Bennet Confident in Infrastructure Financing Plan, Despite Record

May 16, 2014
By

Sen. Michael Bennet

Sen. Michael Bennet

WASHINGTON — Publicly, Sen. Michael Bennet downplays his ability to read a balance sheet and work a crowd. “I just want to provide them with a perspective on infrastructure,” Bennet said as he entered a windowless room underneath the Capitol Wednesday, where the American Society of Civil Engineers held a conference on financing the nation’s roads, schools, and levies.

But inwardly, the Colorado Democrat and former managing director at the Anschutz Investment Company, exuded confidence in his skills. Bennet arrived without his customary aides by his side and after being acknowledged by a female moderator and taking a seat on an Aeron chair on stage, he spoke extemporaneously for half an hour.

Others too perceive Bennet, 49, as a financial wonk who doubles as an elected official. “He has a background in education and investment and is capable of finding solutions. He reaches across the aisle instead of playing games,” Susan Story, the president and CEO of American Water said in her introduction.

Bennet argued that without a public-private partnership for infrastructure, the nation would not only fail to create treasures such as Denver’s Union Station transit hub, but its citizens would see their highways, ports, and dams crumble.

“I wish I could pick up everyone who doesn’t see the need for infrastructure and drop them in Hong Kong for ten seconds,” Bennet said, referring to the city-state whose infrastructure is considered world class. “I want them to see if we don’t do anything, we’re going to miss an opportunity we might never have again.”

There is wide consensus that the nation’s roads, schools, and parks are in disrepair. According to the American Society of Civil Engineers, the nation deserved a “D+” for the state of its infrastructure last year. Although the grade rose from “D” in 2009, the organization concluded that “deteriorating conditions can become a drag on the economy.” It said the nation needs $3.6 trillion in investments within the next six years.

There is wide consensus too among lawmakers that legislation is needed to fix the problem. On the left, Sen. Bernie Sanders of Vermont, a socialist Independent who caucuses with Democrats, said he supports “heavy (federal) spending” on infrastructure.

On the right, Sen. Mike Lee of Utah, a Republican, wants to eliminate the five-cents-a-gallon gas tax and let states and local governments pay for their infrastructure projects as they see fit.

In between those two positions, Bennet has sponsored legislation to finance existing and new infrastructure projects without using federal dollars. The measure seeks to raise $50 billion through the sale of bonds. It would encourage corporations to bid on the bonds by allowing them to exclude a part of their overseas earnings from taxation, according to a legislative summary.

Sen. Roy Blunt of Missouri, the Republican sponsor, said Republicans should back the bill for nationalistic and federalist reasons. “It puts money back into the country. It empowers state and local governments. It’s something Republicans should support,” Blunt said in an interview.

According to a fact sheet from the Treasury Department, two disadvantages of a public-private partnership are that a private sector company that buys a bond may go bankrupt and that their complex nature imposes higher contingency costs on companies. Bennet’s plan involves the floating of bonds.

Bennet’s record on financial deals has also come under question. Although neither his biographical sheet at the conference nor moderator Story mentioned the incident, Bennet attracted criticism for his attempt to eliminate public-pension debt when he was the head of the Denver Public Schools in 2008.

Bennet’s financing plan was complex. At its heart, the school system issued pension certificates that had a variable rather than fixed rate. According to the New York Times, the plan earned the ire of school board members after, as a result of the financial crash in September 2008, interest rates jumped from 5 percent to 8.5 percent.

A Bennet aide protested to The Observer that the 2008 deal differed from the senator’s legislation. But both financing plans involved the floating of bonds.

Bennet’s aides are under few illusions about their bill. Privately, they said it is unlikely to pass in an election year such as this one and noted that even under a best-case scenario it would provide $50 billion, a fraction of the trillions of dollars needed for infrastructure. Sen. Blunt struck a similar note, saying the bill was not a magic bullet, but “another tool in the tool box.”

The organizers of the conference were even less sanguine about the prospects and effects of the bill. After Bennet and Blunt spoke about the role of public investment, the next panel discussion bore the title “Building a Framework to Mobilize Private Investment.”

Patrick J. Natale, the executive director of the American Society for Civil Engineers, concluded his final remarks fittingly. Although Natale praised Bennet and Blunt, he did not urge the 90 to 100 members of the crowd to lobby federal lawmakers, despite their close proximity. “We need to take action. We need you to talk with your lawmakers at the state and local level,” Natale said.

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