[Congressional Record (Bound Edition), Volume 146 (2000), Part 1]
[House]
[Page 1028]
[From the U.S. Government Publishing Office, www.gpo.gov]



   H.R. 2777, THE TRANSPORTATION INFRASTRUCTURE AND LOCAL GOVERNMENT 
                        CAPITAL ENHANCEMENT ACT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Washington (Mr. Metcalf) is recognized for 5 minutes.
  Mr. METCALF. Mr. Speaker, my top priority when I was elected to 
Congress was to balance the budget and rein in the skyrocketing 
national debt. These two goals are vital to the economic well-being of 
the United States.
  Today's budget outlook is considerably more optimistic than when the 
phrase ``deficits as far as the eye can see'' was commonly used in 
conjunction with budget projections.
  The Congressional Budget Office is forecasting enormous budget 
surpluses which provides Congress an immense opportunity to begin to 
pay down the $3.3 trillion of marketable debt. Today, the Treasury 
auctioned $10 billion worth of 30-year bonds, and they are expecting an 
additional small auction in August. After that, the Treasury is not 
expected to auction any additional bonds until February 2001. In fact, 
yesterday's Bloomberg article states that, ``Wall Street bond dealers 
have decided that probably this will be the last bond ever: a 
collector's item to be displayed on the shelf along with golf trophies 
in the recreation room.''
  This poses an interesting dilemma for the Federal Reserve Board. 
Their job is to accommodate a substantial rate of economic growth by 
assuring needed increases in the money supply which has been 
accomplished in the past by buying United States Government securities 
at an average annual rate of about $20 billion. When the Treasury stops 
buying U.S. securities, the Federal Reserve will be losing a vital 
lever to accommodate the needed increases in the money supply.
  My bill, H.R. 2777, the Transportation Infrastructure and Local 
Government Capital Enhancement Act, would provide the Federal Reserve 
Board a replacement mechanism to accommodate the needed increase in the 
money supply without buying U.S. Government securities, that is, 
without going into debt. The Federal Reserve or its surrogate would buy 
zero interest mortgages on State and local infrastructure improvements.
  These mortgages would be amortized over periods of up to 30 years 
depending on the nature of the improvement, and in almost every case 
where the State or local government incurs a debt to finance investment 
in infrastructure, the voters have to approve the loan and pay 
interest. That taxpayers do not lightly assume such obligations is 
testified by the nearly zero rate of defaults on municipal bonds.
  The scheduled repayments of the zero interest mortgages would provide 
a constantly renewed source of funds for public projects without 
requiring the Treasury to pay interest on these loans. Unlike now, when 
Federal borrowing means virtually permanent increases in the public 
debt, the proposed mortgage loans would be regularly repaid by local 
governments.
  Evidence of failures to maintain and improve infrastructure is seen 
every day in such problems as unsafe bridges, urban decay, dilapidated 
and overcrowded schools, inadequate airports. A General Accounting 
Office study finds that education is seriously handicapped by 
deteriorating school buildings, and that an investment of $110 billion 
is needed to bring them up to minimally accepted standards.
  I am particularly concerned about our crisis in critical 
transportation bottlenecks that are in trade corridors, and maritime 
vulnerabilities. We also need to make immediate investments to address 
our Nation's vulnerability in the end-to-end movement of forces, 
equipment and material necessary to support a rapid military 
deployment.
  This plan is fiscally sound. It is a means of providing the Federal 
Reserve Board with a needed lever to increase the money supply and 
provide public infrastructure necessary to meet the challenges of the 
21st century.

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