HR-1235-119
Referred to the Subcommittee on Highways and Transit.
Sponsored by Daniel Webster (R-FL)
What it does
This bill would create a federally chartered Federal Infrastructure Bank, owned by a privately held Holding Company, to provide loans, loan guarantees, and equity investments for infrastructure projects such as highways, ports, energy transmission, water systems, and rail. The Bank and Holding Company would be exempt from federal, state, and local taxation (except real property tax), required to maintain 10% risk-based capital, and barred from funding foreign or China-linked projects; investors in the Holding Company would also receive a new federal tax credit equal to 10% of their investment for five years.
Who benefits
Investors and shareholders in the Holding Company (who receive tax-exempt earnings and a 10% federal tax credit), construction and engineering firms, state and local governments seeking infrastructure financing, rural communities guaranteed at least 10% of Bank funding, and financial institutions involved in bond issuance and underwriting.
Who is hurt
Federal and state taxpayers, who lose tax revenue from the Bank's broad tax exemption and the new investment tax credit while implicitly backstopping a quasi-governmental entity; competing private lenders and existing state infrastructure banks who may lose market share; non-revenue-generating infrastructure projects (e.g., some rural roads or flood control) that depend on the Bank's willingness to cross-subsidize them; and communities whose projects are passed over because they lack sufficient revenue streams to attract Bank financing.
Supporters argue
Supporters argue the United States faces a well-documented infrastructure funding gap—estimated by ASCE at over $2 trillion over ten years—that traditional municipal bond markets and federal appropriations have not closed. They contend a dedicated, quasi-private infrastructure bank could leverage private capital through equity and bond markets, insulate financing decisions from annual appropriations fights, and target underserved rural areas through the 10% set-aside, all while explicitly avoiding a taxpayer-backed guarantee.
Opponents argue
Opponents argue the bill effectively creates a new tax-exempt, government-chartered financial entity that could cost the Treasury billions in forgone revenue through both the blanket tax exemption and the 10% investment tax credit, while its earnings remain private property rather than public funds. They contend the requirement that projects be revenue-producing to qualify for financing will favor tolled highways, ports, and energy projects over unprofitable but critical needs like rural water systems or levees, undermining the bill's own cross-subsidy goal.
Constitutional context
Congress's power to charter a national bank and regulate interstate commerce and infrastructure finance traces to the Commerce Clause and the Necessary and Proper Clause, as recognized in McCulloch v. Maryland (1819), which upheld Congress's authority to create a national bank as a valid exercise of implied powers even though banking is not explicitly enumerated.
Checks and balances
Congress creates the Bank's charter and tax treatment by statute, the Treasury Department and Federal Reserve oversee formation and prudential regulation, and the privately elected Holding Company board—not any federal official—controls day-to-day operations and investment decisions, limiting direct executive or congressional control once established.
Historical precedent
The bill resembles earlier proposals for a national infrastructure bank, such as the BUILD Act and various National Infrastructure Bank bills introduced in prior Congresses, none of which were enacted, as well as government-sponsored enterprises like Fannie Mae and Freddie Mac in their public-private structure.