Building a 21st Century Infrastructure
The President’s Fiscal Year 2014 Budget demonstrates that we can make critical investments to strengthen the middle class, create jobs, and grow the economy while continuing to cut the deficit in a balanced way.
The President believes we must invest in the true engine of America’s economic growth – a rising and thriving middle class. He is focused on addressing three fundamental questions: How do we attract more jobs to our shores? How do we equip our people with the skills needed to do the jobs of the 21st Century? How do we make sure hard work leads to a decent living? The Budget presents the President’s plan to address each of these questions.
To make America once again a magnet for jobs, the Budget invests in high-tech manufacturing and innovation, clean energy, and infrastructure, while cutting red tape to help businesses grow. To give workers the skills they need to compete in the global economy, it invests in education from pre-school to job training. To ensure hard work is rewarded, it raises the minimum wage to $9 an hour so a hard day’s work pays more.
The Budget does all of these things as part of a comprehensive plan that reduces the deficit and puts the Nation on a sound fiscal course. Every new initiative in the plan is fully paid for, so they do not add a single dime to the deficit. The Budget also incorporates the President’s compromise offer to House Speaker Boehner to achieve another $1.8 trillion in deficit reduction in a balanced way. When combined with the deficit reduction already achieved, this will allow us to exceed the goal of $4 trillion in deficit reduction, while growing the economy and strengthening the middle class. By including this compromise proposal in the Budget, the President is demonstrating his willingness to make tough choices and his seriousness about finding common ground to further reduce the deficit.
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Since the President took office four years ago, America has begun the hard work of rebuilding our infrastructure: we have built or improved over 350,000 miles of road and more than 6,000 miles of rail, and we have repaired or replaced over 20,000 bridges. But to compete in the 21st Century economy and become a magnet for jobs, we must do more. We need to repair and enhance the resilience of our existing infrastructure by and investing in the infrastructure of tomorrow, including next-generation broadband high-speed rail, high-tech schools, integrated water management systems, and self-healing power grids. These investments will both lay the foundation for long-term economic growth and put workers back on the job now. And the Budget ensures these investments do not add to the deficit by making trade-offs within discretionary caps and reinvesting savings from capping “Overseas Contingency Operations” funding.
We also know that America works best when we are catalyzing the resources and ingenuity of a vibrant private sector. That is why the President’s infrastructure plan calls for making it easier for the private sector to invest in rebuilding our country and cutting red tape through permitting reform that dramatically reduces project timelines.
Provide $50 Billion in Upfront Infrastructure Investments. The national transportation system continues to face an immense backlog of state-of-good-repair projects, a reality underscored by the fact that there are nearly 70,000 “structurally deficient” bridges in the country today. To address this problem, the Budget includes $40 billion for “Fix it First” projects, to invest immediately in our Nation’s infrastructure with an emphasis on reducing the backlog of deferred maintenance on highways, bridges, transit systems, and airports nationwide. The Budget also includes $10 billion for competitive programs to encourage innovative reform and help get high-value infrastructure projects from the planning stage to execution, including $200 million for “Climate Ready Infrastructure” whose planning efforts and projects include measures to enhance the resilience of transportation infrastructure to extreme weather and other impacts of climate change.
Boost Private Investment Through “Rebuild America Partnership.” The President’s plan will bring together an array of new and existing policies all aimed at enhancing the role of private capital in U.S. infrastructure investment as a vital additive to the traditional roles of Federal, State, tribal and local Governments. The President wants to enable and empower the private sector to upgrade infrastructure on which we all rely and that is crucial for continued economic growth.
Create National Infrastructure Bank. The President continues to call for the creation of an independent National Infrastructure Bank. The Bank will have the ability to leverage private and public capital to support infrastructure projects of national and regional significance. In addition, the Bank will be able to invest through loans and loan guarantees in a broad range of infrastructure projects, including transportation, energy, and water, and will operate as an independent, wholly-owned Government entity outside of political influence.
- Enact America Fast Forward Bonds. Recovery Act funding for “Build America Bonds” (BABs) helped to support more than $181 billion for new public infrastructure. The program’s innovative design ensured that States, localities, and their private sector partners receive the best bang-for-the-buck when they finance their investments in new infrastructure. The President’s new America Fast Forward (AFF) Bonds program will build upon the successful example of the BABs program, broadening it to include similar programs like the qualified private activity bonds program while also making the combined program more flexible. AFF Bonds will attract new sources of capital for infrastructure investment — including from public pension funds and foreign investors that do not receive a tax benefit from traditional tax-exempt debt. In addition, the Budget proposes changes to the Foreign Investment in Real Property Tax Act (FIRPTA) aimed at enhancing the attractiveness of investments in U.S. infrastructure and real estate to a broader universe of private investors.
As part of the AFF Bonds program, the Budget proposes to reduce the cost of financing for building and repairing public schools, State universities, and school buildings sponsored by non-profit educational entities by issuing AFF school construction bonds, with an additional interest subsidy in 2014 and 2015 to encourage immediate investment in school construction.
- Maximize the Impact of the Newly Enhanced TIFIA Program. The Transportation Infrastructure Finance and Innovation Act (TIFIA) program — which provides direct loans, loan guarantees, and lines of credit to regionally or nationally significant transportation projects — received an eight-fold increase in funding to $1 billion in the recent surface transportation reauthorization. Over the past 13 years, TIFIA has entered into 27 loan agreements worth $10.4 billion, resulting in more than $41 billion in total project investment. The program, which is especially important to mayors and local leaders, highlights the important role that infrastructure financing can play in catalyzing private investment, and its expansion was a significant step towards more innovative infrastructure financing.
In addition to the sound implementation of TIFIA’s recent expansion, the Budget also proposes $4 billion in new competitive funding for the Transportation Investment Generating Economic Recovery (TIGER) and TIFIA programs in 2014. This additional investment would make new grant and loan funding available for States and localities across the country, giving them both a new source of financing and the flexibility to design projects and financing packages to meet their needs.
Dedicate Funding for High-Speed Rail Investment. The Budget provides $40 billion over five years to fund the development of high-speed rail and other passenger rail programs as part of an integrated national transportation strategy. This national system will provide 80 percent of Americans with convenient access to a passenger rail system featuring high-speed service within 25 years. The Administration’s proposal also benefits freight rail and significantly restructures Federal support for Amtrak, to increase transparency, accountability, and performance.
Build a Modern Intermodal Transportation System. While the recently-passed two-year surface transportation authorization legislation, MAP-21, provided much needed certainty to transportation funding and enacted a number of important reforms, the Administration believes that more needs to be done to maintain, improve, increase the resilience of, and expand the Nation’s transportation systems. Much of the country’s transportation infrastructure was built decades ago and is in urgent need of repair to meet current and future economic, development, and climate demands. Therefore, in addition to the $40 billion up-front infrastructure investment in the Budget, additional resources are reserved beginning in 2015 to support robust funding levels for highways, transit, and highway safety activities in the next transportation reauthorization legislation.
Modernize Air Traffic Control System. The Budget provides nearly $1 billion in 2014 for the Next Generation Air Transportation System (NextGen). NextGen is the multi-year effort to improve the efficiency, safety, capacity, and environmental performance of the aviation system. These funds would continue to support the transformation from a ground-based radar surveillance system to a more accurate satellite-based surveillance system; the development of 21st Century data communications capability between air traffic control and aircraft to improve efficiency; and the improvements in the quality and timeliness of aviation weather information.
Expedite Infrastructure Projects Through Permitting Reform. Major infrastructure projects typically involve multi-year design, development, and construction timelines with complex approval processes that involve multiple governmental jurisdictions and agencies, each with its own statutory mandate to consider a range of impacts. Multiple permits and reviews from multiple agencies across multiple governmental jurisdictions can lead to confusion, duplication, and delay. In addition, project developers, citizens, and stakeholders can find navigating these governmental roles frustrating, time-consuming, and costly.
In order to accelerate economic growth and improve the competitiveness of the American economy, the Administration is taking action to modernize and streamline the Federal permitting process. The President has established a new goal of cutting timelines in half for major infrastructure projects in areas such as highways, bridges, railways, ports, waterways, pipelines, and renewable energy. By cutting through the red tape, we will more efficiently get projects through the Federal permit decision-making and review process while protecting communities and the environment.
Expand Access to Wireless Broadband. The Administration and the Federal Communications Commission are continuing their work in 2014 to expand availability of spectrum for wireless broadband use through incentive auctions and by identifying spectrum used by Federal agencies that could be repurposed for commercial use. Freeing up this spectrum is critical for encouraging new technologies and consumer applications. In addition, through the First Responder Network Authority, created by the Middle Class Tax Relief Act of 2012, the Administration is also working to invest $7 billion of spectrum auction proceeds into a highly reliable, nationwide interoperable wireless broadband network for first responders.
Invest in State Revolving Funds. The Budget proposes a combined $1.9 billion for federal capitalization of the Environmental Protection Agency’s Clean Water and Drinking Water State Revolving Funds (SRFs). This level will still allow the SRFs to finance approximately $6 billion in wastewater and drinking water infrastructure projects annually, while targeting support to small and underserved communities with limited ability to repay loans. Additionally, the Budget sets aside funding in the SRFs for green infrastructure approaches to storm and wastewater, and other water and energy efficiency projects.