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Trust Fund Versus Water Bank: Which is the Better Way to Increase Infrastructure Investment?
Author(s) -
Curtis Tom
Publication year - 2010
Publication title -
journal ‐ american water works association
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.466
H-Index - 74
eISSN - 1551-8833
pISSN - 0003-150X
DOI - 10.1002/j.1551-8833.2010.tb10016.x
Subject(s) - treasury , leverage (statistics) , bond , finance , interest rate , business , subsidy , investment (military) , financial system , economics , politics , market economy , archaeology , machine learning , computer science , political science , law , history
This article discusses a proposal put forth by AWWA for Congress to create a national water infrastructure bank and authorize it to be capitalized by borrowing money from the treasury at or below long‐term treasury rates. The bank, in turn, would lend to (i.e., invest in) water and wastewater infrastructure projects at those low rates. There is no net loss to the federal government over time and no effect on the deficit, assuming the bank offers no subsidy. The bank would also lend to states that wish to “leverage” their state revolving funds (SRFs) by purchasing SRF bonds at very low interest. Unlike a trust fund, a water bank would not require new taxes nor would it increase the federal deficit. It represents a way for the U.S. Treasury to make an investment in U.S. infrastructure – an investment that would be repaid with interest.