[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                     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

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

70-681 PDF                       WASHINGTON : 2012 

For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
Washington, DC 20402-0001 


































             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                    JOHN L. MICA, Florida, Chairman

DON YOUNG, Alaska                    NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
FRANK A. LoBIONDO, New Jersey        Columbia
GARY G. MILLER, California           JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois         CORRINE BROWN, Florida
SAM GRAVES, Missouri                 BOB FILNER, California
BILL SHUSTER, Pennsylvania           EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia  ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio                   LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan          TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California            RICK LARSEN, Washington
ANDY HARRIS, Maryland                MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas  TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington    MICHAEL H. MICHAUD, Maine
FRANK C. GUINTA, New Hampshire       RUSS CARNAHAN, Missouri
RANDY HULTGREN, Illinois             GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
CHIP CRAVAACK, Minnesota             MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas              JASON ALTMIRE, Pennsylvania
LARRY BUCSHON, Indiana               TIMOTHY J. WALZ, Minnesota
BILLY LONG, Missouri                 HEATH SHULER, North Carolina
BOB GIBBS, Ohio                      STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania         LAURA RICHARDSON, California
RICHARD L. HANNA, New York           ALBIO SIRES, New Jersey
JEFFREY M. LANDRY, Louisiana         DONNA F. EDWARDS, Maryland
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN, 
Tennessee

                                  (ii)

  


                  Subcommittee on Highways and Transit

                JOHN J. DUNCAN, Jr., Tennessee, Chairman

DON YOUNG, Alaska                    PETER A. DeFAZIO, Oregon
THOMAS E. PETRI, Wisconsin           JERROLD NADLER, New York
HOWARD COBLE, North Carolina         BOB FILNER, California
FRANK A. LoBIONDO, New Jersey        LEONARD L. BOSWELL, Iowa
GARY G. MILLER, California           TIM HOLDEN, Pennsylvania
TIMOTHY V. JOHNSON, Illinois         MICHAEL E. CAPUANO, Massachusetts
SAM GRAVES, Missouri                 MICHAEL H. MICHAUD, Maine
BILL SHUSTER, Pennsylvania           GRACE F. NAPOLITANO, California
SHELLEY MOORE CAPITO, West Virginia  MAZIE K. HIRONO, Hawaii
JEAN SCHMIDT, Ohio                   JASON ALTMIRE, Pennsylvania
CANDICE S. MILLER, Michigan          TIMOTHY J. WALZ, Minnesota
ANDY HARRIS, Maryland                HEATH SHULER, North Carolina
ERIC A. ``RICK'' CRAWFORD, Arkansas  STEVE COHEN, Tennessee
JAIME HERRERA BEUTLER, Washington    LAURA RICHARDSON, California
FRANK C. GUINTA, New Hampshire       ALBIO SIRES, New Jersey
LOU BARLETTA, Pennsylvania           DONNA F. EDWARDS, Maryland
BLAKE FARENTHOLD, Texas              EDDIE BERNICE JOHNSON, Texas
LARRY BUCSHON, Indiana               ELIJAH E. CUMMINGS, Maryland
BILLY LONG, Missouri                 NICK J. RAHALL II, West Virginia
BOB GIBBS, Ohio                        (Ex Officio)
RICHARD L. HANNA, New York, Vice 
Chair
STEVE SOUTHERLAND II, Florida
JOHN L. MICA, Florida (Ex Officio)

                                 (iii)



























                                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

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                   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?
    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 Congress--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 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 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 2\1/2\ 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 become 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 game-changing 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 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 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 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.
    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 
projects get funding, based on the decisions of another yet-to-
be-named 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.
    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, long-term, 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.
    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 long-term 
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.
    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-a-century 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, 2\1/
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.
    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 billion 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 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 
user-pays 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 Davis-Bacon 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 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 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.
    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 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 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-first-served, 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.
    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 markets 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.
    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 
non-transportation, 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.
    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 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 long-term----
    Dr. Harris. Right. But you agree this long-term one is not 
short-term. 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.
    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?
    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.
    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?
    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?
    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, right-sized, 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-come-first-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 Geoffrey 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 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 right-size 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 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 
reminding 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.
    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----
    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 long-term 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.
    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.

    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.
    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-first-served, 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 infrastructure--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 likely 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 long-term 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 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.
    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 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.
    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.]
