 

I voted against the stimulus, ARRA, in part because it was deficient in real investment in infrastructure, building things, putting 

21 

people back to work, and very heavy on tax cuts: 13 times more in 

tax cuts than infrastructure investment. Yet I keep seeing these 

mythical sort of ‘‘It is not working.’’ That was the one part of the 

thing that worked. 

And here in Mr. Utt’s testimony, we have this rather disingenuous statement, and I would just like to correct it. And it implies 

that somehow the money hasn’t been committed, couldn’t be spent 

on the highways and transit. Actually, 100 percent has been committed. Yes, project sponsors do not get reimbursed by the Federal 

Government until the project is finished. And that information in 

Mr. Utt’s statement was from July, which was the beginning of the 

construction season. So the number would be quite a bit higher 

now. 

And so, Mr. Utt, I just wish that you and others would stop 

parroting that, and pretending that that part didn’t work. It did. 

One hundred percent commitment of the money. Projects, 100 percent underway or completed. 

And then you go on to say that this is not a good way to put people back to work. In his testimony, Mr. Yarema does not agree. Mr. 

Yarema, I would be interested in your response. Mr. Utt, citing a 

1983 GAO report, says that infrastructure investment is an inefficient way to create jobs and recover from a recession, doesn’t employ unemployed people, et cetera. You say that it will—that TIFIA 

investment could create jobs, and quickly. Could you respond? Is 

infrastructure a really poor way to create jobs? 

Mr. YAREMA. No, infrastructure is a great way of creating jobs. 

It is one of the best ways of creating jobs. TIFIA is a valuable tool 

to attract non-Federal investment, but it is not intended to be a 

substitute for Federal apportionments. We do need Federal apportionments, and the States are doing more than their share to fill 

the gap left over. 

What TIFIA does is recognize the fact that current levels of Federal apportionments, combined with State and local resources, still 

leave us a huge gap, as the national Commission really focused on. 

And so, how do you incentivize States, localities, and private entities to come in and help fill that gap? What TIFIA does, as I mentioned, is create significant leverage and incentives for the States 

and localities to do exactly that. Estimates of how many jobs are 

created for every billion dollars invested in infrastructure vary. But 

AASHTO numbers say it is about 28,000 or 29,000 jobs per billion 

dollars of expenditure. 

If you just take the $30 billion in TIFIA backlog, and right-size 

TIFIA to make it equivalent to demand, you multiply 28,000 times 

30 billion—you get almost a million jobs. What is so important 

about the TIFIA program sitting here today is that the $30 billion 

backlog represents projects that are almost all ready to go. I don’t 

use the word ‘‘shovel-ready,’’ but this backlog of projects of regional 

and national significance are almost all environmentally cleared; 

the State, local, and private monies that will be needed to repay 

the TIFIA loans are almost all assembled; and the procurements 

are all either in process, soon to be in process, or final negotiations 

in process. 

So, we are talking about a very unique moment in our history, 

when we have many billion-dollar-plus jobs that are ready to go if 

22 

we can right-size TIFIA. With consensus on that, we can proceed 

to refine how TIFIA works. There has been some mention today of 

the discretionary decisionmaking that takes place under TIFIA and 

would be enhanced with the national infrastructure bank. If we 

size TIFIA to meet demand, we can make it a first-come-firstserved, rolling application program. You make your application, 

check the boxes. Does it qualify? If so, you do your financial analysis. Is it feasible? If so, then get in line for money. If loan capacity 

is available, it goes out the door. One hundred twenty days from 

initial application should be sufficient for fully qualified and financially sound projects, given without waiting for a one-time-a-year 

window to open and shut. 

So, really, that kind of a program, which is the way almost all 

the rest of the credit programs work in the United States, would 

have a dramatic impact on employment, mobility, and economic 

growth. 

Mr. DEFAZIO. And when the loan was made—since what Mr. Utt 

and others are using is the spend-out rate versus the obligation of 

money—would those loans be immediately all spent, and would we 

measure the projects by that, or would some of them take a couple 

of years, because they are big projects? 

Mr. YAREMA. You are absolutely right. The spend-out would be 

over the construction period. 

Mr. DEFAZIO. Thank you. But you do raise one issue I have a 

concern about, which is springing liens. Because you know the way 

the Federal Government scores things is risk. 

Mr. YAREMA. Right. 

Mr. DEFAZIO. And I would assume—you are an attorney, I am 

not—that the Government would be assuming more risk if that 

springing lien provision did not exist, which means that the trolls 

down at OMB would score these things differently, which means 

we would get less efficiency for the money that we put into TIFIA. 

Mr. YAREMA. That is correct. The scoring that the Treasury does 

and OMB does on these loans varies, based upon the overall risk 

of the loan. There are many risk factors that go into that calculation, of course, the source of repayment of the loan being the principal one. 

So, for example, a TIFIA loan backed by local option sales tax 

revenues, would be scored lower than a loan backed by toll revenues, like may happen with the planned Columbia River Crossing 

between Portland and Vancouver. 

The springing lien would create slightly more risk. But I really 

don’t think it is going to be material. With a 12-year history TIFIA 

is not a new program. The success rate that those TIFIA loans 

have had will, I think, be a significant mitigating factor in any incremental increase in scoring created by a move away from the 

springing lien balance. 

Consequently, I really advocate removing the springing lien requirement. Not only will it have only a modest impact on loan scoring, I think it will have a huge impact on attracting senior debt 

into the projects, which is exactly what TIFIA seeks to accomplish. 

With the springing lien removed, I think we will have a net gain. 

Mr. DEFAZIO. OK, thank you. My time has expired, Mr. Chairman. 

23 

Mr. DUNCAN. Yes, thank you very much. Mr. Coble. 

Mr. COBLE. Thank you, Mr. Chairman. Good to have you gentlemen with us this morning. 

Mr. Ridley, has Oklahoma utilized its SIB as a tool for innovative financing? 

Mr. RIDLEY. We have not. We have used general obligation 

bonds, revenue bonds, GARVEE. We have not used TIFIA, simply 

because we have not had a project that really lent itself. We do 

think that the TIFIA program is a viable program that we may use 

in the future. Certainly if it was better capitalized and maybe modernized a little bit, so that it made it easier for accessibility, we 

think it certainly has some pluses. But we have not. 

Mr. COBLE. Thank you, sir. Mr. Utt, do you see any benefit in 

creating another Federal bureaucracy, when it appears we have 

one in place now that would essentially serve the same purpose? 

Mr. UTT. Exactly. I agree with you there. We have a program 

that is ready to go with experienced people running it, a huge 

batch of knowledge out there by potential users on how it works. 

And you lose all that, or you ignore all that if you then spend as 

much as a year creating a new entity with new rules, new procedures, which will then go out and solicit the projects, and then people have to come in with the projects, and according to their rules. 

You are talking about more than a year before the first dollar or 

first commitment goes out. 

Just to add to that, even some of the current programs are not 

working as efficiently as possible. The rail part of the ARRA took 

about a year before the first awards were made. It took them that 

long to get up and running because it was a relatively new program, even with a bureaucracy—even within a Government department of experienced people in the area of making judgments about 

railroads and their viability. 

Mr. COBLE. I thank you, sir. Mr. Yarema, could a national infrastructure bank be successful in combination with TIFIA? 

Mr. YAREMA. If there were a bill passed that really created adequate Federal apportionments and if TIFIA were funded to meet 

anticipated demand, I think that would be sufficient for transportation. There may be other kinds of infrastructure, however, that 

can’t avail themselves of the TIFIA program that a national infrastructure bank would facilitate, without transportation competing 

for loans with other kinds of infrastructure, like dams, levees, and 

ports. 

So, my strong preference would be to achieve the same goals of 

the national infrastructure bank concept by fully funding TIFIA to 

meet demand, maximizing the incentive for States and localities 

and private entities to bring new sources of revenue to the table, 

and converting TIFIA into a first-come-first-served program. And I 

think that will be sufficient for transportation. 

Mr. COBLE. Thank you, sir. Mr. Thomasson, before my time expires, let me extend what Mr. Utt said. In your estimation, how 

long do you think it would take for the national infrastructure 

bank to actually begin issuing loans? 

Mr. THOMASSON. It’s hard to say. It would take time, and I think 

those who proposed the bank acknowledge that it is not an immediate solution. It sends a good long-term signal to the private marVerDate Aug 31 2005 09:59 Apr 25, 2012 Jkt 000000 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\HT\2011\10-12-~1\70681.TXT JEAN
24 

kets that helps trigger investment. But it would take a year or two, 

probably, before the loans were issued. 

I think the faster process could be hiring the financial professionals that TIFIA lacks, that RRIF lacks. The DOE loan program 

has some that were hired after Solyndra. But I think those financial professionals could play an important and valuable consulting 

role to existing Federal credit programs that could prevent the 

need for additional bureaucracy increases in DOT for TIFIA if you 

are super-sizing its loan capacity. 

So, I think there are certain functions that could be more immediate. I think it could help expedite some of the backlog on TIFIA 

if we have this kind of expertise in the Government. 

But I fully acknowledge that some of the loan process would take 

time. You want it to take time, because this is a different approach 

that needs to be clear and transparent, and you do have to set up 

a process for it. It shouldn’t be a rushed program in the name of 

short-term stimulus. 

Mr. COBLE. Very quickly. Mr. Roth, do you want to weigh in on 

that? Do you want to add anything to that, Mr. Roth? 

Mr. ROTH. I would not like to add anything to that point, but I 

would like to add something to the point made previously—— 

Mr. COBLE. Well, my time is expired. Mr. Chairman, may he do 

that? 

Mr. DUNCAN. Yes. Go ahead, Mr. Roth. 

Mr. ROTH. I beg to dispute the suggestion that roads cannot be 

financed without Government support. In the last century, the 

Interstate Highway System was financed by road users, without 

any Government money coming into it from general revenues. And 

in the century before, tens of thousands of miles of roads were financed privately, under incredibly difficult conditions. As a proportion of GDP, more money was spent on roads in the 19th century 

than in the 20th. 

Mr. COBLE. Thank you, sir. Thank you, Mr. Chairman. I yield 

back. 

Mr. DUNCAN. Thank you, Mr. Coble. Mr. Nadler. 

Mr. NADLER. Thank you. I just have to comment before I start 

asking questions. Of course the private sector can finance certain 

roads and big projects. But clearly, as Henry Clay realized, and 

Abraham Lincoln, and President Eisenhower, and a lot of others, 

it can’t finance all the roads and projects that we need. Some 

projects just don’t pay for themselves, even though they may well 

pay off for the economy. But we will leave that debate to Henry 

Clay. 

Mr. Thomasson, could you succinctly tell us why an infrastructure bank would be superior—or not superior, why we would need 

that in addition to an adequately funded TIFIA program for transportation, not for other projects? 

Mr. THOMASSON. Sure. One thing I would say first about the 

TIFIA program and this committee’s proposals to expand the loan 

capacity of the TIFIA program is that it is currently understaffed, 

as Mr. Yarema said. The resource is very low. It outsources all 

its—— 

Mr. NADLER. No, but let’s assume we adequately staffed and adequately funded it. 

25 

Mr. THOMASSON. Well, first of all, it funds projects beyond transportation: energy, water—— 

Mr. NADLER. The infrastructure bank, not TIFIA. 

Mr. THOMASSON. The national infrastructure bank. So that is 

critical—I know that is not within the jurisdiction of the committee, but it is a critical point. 

Mr. NADLER. Of course. 

Mr. THOMASSON. And we have serious needs in the country for 

those kind of projects. 

Also, as you said earlier, there are certain projects that go beyond the scale of TIFIA that would require more independent analysis and professionalism within the national infrastructure bank. I 

think you get a different approach under that than you do 

under—— 

Mr. NADLER. When you say beyond the scale of TIFIA, what limits TIFIA? 

Mr. THOMASSON. Well, TIFIA’s loan authority, and its allocations 

from this committee under the Highway Trust Fund. But—— 

Mr. NADLER. So you are saying that some projects are simply too 

big for TIFIA? 

Mr. THOMASSON. There are. And I think if you have a more adequately staffed and professionally run national infrastructure bank 

with project finance experience on those big types of projects, we 

as a country will be better able to handle them. We are not very 

good at those large projects, currently. 

You also see the national infrastructure bank as a platform for 

credit expertise and—for the Federal Government—could also play 

this consulting role for other loan programs in the Government— 

DOE, RRIF, which—— 

Mr. NADLER. OK. Now, the proposal—or, well, there are different 

proposals for a national infrastructure bank, but I believe the administration proposal and Senator Kerry’s proposal limits the national infrastructure bank to things like—to loans, loan guarantees, 

not to grants, although I think Congresswoman DeLauro’s proposal 

has grants, too. 

Mr. THOMASSON. That is correct. 

Mr. NADLER. How would you finance—I mean there are clearly 

projects that are vital to the economy, both transportation and nontransportation, that don’t have enough of a revenue stream, or cannot generate enough of a revenue stream to generate enough revenue to pay back bonds and so forth? So if you don’t allow for 

grants, how do you finance those? 

Mr. THOMASSON. I think there are two answers to your question. 

One is that the bipartisan infrastructure bank proposal does have 

that restriction. It is more limited than Congresswoman DeLauro’s 

proposal. And Congresswoman DeLauro would tell you that we 

need to be more bold to be able to fund every type of project like 

that. 

So, it is true that the bipartisan proposal would not be able to 

fund every type of project that is out there. I think it is a tool in 

the armory, as you said. There are other sources for grants available that—— 

Mr. NADLER. OK. 

26 

Mr. THOMASSON [continuing]. Infrastructure bank projects might 

be able to seek as—— 

Mr. NADLER. You might use infrastructure bank financing, plus 

something else. 

Let me ask you the last question, because my time is running 

out; I have got 45 seconds, plus whatever leeway is granted. 

Chairman Mica has estimated the cost of establishing a national infrastructure bank would be about $270 million. Could any of the 

witnesses explain where this figure comes from, and whether it 

seems to be accurate? And does anybody have a different estimate 

of the cost that would be associated with establishing such an entity? 

Mr. THOMASSON. I have not seen this number before. I am not 

sure where it comes from. 

Mr. NADLER. Mr. Utt? 

Mr. THOMASSON. You know, I—— 

Mr. NADLER. Thank you. 

Mr. UTT. Yes. I think I put it in my testimony, and it comes—— 

Mr. NADLER. Could you talk louder, please? 

Mr. UTT. I think I put it in my written testimony, and I also 

think I footnoted it. It goes back to the President’s February 2001 

transportation budget plan, which was also his transportation reauthorization plan. There was a page—— 

Mr. NADLER. 2001? 

Mr. UTT. 2011, I am sorry. In this age of austerity, I have less 

numbers. 

The President’s budget proposal includes a page devoted with 

some detail to a transportation infrastructure bank, as opposed to 

the current infrastructure bank proposal, which covers a wide 

range of infrastructure. And it lays out in some detail what the 

funding would be. And it talks about a total of $270 million to get 

it up and running, consulting fees, different kinds of studies, and 

paying a staff of, I think they estimate, 100 people. And so that 

would be the start-up cost for that. 

And again, we are pulling it right out of the President’s proposal. 

Mr. NADLER. And would that figure differ greatly if it were simply to expand TIFIA to the similar size? 

Mr. UTT. I can’t imagine that it would. In fact, I find the $270 

million figure that was in the President’s budget a little bit on the 

high side for starting up a public entity. But nonetheless—— 

Mr. NADLER. That was his estimate? 

Mr. UTT. Those were the numbers that were there. 

Mr. NADLER. Thank you. I see my time has expired. 

Mr. DUNCAN. Thank you very much, Mr. Nadler. Dr. Harris? 

Dr. HARRIS. Thank you very much. And thank you very much, 

Mr. Chairman, for holding the meeting. It is an important day, because I guess the news today is that we probably are going to have 

to break up the American Jobs Act and do what we probably 

should have done from the beginning, handle things piece by piece. 

Let me just ask Mr. Thomasson. I am going to—and I will ask 

the same question for all five of the panelists here. You know, the 

President said in his speech—and I quote—‘‘The American Jobs Act 

answers the urgent need to create jobs right away.’’ The testimony 

I am hearing is that none of you think that this is a—establishing 

27 

the American infrastructure bank in a hurry, which is what we are 

talking about, we are talking about a major new program, rushing 

through the process of a major new program—I assume that none 

of you believe that this will create—and I quote—‘‘jobs right away.’’ 

Well, except for the people we hire into the bureaucracy. 

But starting with Mr. Thomasson, do you agree that that is true? 

Mr. THOMASSON. Well, I think my first answer to your question 

is his statement was about the American Jobs Act broadly. He has 

two different infrastructure sections in the jobs act. One is immediate infrastructure investment and the second is this longterm—— 

Dr. HARRIS. Right. But you agree this long-term one is not shortterm. It is not immediate in any way, shape, or form. It will take 

a long time, comparatively. I mean we have a 9.1 percent unemployment rate. CBO says it is not scheduled to go down before the 

next election. Would you agree that we really won’t see concrete 

evidence of this working—no pun intended—before the next election? 

Mr. THOMASSON. I would, as an administrative point. But I 

would—— 

Dr. HARRIS. Thank you. Can we just go—I only have 5 minutes. 

Mr. THOMASSON. OK. 

Dr. HARRIS. I can’t have—I have another question. Mr. Roth? 

Mr. ROTH. It seems to me that the obstacle to creating jobs in 

transport infrastructure is more regulation than lack of money. 

Dr. HARRIS. And this really doesn’t do anything to address the 

regulatory side. 

Mr. ROTH. I think that the Honorable Gary Ridley could tell us 

more about this from his experience in Oklahoma. 

Dr. HARRIS. Sure. 

I am working my way down there. Thank you, Mr. Roth. Mr. 

Yarema. 

Mr. YAREMA. Early in my career, I was a lawyer for the U.S. 

Synthetic Fuels Corporation, which was formed under the Energy 

Security Act of 1980. It was a Government corporation intended to 

provide loans, loan guarantees, and other instruments for alternate 

energy projects. And it worked fairly well. But it took a long time 

to get the program started. I think a year is a very unlikely period 

of time to get this program off the ground. The rulemaking alone 

will take time. 

If TIFIA is managed and staffed properly, it can make significant 

loans quickly. In 2003 the TIFIA program issued a $917 million 

loan to the Texas Department of Transportation for the $3.6 billion 

Central Texas Turnpike Program. That loan was made when needed—the projects are all built and it is completely performing. There 

was no problem in getting that loan made. And there are very few 

projects in the United States that would be larger than that. 

Dr. HARRIS. And what TIFIA can do. Thank you. Mr. Utt. 

Mr. UTT. I mean I agree that any of these programs are going 

to be hard to get underway very quickly. So they should be viewed 

as infrastructure investment programs, which is a long-term issue. 

And there is a backlog that is necessary, or that exists, that needs 

to be remedied. 

28 

But that is much different than a stimulus program. And I think 

all of these—ARRA and the current jobs act are being sold as something, or promoted as something, that we need right now. And yet 

I think there is widespread agreement on this panel, and also within the experience, that you are not going to get jobs right now. 

Dr. HARRIS. Well, except in the bureaucracy. Thank you. Secretary Ridley? 

Mr. RIDLEY. Congressman, without adding a permanent revenue 

stream, adding another credit card to the Government will not create jobs in the short term nor the long term. It will not. 

We have the abilities to be able to finance projects today. States 

need to ensure that they have the revenue streams in order to 

repay the debt as accumulated. So, having another way to do that 

is not necessary, in our belief. 

Dr. HARRIS. Thank you. And working the way down, just kind of 

a very brief answer, so what I am hearing is that basically we 

could take the currently existing program, TIFIA, and with some 

modification—Mr. Thomasson mentioned maybe putting some other 

areas of expertise on it—we could basically deal with virtually any 

size project that comes along. General agreement? All kind of nodding. 

Mr. YAREMA. Absolutely correct. 

Mr. THOMASSON. Except I don’t think you get too much more of 

a time advantage beefing up TIFIA than you do creating an infrastructure bank. I think that takes time, also. 

Dr. HARRIS. OK, thank you. Yield back. 

Mr. DUNCAN. Thank you very much. Mr. Boswell. 

Mr. BOSWELL. I pass. 

Mr. DUNCAN. Mr. Altmire. 

Mr. ALTMIRE. Thank you, Mr. Chairman. Secretary Ridley, you 

just said—and I think I heard you correctly—that we have the ability, as a country—presumably the States and others—to fund 

projects already. Is that correct? 

Mr. RIDLEY. Congressman, if I said that, I said it in error. We 

have the ability to finance projects. The funding capability is where 

the draw is, where it is difficult. We have, again, all different ways 

of being able to finance a project and receive financing. It is funding the projects and funding the repayment of the financing that 

becomes difficult. 

Mr. ALTMIRE. Right, OK. I appreciate the clarification. I come 

from a region of the country where we have over 1,000 structurally 

deficient bridges—Western Pennsylvania—and we are obviously 

having trouble finding that funding, and finding the way to repair 

and do the maintenance on those bridges. And to that point, I 

wanted to talk to Mr. Thomasson for a moment. 

And, you know, I am a fiscal conservative. I have accumulated 

a voting record on a lot of these things. And I share the same concerns that a lot of us do about the spending decisions that had been 

made in the past in Congress, and some of the same concerns have 

been expressed by the other members of the panel. And I wanted 

to ask you: why is the infrastructure bank the fiscally responsible 

thing to do now, and what role does private capital investment play 

in getting more out of what we would spend under the infrastructure bank? 

29 

Mr. THOMASSON. Sure, thank you. First of all, as most on this 

committee probably recognize, infrastructure spending isn’t the 

kind of thing that you save money by cutting. There is nothing fiscally responsible about deferred maintenance. When you are looking at a required repair cost, it doesn’t get any cheaper by putting 

it off. 

But with regard to the bank specifically, there is no better time 

for the infrastructure bank than now, with loans and loan guarantees as a credit approach. We have heard time and time again 

today that TIFIA is an effective way of leveraging the Government’s money and the Government’s loan authority. 

And as Mr. Yarema could probably testify to this better than I 

can, the Government’s loans, whether through the bank or through 

TIFIA, only cover a portion of the total project cost—for TIFIA 33 

percent, for the bipartisan bank 50 percent—that leaves at least 50 

percent, and in most cases more than that, of the total cost to be 

picked up by private-sector investors and by State and local governments. That alone leverages it. But the loans themselves are 

also typically scored at about 10 percent of their total cost. 

So, in terms of ‘‘bang for the buck’’ for taxpayers and smart, efficient approaches to investing, both TIFIA and the infrastructure 

bank really provide advantages that we should look at. 

Mr. ALTMIRE. You referred, Mr. Thomasson, in your opening 

statement, about the Chamber of Commerce and some opinions 

that have been expressed by other organizations publicly. And 

there has been a lot of talk about how more infrastructure investment, including the bank, would make the U.S. more globally competitive. At least that has been the opinion expressed by supporters 

of the bank. 

Have you heard directly from companies or investors who agree 

with that claim? 

Mr. THOMASSON. Actually, we heard directly last week. My 

group, the Progressive Policy Institute, held a forum here on the 

Hill with top CEOs from the U.S.: the CEO of Nucor, the biggest 

steelmaker in the country; and the CEO of Siemens Industry, a 

multinational that invests heavily in the U.S. We heard from CEO 

after CEO that we need this kind of strong signal to the international business community that the U.S. is a place worth investing in. 

The Siemens CEO told this short story about starting a new 

manufacturing plant in Charlotte, North Carolina, to build gas turbines. And to do that, part of their costs were building their own 

rail line up to the Port of Norfolk, because they are exporting these 

turbines. And he said, ‘‘You know, Siemens is a 160-year-old company. We look at the long term. We are happy to include those 

costs in our decisions of bringing our own infrastructure to the U.S. 

But how many companies are going to do that?’’ How many global 

investors, when they look at the U.S. and they see that they have 

to bring their own infrastructure, are going to do that? 

And we heard the infrastructure bank would send a clear signal 

that the U.S. is improving its decisionmaking ability to invest in 

infrastructure and attract private capital from abroad and multinational corporations to invest here at home. 

30 

Mr. ALTMIRE. And Mr. Utt, very quickly, Mr. Thomasson makes 

the point that deferred maintenance is not a fiscally responsible decision, that if you allow things to fall into disrepair the costs are 

more later than they are today. Is that a statement that you agree 

with? 

Mr. UTT. Sure, yes, absolutely. 

Mr. ALTMIRE. OK. My time is up. I would like to follow up, but 

my time has expired. Thank you. 

Mr. DUNCAN. All right. Thank you very much, Mr. Altmire. I 

have to leave in just a few minutes for another meeting, but I do 

want to ask some questions before I go. 

Secretary Ridley, you have had long experience in this field. And 

we have heard your skepticism about the national infrastructure 

bank proposal. You do know, I am sure, that in our base bill we 

tried to expand TIFIA, we tried to expand the State—get more incentives for State infrastructure banks. 

What ways—what are the two or three most important things 

that we could do, here at the Federal level, to make your job easier 

or to help a State DOT operate more economically and more efficiently? Would it be—it is a little bit beyond the scope of this, but 

it ties in, I guess, directly and indirectly, both. Would it be environmental streamlining? What two or three things would you suggest 

to us? 

Mr. RIDLEY. Mr. Chairman, it would be regulation reform. I 

think that we can accelerate projects. We heard comment today 

about the administration targeting 14 projects across the country 

for accelerated delivery. I can tell you from our own experience in 

Oklahoma we had an interstate bridge go down, a 525-foot long 

bridge, four-lane facility, about 25,000, 30,000 vehicles a day on it. 

We were able to completely rebuild that bridge in 64 days. And we 

did not break any laws or skirt around any regulations. But the 

Government was focused on the task at hand, and the regulatory 

agencies that we deal with were focused on that at hand. 

If you really want to accelerate project delivery, if we really want 

to put the construction industry back to work, and making the assumption that you would be able to fund things at the historic levels over the last few years, if you can remove the brick that is 

around everyone’s neck that holds us back from being able to do 

our job—and that would be in the regulatory effort—it is my belief 

if the administration would declare an economic emergency, and 

therefore these regulatory agencies knew they had to respond 

quickly and timely with every project, not just with 14, that I think 

that you can see a lot of things happen rather quickly. 

Mr. DUNCAN. Let me ask you this. The two most recent studies 

by the Federal Highway Administration have said that—one said 

it took 13 years, one said it took 15 years for the average highway 

project, from conception to completion. And these are not 

transcontintental roads, these are relatively short, mileage-wise, 

projects. 

If we did what you want us to do, and when—these projects on 

an emergency basis, how much do you think we could speed those 

projects up? Could we cut that time in half? Would that be just totally unrealistic? Or what would you say about that? 

31 

Mr. RIDLEY. Oh, I think that—I think maybe even better than 

that. As—all of us remember the bridge that went down in Minnesota, and how fast they were able to rebuild that structure. 

Mr. DUNCAN. Right. 

Mr. RIDLEY. The earthquakes in California, and how fast 

Caltrans was able to put those back together, the bridge and causeway that went down in Texas, and how fast TxDOT was able to 

put that back together, and it is simply because the focus of the 

agencies are on the same project, or the same goal, if you will. 

Right now, it isn’t the same goal. Regulatory agencies do not 

have the same goal as DOTs or local units of governments. It— 

their goal is somewhat different. But if you put a focus and a microscope on what actually has to be done and what you are trying 

to build—we build the whole—not the whole, I won’t say the 

whole—90 percent of the interstate in this country was built in 

about 17 years. Think about that a minute. Now, the only reason 

I know, because I was there. But in about 17 years, 90 percent of 

our whole interstate system was built. 

Mr. DUNCAN. Yes. 

Mr. RIDLEY. And today, as you pointed out, it takes many, many 

years from conception until we get project completion, just on a single portion of that. 

Mr. DUNCAN. I remember one of the main contractors on the 

California earthquake highway project was given an incentive 

bonus of $100,000 a month. And that really speeded up things out 

there. It is amazing how early they came in, in comparison to the 

original estimates. 

I need to move on. Mr. Utt, my friend Mr. DeFazio seemed to 

imply that you were sort of misleading people in your—some of 

your writings that you have done. Would you like to respond? 

Mr. UTT. Well, I didn’t mean to, if that was the perception. I 

agree with several of the other statements, that jobs will occur as 

a consequence of spending on infrastructure. But the issue that we 

are discussing today is being presented as a desperately needed effort to get the unemployment rate down as quick as possible. And 

if that is the case, then this is not the proper tool to do that. 

And likewise, on ARRA, is that this was also presented as something urgent, a national emergency. We were in the midst of a recession, we have a stagnant economy, we were losing jobs. And 

again, what we see is that, despite the urgency of enacting it, you 

cannot make a program like that work very quickly. And this is not 

a deficiency on the part of people being involved, it is just that infrastructure is a slow, deliberative process. 

For example, one of the biggest delays in ARRA was getting acceptably presented projects in from all the State DOTs. And you 

can’t do anything until you do that. And then you have to evaluate 

them. And this involves a long time before any money is spent. 

So, if you want jobs next week, or jobs tomorrow, or even jobs 

within a couple of months, this is just not the way to go. 

Mr. DUNCAN. All right—— 

Mr. NADLER. Would the gentleman yield? 

Mr. DUNCAN. Well, I am in kind of a hurry, Mr. Nadler, so I am 

going to move on. 

Mr. NADLER. At the conclusion of your remarks? 

32 

Mr. DUNCAN. Yes, you can—— 

Mr. NADLER. Thank you. 

Mr. DUNCAN. Mr. Yarema, everybody has said glowing comments 

about TIFIA—has had glowing comments about TIFIA here today, 

and especially you. And it is a program that I support, as well. But 

I am just curious. You have great expertise in this area. Is this 

the—is TIFIA the first perfect Federal program, or would you tell 

us what problems there are with it, or what changes you would 

make? 

And I am particularly interested—do you know of a TIFIA 

project that has gone bad? And what was the reason for that? 

Mr. YAREMA. TIFIA is not perfect, but what we have is 12 years’ 

experience with it. I was around when it was enacted in 1998. We 

have worked on about two-thirds of the applications that have gone 

in. And it needs to be modernized in that 12 years. 

And there is no question we can improve it. If it is, in fact, rightsized, we would need new staff, nowhere near the 100 employees 

the national infrastructure bank proposal calls for, only a small 

fraction of that, and you would need additional leadership in the 

TIFIA program. 

But the most important thing to move away from is the discretionary decisionmaking process that has the potential—and some 

would say the reality—of being politicized—toward a first-comefirst-served program where applicants put together their projects, 

they meet all their criteria or they don’t, they are either feasible 

or they don’t, and then they stand in line to get their money. If we 

use that kind of approach, TIFIA loans could be going out 120 days 

after the applications come in. It would be a very simple process 

to use. 

In my memory, over the 12-year history of TIFIA, there has only 

been one default. That is the SR–125 toll road in eastern San Diego 

County which opened right at the beginning of the recession. As a 

result, the traffic isn’t there. So, the TIFIA program has a default 

on its record. 

But if you look at it as you should, which is a program where 

Congress effectively pays insurance premiums into the Treasury 

every year under the Credit Reform Act, the Treasury has actually 

made money off the TIFIA program. So that, I think, gives it 

strong credibility, going forward. 

Mr. DUNCAN. All right, thank you. Mr. Roth, you mention or cite 

the Solyndra project in your testimony, and that has raised a red 

flag with some of us, because this national infrastructure bank proposal from the President would include energy-type projects such 

as that. And we would have some concern about that. 

But as a proponent of more private investment and less Government involvement in these types of things, do you believe that private investment alone will be able to cover our infrastructure revenue shortfalls? 

Mr. ROTH. It would be difficult, until the way that road use is 

charged for is changed. When people pay for using roads by means 

of a fuel tax, it is not easy to reimburse private road providers. 

That is why I think that the Government should be interested in 

helping States to switch to new ways of paying for roads, based on 

vehicle miles traveled, as recommended in 2009 by witness GeofVerDate Aug 31 2005 09:59 Apr 25, 2012 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\HT\2011\10-12-~1\70681.TXT JEAN
33 

frey Yarema and his colleagues on the National Surface Transportation Infrastructure Financing Commission. 

But, even under the present methods of payment, it is possible 

to bring in the private sector. And I gave in my testimony an example of how this was done in Britain 20 years ago. 

Mr. DUNCAN. All right. Well, I am running way late. Mr. Nadler, 

if you could be very brief—— 

Mr. NADLER. Yes, I will be very brief. 

Mr. DUNCAN [continuing]. Your side. 

Mr. NADLER. I thank you. I just wanted to make a comment, because it has come up twice now, and that is the jobs aspect of the 

bank and the timing. 

It is clear, obviously, that it will take some time to get an infrastructure bank up and running, and it is not—and forgetting its aspect of infrastructure finance, just looking at its employment aspects—it is not the solution to an immediate jobs crisis. But anyone 

who thinks that our jobs crisis is going to be over in a year or two, 

no matter who the President is or what we do or how successful 

other things are, I think is not realistic. 

The problem we have now is a long-term as well as a short-term 

job crisis. And an infrastructure bank, if it worked properly, could 

be invaluable in dealing with the jobs crisis that is an ongoing crisis. That is all I wanted to say. So you have to evaluate it. Not 

only—from a jobs perspective, not only will it help the problem 

within a year, but will it help the problem over a period of time. 

Thank you. 

Mr. HANNA. [presiding.] Ms. Edwards. Donna? 

Ms. EDWARDS. Thank you, my good friend, Mr. Hanna. Good to 

see you in the chair. 

I want to thank you all for your testimony. I am just curious 

about something. I think all of us acknowledge—or most of us do— 

that whether it is hearing from the U.S. Chamber, from the AFL, 

from the various construction trade associations, that we have 

about a $2 trillion infrastructure deficit. That is money that we 

really need to spend on infrastructure, our roads, bridges, you 

know, all of our infrastructure that just is crumbling, to get us to 

where we need to be in the 21st century. 

And I think, Mr. Yarema, even if I agree with you, which I do, 

about what you describe as sort of right-sizing TIFIA and, you 

know, dealing with the $30 billion backlog that could create a million jobs, that that still leaves a rather significant shortfall, in 

terms of what we really need to be spending on infrastructure. And 

so, maybe we could argue that it is about $200 billion or $250 billion a year that we need to be spending. 

And so let’s say we do the $30 billion backlog. That other balance 

we really do need to invest in infrastructure. And if it can’t be 

through TIFIA—and we have had arguments in this committee 

about whether—and with the administration and others—about 

whether we can do it through a fuel tax or measuring—looking at 

miles consumed, used in that sense—we have to put together some 

combination of things to meet our infrastructure needs. 

And so, isn’t—and I direct this to Mr. Thomasson and Mr. 

Yarema—isn’t an infrastructure bank at least one of the legs of the 

stool that could be used to, you know, to provide the balance that 

34 

we need for infrastructure, recognizing that we still might have to 

deal with the $30 billion need that we have, the backlog in TIFIA? 

And I wonder if you could address that. 

Mr. YAREMA. I would be pleased to. The National Surface Transportation Infrastructure Financing Commission, on which I was 

honored to serve, absolutely underlines what you are saying—that 

the shortfall in Federal transportation revenues will not be made 

up for by project revenues alone. So we do need a level of Federal 

apportionment that does its best to meet as much of the Federal 

role as possible. The Commission recommends a vehicle miles traveled fee that would be imposed by the year 2020. 

I think the only point I was making about TIFIA in distinguishing from the national infrastructure bank is that if we rightsize TIFIA, I believe that all the projects where there will be sufficient revenues to be able to repay a loan. TIFIA can handle that. 

The national infrastructure bank, as a tool, will be redundant for 

the transportation program if TIFIA is right-sized. It will not be redundant for other kinds of infrastructure that don’t have TIFIA. 

Energy projects, ports, levees, and dams don’t have the benefit of 

TIFIA. So there may very well be a role there for a national infrastructure bank. All I was saying is that the national infrastructure 

bank probably will not be able to provide an instrument that requires repayment any better or different than TIFIA’s. 

If you compare TIFIA to the other multilateral banks in the 

world, like the European Development Bank and the Asian Development Bank, that provide Government-supported finance for 

projects, those applicants would all kill for the terms that TIFIA 

provides. So we do have a great program. 

Ms. EDWARDS. Thank you. And, Mr. Thomasson, if you could also 

address this, you know, this burning question that I have kind of 

had that—I mean, look. We have a fuel tax we haven’t actually 

raised in a gazillion—not since I was in college, or something like 

that. And in Maryland, we actually are now, you know, considering 

that, because we have a whole bunch of State and local projects 

that don’t really qualify to be used out of our Federal funding, and 

we have still got to do that stuff, too. 

So if you could address those questions, I would appreciate it. 

Mr. THOMASSON. I think that is absolutely right. It has been, 

what, 17 years, I think, since we have raised the fuel tax. And that 

leaves States in a bind. We have States who are not only facing 

tough fiscal situations, but who are there on the ground, trying to 

make these investments in infrastructure because the Federal role 

is limited. 

And part of the idea of the infrastructure bank is to offer an optional tool to the States, another tool, because we need as many as 

we can to meet this infrastructure deficit that we are facing. As 

you said, it is in the trillions, and the magnitude is just awesome. 

And we need every tool we can have available. 

We can talk about the duplication with TIFIA, but this funds 

other kinds of projects. The need for water projects is enormous at 

the State level, and there is no good financing mechanism for that. 

It is worth doing, just for the water programs, if nothing else. 

But I think you are exactly right. This is a long-term project, 

whether it is the President’s new jobs bill, or the recommendations 

35 

from his jobs council just this week, where there are a dozen recommendations about infrastructure. This is not a silver bullet. This 

is one part of a broad-based strategy that we need for this overwhelming challenge that we are facing on infrastructure. 

Ms. EDWARDS. Thank you. And I just would conclude by just re- minding us that with this $2 trillion deficit and the need that we 

have to spend, I would say, a couple of hundred to perhaps $300 

billion a year in infrastructure, there is no shortage of multiple 

ways that we are going to need to finance this stuff. We have to 

bring the United States into a 21st-century infrastructure if we 

want to be competitive, globally. And we cannot wait to do that, arguing over whether it is this or that. It is not this or that. It is 

all of these things. 

And so, I would urge us to do that and get on with it. Instead 

of talking about the 1 million jobs that we would create with a 

right-sized TIFIA, we could be talking about 7 or 8 million jobs 

that we would fund with a long-term infrastructure plan for this 

country that would really put people back over the course of time, 

and allow States to do the kind of planning that they need for the 

big projects, and not just for routine maintenance. 

And so, with that, I would yield. Thank you. 

Mr. HANNA. Mr. Capuano. 

Mr. CAPUANO. Thank you, Mr. Chairman. And gentlemen, I 

apologize. I heard all your testimony, but I had to leave during the 

first question. So if I am redundant, welcome to Congress. 

Gentlemen, especially Secretary Ridley, you made some comments in your statement—and also in your written statement— 

that I found very interesting. First and foremost, ‘‘Recognize that 

the success of dedicated funding, financing methodologies, and 

partnerships are all dependent on the identification and stability of 

long-term supporting revenue streams.’’ That is 1 million percent 

right. 

Is there anybody on the panel that disagrees with the statement 

that we need to put more money into our national infrastructure 

needs? Is there anybody who disagrees with that? 

[No response.] 

Mr. CAPUANO. OK. Is there anybody who disagrees with the 

statement—do you disagree, Mr. Roth? 

Mr. ROTH. I disagree with the statement the way that it is put. First, I am very suspicious about this $2 trillion figure. I suspect 

that—— 

Mr. CAPUANO. Well, you disagree with it. So you think that we 

are fine with the amount of money we put into our infrastructure 

now. And that is fine. You are welcome to that opinion. 

Mr. ROTH. What I want to say is that the money has to be put 

into the right place, and we have to have a way of prioritizing—— 

Mr. CAPUANO. Well, I understand that. 

Mr. ROTH [continuing]. And putting money—— 

Mr. CAPUANO. That is a judgmental call, and I respect that. We 

may have differences of opinion on where it should go. And I understand that. But you are telling me that you are fine with the 

amount of money that we put into the infrastructure system. You 

don’t agree—I didn’t mention $2 trillion; some people have different 

numbers. 

36 

I happen to think that, no matter what the number is, I think 

our infrastructure system is crumbling, and we are turning into a 

Third World country over time. And if you disagree with that, you 

are welcome to that opinion. That is all I asked. Do you disagree 

with that? 

[No response.] 

Mr. CAPUANO. I will take that silence as a disagreement. 

Mr. ROTH. I do not think there is any rational way of knowing 

whether we should be spending 2 or 3 or 4 billion dollars on infrastructure—— 

Mr. CAPUANO. Well, unfortunately, we have to make that decision, and I respect that. 

Mr. Roth, I presume, then, you would then disagree that you 

think the Highway Trust Fund is probably perfectly well funded. 

Mr. ROTH. I believe that the people who are running the Highway Trust Fund should raise the fuel tax to get more money 

into—— 

Mr. CAPUANO. So you think we need more money for the Highway Trust Fund. 

Mr. ROTH. Yes, certainly. 

Mr. CAPUANO. Does everybody else agree that we need more 

money into the Highway Trust Fund? 

Mr. ROTH. The fuel tax, at the moment, is not—— 

Mr. CAPUANO. Mr. Roth, I understand this, but there are many 

ways—— 

Mr. ROTH [continuing]. Does not even cover the maintenance 

costs—— 

Mr. CAPUANO. I am trying to avoid the discussion of how to get 

that money, because that sets everybody off here. I am simply asking a simple question. 

Do people on this panel think that we need more money into the 

Highway Trust Fund? If you do, fine. If you don’t, that is fine. I 

am not an argumentative question. It is argumentative when you 

start saying how we get it in there. And I am trying to avoid that. 

I am trying to be nice. I don’t want to upset my colleagues here. 

Mr. ROTH. We do need more money in the Highway Trust Fund. 

Mr. CAPUANO. That is—so we all agree on that. So, as this—as 

we sit here today, we are all struggling with a way to get more 

money into infrastructure. That is really what this is all about, and 

how to get it done. 

Now, for me, whenever you introduce private sector into anything, does the private sector do anything, or should they—I don’t 

think they should—do they do anything for free? No. It costs money 

to get the private sector in. And in this case, it costs interest payments, which I am not arguing is good, bad, or indifferent, but it 

takes money away from infrastructure to pay private enterprise. 

And, Mr. Ridley, when you were involved with the creation of the 

Interstate Highway System, did we do that? 

Mr. RIDLEY. Most of the monies that was paid for the interstate 

system was pay-as-you-go, although there was some—— 

Mr. CAPUANO. A little bit. 

Mr. RIDLEY [continuing]. Roads that were toll roads. Oklahoma 

has a few that were—— 

37 

Mr. CAPUANO. But a toll road is pay-as-you-go, too, if you are a 

toll payer. 

Mr. RIDLEY. That is correct. 

Mr. CAPUANO. Either way, every penny, or virtually every penny 

to create the Interstate Highway System was out of the taxpayers’ 

pockets. 

Mr. ROTH. No. 

Mr. CAPUANO. My concern—well, on the Federal side it was. The 

State side it wasn’t. On the Federal side it was. 

Mr. ROTH. It was paid by road users. It did not come out of Federal general revenues. 

Mr. CAPUANO. Well, Mr. Roth, now we are getting into a substantive discussion. Whenever the Government reaches into my 

pocket—and I am a liberal, by the way, I don’t mind this—that is 

a tax. You can call it a fee, you can call it a toll. But when the 

Government reaches into my pocket, that is Government action. It 

is a tax. 

When I go—when I drive down the Mass Pike, I don’t really care 

why they are collecting my dollar-and-a-half; I know that they are 

doing it. 

So, I guess the question for me is, why are we arguing, in any 

capacity, adding a middle man to this? Bottom line is we are here 

today to discuss an option because we haven’t got the courage or 

the fortitude to do what we have to do, which is to increase revenues, increase funds going into our infrastructure. And we are all 

struggling for 1,000 different ways to do this. 

And the truth is, it is all going to cost taxpayers or toll payers, 

which are the same people, by the way, more money over the long 

run. If we just did it straight up, either through a gas tax or a vehicle mile, or the 10 other proposals that are on the table, the longterm benefit to the Commonwealth of Massachusetts, to the taxpayers of Massachusetts, to the people of this country, is that they 

get a bigger bang for their buck when it comes to infrastructure. 

And I guess I just want to argue. Does anybody here think that 

it is good to simply deny our obligations, to say, ‘‘We don’t really 

need this,’’ or, ‘‘We don’t have the courage to pay for it now, we will 

let somebody else pay for it later’’? How is that a strong-minded, 

intelligent, long-term process when the day will come—maybe not 

for you, Mr. Ridley, but for me or my kids or your kids—when they 

are going to have less money to fix their roads and bridges because 

we burned them with interest payments that were unnecessary, because we don’t have the courage to do what we need to do today? 

I would like to know. My time is up, but I had fun doing it. If 

you have any time, I would like to know if any of you disagree with 

that. 

[No response.] 

Mr. HANNA. Ms. Richardson. 

Ms. RICHARDSON. Yes, thank you, Mr. Chairman. I have a few 

questions. First of all, Mr. Roth, in your testimony you reference 

the California State 91 Freeway, which—I happen to live in California, and I go along that freeway often. Are you aware of some 

of the problems regarding your suggestion of why tolling and all 

that is a great scenario? Have you studied the problems, as well? 

You didn’t reference the issues with that. 

38 

Mr. ROTH. I know that there was a problem in connection with 

the State building new roads parallel to that, and that that problem was overcome by the toll road being sold to Orange County. 

But I don’t know of other problems. The road has been working 

well since 1995. The system has been replicated in other parts of 

California, in Colorado, in Minnesota, and of course, is coming to 

Washington, DC. 

The beauty about that arrangement is that paying the toll is voluntary. People who use that corridor if they need to get to somewhere in a hurry. If they are late for picking up their child, then 

they can pay the money and use the toll road. If not, they stay in 

the untolled lanes, and it seems—— 

Ms. RICHARDSON. OK, excuse me, sir—— 

Mr. ROTH [continuing]. To me that these arrangements can be 

replicated—— 

Ms. RICHARDSON. Excuse me. We have only got 5 minutes. Reclaiming my time, I would like it to be noted for the record, because 

I think it is important, if we are going to have people come and 

testify, that we are testifying accurately and providing information, 

especially to this committee. 

Sir, in your testimony you note, as you just started to explain, 

that payments are collected electronically from customers from prepaid accounts. So I would like to ask you. If it is from a prepaid 

account, and if someone—suddenly an emergency and needs to get 

there, or someone is driving through that area and would like to 

utilize it, they don’t have the ability to use that road, because it 

is only collected through prepaid accounts, which is called Fast 

Track. 

So, essentially, what it is doing is it is eliminating people, such 

as myself. I don’t drive—go down the 91 Freeway every single day 

into Orange County. I may do it once a month. So if I would like 

to reduce congestion and have the ability to do it, I currently don’t, 

because of the Fast Track system. 

So, I would only say if you are going to reference as a positive 

of toll roads in communities, especially across the United States, 

you need to make sure to reflect all of the information and some 

of the problems, and not just the limited area in the way that you 

did. Because it is a well-known fact and an issue in California. 

Mr. ROTH. It—— 

[Following are supplementary remarks regarding California’s 

State Route 91 HOT lanes submitted for the record by Gabriel 

Roth:] 

A subcommittee member queried the omission from my 

testimony of the fact that road users have to open accounts 

before using California’s State Route 91 HOT lanes. 

I spoke to a staffer at the Orange County Transportation 

Authority and was advised that road users can enter the 

HOT lanes even without having an account. Those who do 

so receive an invitation to open an account, and are 

charged a $25 fee for using the lanes without one. However, if they then open a HOT lanes account the $25 fee 

is credited to it. 

39 

Ms. RICHARDSON. My next questions are for Mr. Yarema. You 

mentioned about TIFIA—and we were pretty involved with TIFIA 

legislation last year, both myself and some others, in terms of extending that program—and on page five of your testimony you talk 

about a first-come-first-served program. And you are proposing that 

we would eliminate discretionary competitive programs, and somehow that this would help us with regional and national significance. 

I don’t quite agree. So let me let you take a stab at explaining 

why you think that is right. 

Mr. YAREMA. Sure. As long as you have more applicants than you 

have resources, then you have to have a discretionary program. 

And hopefully that discretionary program will be based upon objective criteria that Congress has laid down. 

TIFIA was, for many years, undersubscribed. So until recently it 

was essentially first-come-first-served, because the resources that 

Congress made available to it were greater than the demand. 

That curve started to change in the last couple years. And as it 

has changed, it has become oversubscribed. So those discretionary 

decisions have become, for the first time, real. 

Ms. RICHARDSON. Let me—— 

Mr. YAREMA [continuing]. If we right-size the program—— 

Ms. RICHARDSON. If you could, wrap it up in 5 seconds. 

Mr. YAREMA [continuing]. We can go back to the way it was. 

Ms. RICHARDSON. If we what? 

Mr. YAREMA. If we right-size the program, we put the resources 

in it to meet demand, then we don’t need to have a discretionary 

program, because it is not a limited resource; it will be sized to 

meet the demand that the States and localities are asking for. 

Ms. RICHARDSON. OK. Reclaiming my time, the problem is we 

live in the United States of America. And the fact that we are 

going to be able to resize it to the point that we can meet every 

single road and highway, I don’t know that I would probably say 

that that is realistic. 

So, in light of that, I just want to say for the record that I would 

have a great concern with us eliminating the discretionary and 

competitive program, because I think it would do the very thing 

that your statement actually suggests. I think it would be contrary 

to that. By doing a first-come-first-serve, to me, that eliminates establishing whether the projects are, in fact, of regional or national 

significance. It just means whatever project happens to come up is 

going to get funded. And I don’t think the—— 

Mr. YAREMA. No, I would say that the objective—— 

[Following are supplementary remarks submitted for the record 

by Geoffrey S. Yarema:] 

A first-come-first-served program can and should still impose strict eligibility requirements, including qualification 

as a project of regional or national significance, among others. 

Ms. RICHARDSON. Excuse me, I have reclaimed my time. You already got to testify. We only get 5 minutes, and we are in the middle of a Homeland Security markup. 

40 

I am just saying, from reading your testimony—and I am happy 

to have an offline conversation with you about it—but my concern 

is, listed in your testimony of suggesting going to a first-come-firstserved, I believe—I don’t see, realistically, that we are going to 

have all the money we could possibly need. And so I think it is important for the record—because we are going to be working on a 

transportation bill—that we seriously understand the problems 

with this. Because I don’t believe that then the projects of national 

significance and regional significance would be adequately met. 

So I just wanted, for the record, to clarify that part in your testimony. Thank you. 

Mr. HANNA. Thank you—— 

Ms. RICHARDSON. I yield back the balance of my time. 

Mr. HANNA. Mr. DeFazio. 

Mr. DEFAZIO. Thank you, Mr. Chairman. Mr. Ridley, some of 

those who object to the national infrastructure bank—and I made 

clear my position on it at the beginning, that it was appropriate for 

certain things, not for others, I don’t know that we need it for 

transportation—are offering saying, ‘‘Well, we should just encourage State infrastructure banks.’’ 

I notice apparently your State doesn’t have one, a State infrastructure bank. 

Mr. RIDLEY. We do have an infrastructure bank. It is not capitalized. It was established in the late 1990s. We haven’t had a use 

for it, but it is established. It is in statute. We promulgated the 

rules, and we do have a bank. 

Mr. DEFAZIO. So you have one, but you haven’t found a need to 

utilize it. 

Mr. RIDLEY. That is correct. 

Mr. DEFAZIO. OK. And what would bring you to utilize it? I 

mean what—— 

Mr. RIDLEY. Certainly I think we would have to understand that 

when we capitalize the bank, then that takes money out of the revenue stream that we would have. So capitalization of it would be 

the start. 

The second thing is that you would have to assume that you 

could get lower interest loans through the State infrastructure 

bank than you can get currently now, just in the market. Our rating in Oklahoma is very good. The turnpike authority rating is 

very good. So whether it is revenue bonds or others, we have a 

good enough rating that we get very good interest rates on our 

money today. And that is not the issue. 

Mr. DEFAZIO. OK. I would like to see if I can turn this into a 

question. It is back to Mr. Capuano’s comment regarding the levels 

of investment. 

I guess first I will ask, are any of you or all of you familiar with 

the new and different report from the American Society of Civil Engineers? They regularly rate the state of our infrastructure, which 

is, as Mr. Capuano said, headed toward Third World status, and 

it gets poor ratings. But they came out with a different report this 

year—first one they have ever done of this kind which looks at the 

cost of not investing in our transportation infrastructure. 

I don’t know who on the panel is familiar with it. My reading is 

they are saying that our lack of investment in transportation infraVerDate Aug 31 2005 09:59 Apr 25, 2012 Jkt 000000 PO 00000 Frm 00050 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\HT\2011\10-12-~1\70681.TXT JEAN
41 

structure—and I believe Mr. Thomasson sort of referenced this 

when he talked about foreign firms looking at making capital investments in the U.S. having to build their own infrastructure, 

something you would have to do in Siberia or the interior of Africa, 

but you wouldn’t think you would have to do it in the United 

States of America—is a detriment to investment, both by foreign 

capital and by U.S. capital in plants and equipment here. They estimated about a $30 billion-per-year loss because of the lack of investment. 

Does anybody have any issues with the report? Mr. Thomasson, 

you were nodding your head. 

Mr. THOMASSON. I am familiar with it, not enough to quote it, 

but that was some of the background behind sort of the deferred 

maintenance and the competitive concerns. 

I think you also see domestic costs. The Nucor CEO that we had 

last week who said, ‘‘What is good for America is good for Nucor, 

and I would love to be putting out more steel for investments here 

in this country. I am having to ship some abroad because there is 

so much foreign investment. But also, I am under capacity and 

would love to have more economic growth from that investment.’’ 

So I think there are both costs, in terms of attracting capital 

from abroad, getting businesses to invest here, but also businesses 

we already have would love to see more infrastructure investment, 

because they benefit directly from the economy, as a whole, growing. 

Mr. DEFAZIO. OK. Mr. Roth? 

Mr. ROTH. I suspect that the nice civil engineers who make those 

reports are being a bit self-serving, and they are looking—— 

Mr. DEFAZIO. Well, sir, have you read the report? 

Mr. ROTH. No, I have not. 

Mr. DEFAZIO. OK. Well then I really don’t want to hear from you 

on that. 

Mr. ROTH. May I make—— 

Mr. DEFAZIO. No, sir. I am reclaiming my time. If you haven’t 

read the report, you haven’t seen that it was done by economists, 

not by civil engineers, you have nothing to contribute here. Anybody who has read the report who would like to comment or contest the conclusions? 

[No response.] 

[Following are supplementary remarks submitted for the record 

by Gabriel Roth:] 

A subcommittee member asked the witnesses whether we 

accepted the estimate made by the American Society of 

Civil Engineers that the ‘‘infrastructure needs’’ of the U.S. 

total $2.2 trillion. I have doubts about this estimate because it is associated with requests for Federal money and, 

as such, may be exaggerated. I could name projects that 

make no sense to a transport economist but which are 

probably included as somebody’s ‘‘need.’’ 

Furthermore, the concept of ‘‘needs,’’ with no prices attached, is dubious. I may ‘‘need’’ to travel in Washington, 

DC, at a speed of 20 miles per hour but that ‘‘need’’ is likeVerDate Aug 31 2005 09:59 Apr 25, 2012 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\HT\2011\10-12-~1\70681.TXT JEAN
42 

ly to vanish if I were required to pay my share of the costs 

of providing it. 

Mr. DEFAZIO. OK. So I think they make a good case. I mean I 

will just give a slight example. We had a failure of a major interstate bridge in Oregon on I–5. And what it meant was a truck 

route detour which went over the Cascade Mountain range, down 

the other side of the mountains, and then back down the Cascade 

Mountain range. I think some companies find that inconvenient. 

And UPS has documented what a delay means to them, and other 

companies have, too. 

So, I think what—we hopefully have a common goal here, which 

is to enhance our investments, deal with the decrepit state of repair. Whether a national infrastructure bank, you know, would be 

a major contributor, or is necessary for transportation—I have my 

doubts—it would be necessary, I believe, for other forms of infrastructure, or potentially necessary, because we don’t have a TIFIA 

program for water and sewer, and States are limited these days, 

in entering into the markets. 

Anybody have any comments on how important that potential 

could be for other infrastructure investments, which are also important to our economy and our citizenry? 

Mr. THOMASSON. Well, I think that is absolutely right. We have 

heard in the bipartisan proposal in the Senate there is just an 

enormous outpouring of concern about water infrastructure projects 

that can’t get financed—that States are having trouble financing 

them. 

Our energy transmission grid is a generation older than it needs 

to be. We have massive modernization challenges that could be expedited, if we lower the financing costs for those projects. I think 

this is critical for our overall investment deficit. 

And I think TIFIA is a great program. We learn from the lessons 

and success of TIFIA. We can scale that to other areas of infrastructure, focus on the kind of projects that we need as a country 

to make the economy more efficient, to keep from being the kind 

of Third World country that we are headed toward being, and that 

kind of national strategy is essential if we are going to have a longterm strategy for growth and prosperity. 

Mr. DEFAZIO. Thank you. Just back to the topic I raised earlier, 

which Mr. Utt was given the opportunity to comment on, that 

ARRA was defective, very defective. I voted against the bill. A lack 

of investment in infrastructure was a big part of it. Seven percent 

for infrastructure, over 40 percent for tax cuts. 

Can anyone on the panel tell me of a major infrastructure project 

which has been initiated by tax cuts? 

[No response.] 

Mr. DEFAZIO. No, I didn’t think so. Tax cuts don’t seem to build 

infrastructure. They don’t seem to put people back to work, either. 

And I would also observe, in terms of how quickly the money can 

be spent, it varies by program, Mr. Utt. If you look at the backlog 

in our transit infrastructure, which is about $70 billion for a state 

of good repair—they are killing people in Washington, DC, because 

of a lack of state of good repair, a little embarrassing and kind of 

43 

tragic for the families, the Nation’s Capital is running obsolete 

equipment that actually kills people. 

In Chicago—and I use this example because of my differences 

with the President over this—Chicago Transit Authority was able 

to commit its total ARRA allocation of $270 million in less than 30 

days, which immediately initiated orders, which immediately put 

people to work, and there are Made In America requirements, and 

they were all Americans. That did initiate employment. 

So, if you choose where to target the money—if you want quick 

employment you probably would put more money into areas where 

there are on-the-shelf investments ready to go, orders waiting. I 

talked to the people who make buses. They are waiting. They have 

orders for thousands of buses, but can’t move forward because they 

lack the funds. 

So, they are ready to go. They are ready to hire. So it depends 

on where you choose to invest the funds. If you put it into a new, 

major road project that requires environmental review, that is 

going to take a long time. If you put it into bridges, quite a bit 

quicker—150,000 bridges on the Federal system need replacement 

or repair. I have a bridge company out in my State, American 

Bridge, they have two branches. They are kind of underemployed 

at the moment. They would love to be building more bridges made 

in America. 

We have the strictest Made in America requirements for transportation investment. We have the least leakage, unlike tax cuts, 

which go into savings, or junk made in China. 

So, I have got to say that those who fault the idea that we could 

both get long-term and short-term growth, and increased foreign 

investment, out of investing in infrastructure just couldn’t be more 

wrong. Is an infrastructure bank a magic wand, no. And I never 

said that. Perhaps there are some who have. But we need more investment from all sources. And that is the bottom line here. 

I do note with appreciation that the Republican side has now 

dropped their proposal to cut infrastructure investment by 35 percent, and they are now talking about current levels of funding extended in the future. Not what we need. We need more investment. 

But that is a good start. Now they are searching for a revenue 

source, and I will do anything I can to help them in that effort. 

So, thank you, Mr. Chairman. I appreciate the opportunity. 

Mr. HANNA. Thank you, Mr. DeFazio. I have one last question. 

It has been widely written by economists that infrastructure 

banks—whether you agree with the premise that the Government 

should be the source of last resort or not—are similar to Fannie 

Mae and Freddie Mac, especially as we come reeling off of the 

whole housing crisis, with public risk and private profit. 

How does anyone feel about that? Do you think that is an accurate comparison? Sir? Mr. Ridley? 

Mr. RIDLEY. In the description of the infrastructure bank, it is 

described as a Government corporation. I know of very few Government corporations, and I don’t know that I can—I certainly cannot 

speak on behalf of the two lending institutions, and whether those 

are considered Government corporations, but certainly you—have 

been established by the Government. 

44 

U.S. Postal Service and Amtrak would be others, I would think, 

that would have been started by well-meaning people and created, 

in some cases, unintended consequences, a debt on the Government 

or a debt on the State. So—— 

Mr. HANNA. Thank you. Mr. Utt? 

Mr. RIDLEY [continuing]. But I do not have the answer for that 

question, sir. 

Mr. HANNA. Mr. Utt? 

Mr. UTT. Do I believe it is a risk? Yes, absolutely. I mean there 

are a lot of infrastructure projects that were originally projected to 

do quite well, based on ridership estimates and cost to do it, and 

everything worked out, and the bonds were issued, and lo and behold, the customers didn’t show up, who need to pay the toll. 

The classic case is the Nevada monorail system, which would 

have allegedly—based upon projections done by a highly reputable 

consulting firm in transportation—would have made it the second 

transit system in the world to earn a profit, or at least cover its 

costs and its capital. And, as a consequence, it moved forward. 

Now, if this was 10 years ago, this would have been—they would 

have come to the infrastructure bank, possibly, for this. But let’s 

talk about what happened. It turns out that the ridership projects 

were dead wrong. Instead of the 50,000 people per day, they got 

about 21,000 per day. The consequence was that revenues were 

very short of what was needed for debt service, let alone operating 

costs. The consequence is that $600 million of private activity 

bonds are now worth zero. 

Now, that could have been held by the infrastructure bank. And 

there are other programs like that. Even Fannie Mae didn’t have 

assets that went to zero, OK? 

Mr. HANNA. Right. 

Mr. UTT. So there are risks out there. It is not to say it is not 

worth doing, but it is just not a slam dunk. Just because somebody 

is charging tolls and you have got some private activity bonds 

there, and you have got private partners, doesn’t necessarily mean 

it is going to work. It is like any other business. 

Mr. HANNA. Yes. Mr. Yarema? 

Mr. YAREMA. Let me just offer some comments about the Las 

Vegas Monorail. 

First of all, there were no private activity bonds in that project. 

The private activity bond program wasn’t authorized until 2005, 

and the Las Vegas Monorail closed its financing in September of 

2000. 

Secondly, yes, there is a shortfall in revenues. But it didn’t cost 

the Government a single dollar. That was private money taking 

private risk. The hallmark of a public-private partnership program 

is for the Government to shift risk to the private sector that it normally assumes in a conventionally delivered and conventionally financed project. 

Yes, people think these projects print money, and the private sector just gets rich off them. Actually, in the way most public-private 

partnerships are structured, there is a cap on the amount of profit 

they can make and there is no floor on how much money they can 

lose. In fact, in the Las Vegas Monorail, private investors did lose 

money. But that project would have otherwise been developed by 

45 

the Regional Transportation Commission, the transit agency for 

Clark County, Nevada. And Clark County didn’t put a dime into 

that project, either at the time of the financing or subsequently. 

So, from the public sector’s perspective, protecting the public interest, it was protected. That system operates today without a single dollar of Government money. 

Mr. HANNA. Mr. Roth? 

Mr. ROTH. I think it is more helpful to focus on individual 

projects, rather than looking at infrastructure as a whole. 

An interesting example is the Channel Tunnel, which was, in 

fact, privately financed. A lot of people, private people, lost a lot 

of money on it. And the tunnel was produced. But no Government 

money was lost on its construction. 

I think we have to remember, when we talk about the references 

to this country becoming a Third World country, that it is the policy of this administration to reduce the miles traveled per person. 

And it is the policy to take monies—35 percent, according to Chairman Mica’s letter of July 15, 2011, to the Chamber of Commerce— 

from road users and spend them on bike paths and beautification, 

and things like that. And I believe there is a wish to take money 

from road users to spend it on rail, 19th-century technology used 

in Third World countries. 

So, I think we have to be very careful when we design methods 

of routing Government money to infrastructure. 

Mr. HANNA. Thank you. Mr. Thomasson? 

Mr. THOMASSON. Well, to get back to your question, Congressman, about Fannie Mae and Freddie Mac, it is an important question, because the bipartisan infrastructure bank bill that the President has adopted started with the intent of avoiding the kind of 

structure that the GSEs had that has gotten them into trouble. 

The biggest distinction in that structuring is that Fannie Mae 

and Freddie Mac are Government-chartered corporations, but they 

are owned by private shareholders. You have this divergence of interest, a conflict of interest, between the private shareholders that 

want to chase high returns and have Fannie Mae and Freddie Mac 

holding higher risk portfolios to generate those returns, and the 

public interest that is supposed to be served by those GSEs. 

The bipartisan infrastructure bank that Senator Kerry and Senator Hutchison have introduced maintains ownership of the corporation by the Federal Government, so you don’t have that conflict 

of interest with the public interest. It also doesn’t issue its own 

bonds like Congresswoman DeLauro’s bill would do, so it is not 

able to leverage or gear its own capitalization by issuing debt, 

which Fannie and Freddie also did to abandon. 

I mean look at the numbers—Fannie Mae in 2008 had debt that 

was 18 times its equity; Freddie Mac’s was over 60 times its equity. 

This is designed intentionally to avoid that. The bank would have 

to hold an investment-grade portfolio. It is a lower—much lower— 

risk profile that we are talking about. And it uses the same sort 

of risk approach as TIFIA and the Export-Import Bank, which is 

a much better analogy, a much better comparison, that is financially self-sufficient and returns money to the Treasury every year. 

46 

Mr. HANNA. Thank you. Thank you all. I guess I am the only one 

here, so there is no further questions. I want to thank you for your 

contributions and your insights today, and particularly your time. 

I ask unanimous consent that the record of today’s hearings be 

left open until such time as our witnesses have provided answers 

to any questions that may be submitted to them in writing, and 

unanimous consent during such time as the record remains open. 

Additional comments offered by individuals or groups may be included in the record of today’s hearing. Without objection? 

[No response.] 

Mr. HANNA. So ordered. I would like to thank our witnesses once 

again for coming. 

If there are—no other Members have anything to say, obviously. 

This hearing is adjourned. Thank you so much. 

[Whereupon, at 12:29 p.m., the subcommittee was adjourned.] 

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