Nomination Of M. Patricia Smith To Be Solicitor For The Department Of Labor - Continued

Floor Speech

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Mr. WYDEN. Mr. President, after holding 20 townhall meetings in my home State of Oregon over the past month, I can certainly report that people are hungry for good economic news, particularly news about job creation growing our economy. Our people want fresh ideas that work, and clearly they are saying, and saying passionately, that it is time to set aside government that doesn't work for them.

That is why I am proud to come to the floor this afternoon and talk about a positive economic development--a development that has far exceeded the projections and the hopes of those who advocated for it--and that is the Build America Bonds program. Build America Bonds works, and it works because it puts our people to work at good-paying, family-wage jobs.

Mr. President, when I started working on Build America Bonds about 6 years ago with a number of colleagues on the other side of the aisle, it was because I believed there was bipartisan support for shoring up our Nation's crumbling infrastructure and, at the same time, getting our economy back to work. It is a fact that investing in infrastructure, dollar for dollar, is one of the best economic multipliers we have in our country, and it is a way to jump-start economic growth.

As communities deal with the recession, I and my colleagues on the other side of the aisle want to give our communities new tools to finance essential construction projects. What Build America Bonds has always been about is not taking any of the tools out of the toolbox we have today, but putting in some additional ones for our communities. Build America Bonds is certainly not a replacement for direct Federal spending on infrastructure, but I think all people who have looked at this subject understand the need is so great for roads and bridges and water systems and schools that we ought to be looking for all cost-effective, efficient ways to fund this essential infrastructure that does have bipartisan support in the Senate.

To report, we thought that maybe getting the Build America Bonds Program off the ground would result in somewhere in the vicinity of $5 to $10 billion worth of additional investment in infrastructure. The program was authorized as part of the stimulus legislation. It did not get off the ground until the middle of the next year, and my colleagues and I thought perhaps the $5 to $10 billion of Build America Bonds that were authorized would allow us to make the case that when the program expires at the end of this year we could call for its renewal.

When the year wrapped up, the figures showed that almost $64 billion worth of Build America Bonds had been issued. In fact, a number of independent experts say that Build America Bonds are now the hottest, most attractive vehicle in the municipal bond market.

In my home State of Oregon, it has been proven time and time again that private money follows public investment. People get back to work building a bridge, for example, and all the businesses near the construction site get more activity from the people who need their services. Once the project is finished, private investment follows the public investment. That bridge makes it easier for folks to get to work or take their kids to school, and communities grow.

As I mentioned, this bill has a long bipartisan lineage. Then-Senator Talent joined with me about 6 years ago for this program. The program would have created a Federal tax credit bonding program to fund investment in transportation infrastructure. Since then, our colleague Senator Thune and four others on both sides of the aisle have joined us to make sure the Senate was on record as saying we can find sensible, commonsense, nonpartisan solutions that address the basic needs this country has to a great extent overlooked.

I have mentioned to date more than $60 billion worth of these innovative bonds have funded hundreds of projects in 39 States--fixing our roads and bridges, rebuilding our schools, upgrading our utilities. These are projects that have been funded, I advise my good friend from Delaware, because we had a lot of discussion about exactly what works in infrastructure and what does not.

On top of this $60 billion of Build America Bonds infrastructure investment, we have seen $80 billion of direct Federal infrastructure spending that was included in the Recovery Act. So you have a one-two punch now for the first time to mobilize all possible resources to fund infrastructure. You have a significant investment in what is called direct spending. I particularly appreciate what a number of my colleagues on the Appropriations Committee have done in this area, particularly Senator Murray, who has championed our cause in the Pacific Northwest with respect to infrastructure. Senator Harkin, the chairman of the Pensions and Labor Committee, also has done a great job in school construction.

I want it understood that those of us who support Build America Bonds see the bonds as a complement to the outstanding work a number of my colleagues whom I have mentioned are doing. This is not to supplant that kind of direct spending effort but to shore it up, to offer additional assistance, particularly additional assistance when the need is so great.

As our proposal was developed, we had an opportunity to work with Chairman Baucus and Senator Grassley, the chair and ranking minority member on the Finance Committee, because we wanted to make sure this effort continued to be bipartisan at every step of the way. I am very grateful that Chairman Baucus and Senator Grassley in effect gave us a chance to jump-start this idea, to get it off the ground.

The reality is, I suggest to my colleague from Delaware, the Federal Government has never bonded in the transportation area. A lot of States and communities wonder if they would even exist without bonds, but the Federal Government had never bonded in the transportation area. We, our bipartisan coalition, believed a tax credit bond could be especially effective. But because Chairman Baucus and Senator Grassley were willing to bet on our bipartisan coalition, our coalition that said Build America Bonds are going to be an efficient tool, we saw all the predictions for the success of this program exceeded. The reality of Build America Bonds blew past the predictions like a bullet train. Build America Bonds sold like hotcakes, getting desperately needed funding going into local communities, creating jobs, and helping to strengthen our infrastructure.

As I have suggested, anyone concerned that in some way this bond program would displace current assistance on infrastructure ought to look at the numbers I have cited. Under the Recovery Act, there was $80 billion for direct Federal infrastructure spending. It has been spent on infrastructure or will be spent within the next year. And Build America Bonds were sold on top of that assistance.

Here are some examples of Build America Bonds quickly putting folks to work. In Oregon's Dayton school district, they used Build America Bonds to employ up to 150 people building and remodeling classrooms. By using Build America Bonds, the school district saved an estimated $1.2 million in interest costs. It is a small school district. Those kinds of savings make a difference.

Communities in Wisconsin have also used Build America Bonds. One small community used them to lower their financing costs by 2.3 percent, allowing them to turn plans to upgrade roads, sewers, and buildings into reality. One of their leaders told Business Week magazine that without Build America Bonds, ``some projects might not be done'' and ``there would be less employment.''

Recently a CBO/Joint Tax Committee report highlighted a number of other benefits from Build America Bonds. CBO and the Joint Tax Committee found that tax credit bonds, like our Build America Bonds, are more cost effective than tax-exempt bonds. The report also concludes that because the bonds are more attractive to investors, they are more efficient at raising capital. This saves municipalities time and money and effort that can be spent on other priorities. Aside from the fact that the funds are raised efficiently, what I have heard again and again--and I think this is what colleagues are going to be looking at when it comes to infrastructure investment--Build America Bonds get the job done quickly. Because they have to adhere to Federal spending guidelines, all of the bond funds have to be spent within 2 years of the date the bond is issued. This means that money is not just flowing into projects, it is being spent in the short term, paying to build roads and bridges and other infrastructure and putting folks back to work quickly. That is the kind of bang for our buck that Americans are hungry for right now. That is what Build America Bonds deliver.

Back in the days before Build America Bonds were issued, the market for normal municipal bonds was almost frozen. It was very hard to sell municipal bonds. It certainly didn't mean the need for financing infrastructure was not there, it was just very hard to get them through the traditional bond market. Build America Bonds have changed that. The private sector, folks who represent the country's largest businesses--the Chamber of Commerce and National Association of Manufacturers--have been strong supporters of it. Many of the labor groups, the trades in particular, have been supportive of it because clearly business and working families need a working infrastructure to give businesses the security they need to think long term about their future.

But it is not just businesses that buy Build America Bonds. Nonprofits, like pension funds, have also found Build America Bonds an attractive investment. Although nonprofits cannot benefit from the tax credits, bond issuers can pass on the value of the tax credits in the form of a higher interest rate for Build America Bonds than other types of bonds. By contrast, traditional tax-exempt municipal bonds are not a good investment for pension funds and other institutional investors that do not pay taxes. So Build America Bonds are especially attractive as a way for nonprofits to invest in American infrastructure that traditional tax-exempt bonds do not provide.

I am not surprised, and I think the judgment I have made would be shared by colleagues on the other side of the aisle because a lot of them have been involved over these last 6 years--we are not surprised that Build America Bonds are reinventing the municipal bond market. They have been a good deal for our communities and for all types of investors. They have freed up financing for badly needed infrastructure construction and ensured long-term economic growth. In some cases these bonds, according to people in communities across this country, make the difference between whether infrastructure projects are actually going to get done. In other cases they lower the cost of the projects and allow communities to reinvestment those savings in other projects.

By any scenario you look at with respect to this program, this is one that helps local governments, local businesses, and the people who rely on infrastructure for jobs and economic security. My view is that is exactly the kind of solution folks are asking for from the Congress at this time. It is fine to speculate about programs you wish to have considered and you will look at down the road to see if they actually produce. The Obama administration now wants to make Build America Bonds permanent because they have seen the extraordinary response our country is demonstrating. Build America Bonds have produced, and they have produced exactly what was intended: a prompt infrastructure investment in an efficient fashion.

I express my appreciation to Chairman Baucus. Under his leadership the Finance Committee, on which I am honored to serve, is currently looking at expanding and improving Build America Bonds in the upcoming jobs bill. I told Secretary Geithner this morning that I had appreciated his leadership and the administration's leadership on this issue.

We have some questions about how to proceed--for example, whether, as I would like, Build America Bonds should be devoted to new job creation as opposed to assistance for operating expenses and other areas. But the bottom line is those are the kinds of issues that Democrats and Republicans here in the Senate can take on in a bipartisan way. What we know is we have something that is working, that is making a difference in this critical infrastructure area, and that literally has 6 years worth of bipartisan history where Democrats and Republicans have come together on an issue that is extraordinarily important to our Nation.

If we keep working together on good ideas such as Build America Bonds, by the time the current economic storm passes our country's infrastructure will be finally ready to support a strong, healthy economy that lies ahead for our Nation.

I yield the floor and suggest the absence of a quorum.

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