FOR IMMEDIATE RELEASE                    Contact: Adriana Surfas
Wednesday, March 12, 2008                         (202) 225-3661    

DeLauro Highlights Need for

National Infrastructure Investment

Washington , D.C.  – Congresswoman Rosa L. DeLauro (Conn.-3) pressed for a new agenda focused on the infrastructure challenges faced across the country in testimony submitted for a House Financial Services Committee hearing on “Municipal Bond Turmoil.” 

I want to thank Chairman Frank for having this important hearing and for allowing me to submit testimony today. The sub prime mortgage crisis and credit crisis have an impact on our entire economy.

I also want to recognize my friend and colleague Connecticut’s Attorney General Richard Blumenthal and thank him for testifying here today – in particular to address the current dual system for rating municipal bonds versus to corporate bonds. He has highlighted the fact that cities and states appear to receive unfairly low ratings in comparison, costing taxpayers millions. I have always valued Attorney General Blumenthal’s opinion and I am glad to see this committee has asked for his perspective as well.

It is critical that we do everything we can to respond and give our communities the tools they need to endure the serious consequences of a prospective recession.

But we must recognize that states and municipalities are struggling to handle not only today’s churning markets but also the rising costs of consistently failing infrastructure that has gone underfunded for far too long. 

Infrastructure represents the lifeblood of any economy. And lately, the pressure and growth requiring still more investment has increased at record pace.

The American Society of Civil Engineers estimates that we need $1.6 trillion over five years just to bring our infrastructure up to a good condition. As of 2006, 25.8 percent of the nation’s bridges (154,101) were structurally deficient or functionally obsolete.

Airport capacity had increased only 1 percent from 1991 to 2001, yet air traffic had increased 35 percent during that same time period. According to recent estimates by the Environmental Protection Agency, as much as $390 billion will be needed over the next 2 decades to rebuild, repair, and upgrade the nation’s wastewater treatment plants. According to the Texas Transportation Institute, traffic congestion continues to worsen in American cities of all sizes, creating a $78 billion annual drain on the United States economy in lost productivity and wasted fuel.

Things are difficult enough, and now the latest municipal bond turmoil has put states and municipalities in a worse position to confront these infrastructure challenges than ever before.

The widening credit crunch is making it harder for cities, towns, and states to secure funds for critical projects like buildings, bridges, schools, hospitals and roads. The $2.5 trillion market for municipal bonds has been stretched thin as a result of significant losses among bond insurance firms.

Municipalities with lower credit ratings are being forced to pay more to borrow money and possibly put off important projects. Ultimately it is the taxpayer who bears the cost – either in increased expenses for large projects or down the road when we see the consequences of crumbling infrastructure. Some cities have already put off planned bonds. It is clear that the investments once considered safe are now seen to be far riskier.

We must work in Congress to put the focus on a new agenda for our national infrastructure challenges. We have a responsibility not only to restore people’s confidence in our markets but also to give our cities, towns, and states the support they need to make the critical long-term investment. That is why I have introduced legislation to launch a National Infrastructure Development Corporation (NIC).

If the National Infrastructure Development Act was implemented today, over the coming years the federal government would have an entity in place, the National Infrastructure Development Corporation, to make the critical investments needed in infrastructure to grow our economy to compete in the 21st century. 

Moreover, because the Corporation would make loans, purchase securities and issue insured public benefit bonds, among other things, it would help make up for the shortfall in the municipal bond market, restoring confidence, and getting needed funds to these cities. 

NIDA would provide the Corporation with powers including the ability to make senior and subordinated loans and purchase senior and subordinated debt securities and equity securities, the proceeds of which are to be used to finance infrastructure projects; issue and sell debt securities and voting and nonvoting equity securities; issue “public benefit bonds”; and make agreements and contracts. 

When we ease the burden on commuters, modernize our public transportation systems or ensure we have safe drinking water, we are paving the way for new growth and opportunity. When we fail to do those things – when we neglect our air traffic control system or fall drastically behind other nations in broadband adoption -- we create a costly drag on our economy. By ensuring our towns, cities, and states can continue investing in infrastructure, we can rebuild America and keep our nation highly competitive throughout the 21st century.

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www.house.gov/delauro