economy depends on a reliable and consistent infrastructure. sometimes the funding for such improvements can get bogged down particularly if the project might involve multiple jurisdictions. recently i was at a hearing in hartford connecticut to discuss a new high-speed rail project involving western massachusetts connecticut and vermont. the transportation secretary, our good friend and former congressman braley lahood complimented on getting everyone on the same page and working together that is too often the problem with the projects no one can think beyond their borders and we will hear today of a great need for focus on projects of regional and national significance. the chinese proverb teaches that one generation plants the tree and another gets the shade. now would be a good time to lay the groundwork for infrastructure improvement. with bridges crumbling and boiling water we've received the

message america's infrastructure is desperately in need of support. what we now recognize my friend for his opening statement. >> thank you, chairman neal for convening today's hearing on the infrastructure bank. as we are all aware the need for additional highway spending continues to grow at the same time the viability of the current highway trust fund financing structure is according to the congressional research service and i quote in a precarious position, and of quote. i think that is a rather generous description even without taking into account the large spending increases in the current reauthorization proposal. last summer the subcommittee with the leadership of chairman neal met to consider long-term financing options for the highway trust fund. i found the hearing extremely interesting and informative. looking for what the testimony of witnesses on the panels today as we discussed another potential menace to fix the nation's infrastructure needs.

as we proceed it's important to keep in mind the national infrastructure bank or any other financing method that we look at for that matter is not free. it would be presumably we would need to be capitalizing this initially. to that extent, it was used to disperse the total subsidies such as grants or tax incentives rather than revolving loans it would also need an ongoing revenue stream. this would result ultimately in higher taxes, user fees or deficit spending going forward. federal guarantee borrowing and lending could place taxpayers on the hook should it fail. we have unfortunately already been down this road in another area of government with fannie mae and freddie mac. my comments, chairman neal are not meant to put a damper on the discussion but i think we should proceed with our eyes as wide open as possible and recognize additional spending doesn't come without cost down the line. thank you and think you to the witnesses for being here today. i look forward to the testimony.

>> thank you. now let me welcome our distinguished experts on the first panel. first we welcome representative rosa delauro from connecticut who filed legislation to create a national infrastructure bank and next we welcome representative peter defazio wizards as chairman of highway and transit subcommittee of the house transportation and infrastructure committee. we are also pleased to have representative dan lipinski of illinois who serves on three subcommittees of the house transportation committee and as the chairman of the research science education subcommittee for science and technology committee. next we will welcome governor ed rendell of the commonwealth of pennsylvania, governor rendell is the co-chair of building america's future. and finally we will hear from the mayor antonio of los angeles. i will refer to them of the year. we should that alumni association. we look for to the testimony

today and thank you for your participation. without objection and the other members wishing to insert statements as a part of the record may do so. all written statements written proposed by the witnesses will be inserted into the record as well. i recognize congresswoman rosa delauro for her opening statement. -- before mr. chairman and ranking member. the members of the subcommittee, and number of the including mr. blumenauer, who have been strong proponents of infrastructure over the years. this is a timely hitting and i appreciate the opportunity to testify about my proposal. it's a proposal along with representatives keith allyson come steve israel and anthony wiener and yes, it is about to create a national infrastructure bank, and i would also say i'm honored to be on this panel with people who are such strong components of smart infrastructure investment with peter defazio, dan lipinski, mayor rendell and we've shared

the podium and stage often times and the mayor villaraigosa. infrastructure crisis are all around. in 2003 the northeast experienced a major widespread black out. we will never forget the broken levee after hurricane katrina were the major i35 bridge collapse in minneapolis. just this month we endured a catastrophic pipe break that shut off water for 2 million people. as human costs there are heavy economic costs. lost opportunities for job creation and economic growth we need to remain competitive in the 21st century. china puts 9% of its gdp infrastructure. indy 500 of 5% and rising. here we spent less than 2% of gdp. down from the time when we spent 8%. these other nations are investing in 21st century infrastructure while wheat too often are shoring up old legacy systems. we know we need to invest in our infrastructure to move from

recovery to long-term economic growth. yet the 2.2 trillion question is how to pay for that. that is how much the american society sibylline shares estimate we need to spend over the next five years just to bring the infrastructure up to an adequate condition. representatives of the san impleader and i introduce a back as an important way to supplement other federal programs such as the surface transportation reauthorization which cannot make up for this investment deficit alone. and for stricter bank will be about leverage private dollars for married based projects across the country. the bank would be an independent government owned corporation modeled after the european investment bank which has been successfully investing in european transportation, energy and telecommunications projects for over 50 years. in 2008, the european investment banks lent $81 billion to

finance projects and have a target of $112 billion last year. our proposed bank would be managed by a five member board of directors with public and private sector experience pointed to a six year term by the president with advice and consent of the senate the board would be essential function to issue 30 plus year federal bonds and use proceeds from their issuance to offer loans and loan guarantees to transportation, environmental, energy and telecommunications projects. the board under the direction of the treasury secretary would buy and sell infrastructure loans and securities creating a secondary market for u.s. infrastructure development and increasing investment in these sectors. under the board would be a nine member executive committee headed by an executive director including chief compliance officer, chief financial officer, chief asset and liability management officer, chief loan origination officer,

chief operations officer, chief riss officer, chief treasury officer and general counsel. the executive committee would handle the day-to-day operations and have finance infrastructure experts that would recommend projects to the board. i am aware of the concern about past experience of other entities. the bank would also have a five member risk-management committee headed by chief riss officer to create financial credit and operational risk-management guidelines and in short diversification of lending activities by both the region and infrastructure. finally, the bank would have a five member audit committee headed by the compliance officer which would work with outside auditors providing activities for the bank as a whole the banquet objectively review projects, provide financing for those with clear economic environmental and social benefits. criteria for this merit based project selection might include a transportation project ability

to reduce surface or air traffic congestion. a water project public health benefit, and energy products ability to reduce carbon emissions, or a telecommunications project emphasis on deploying broadband to the ruble and the disadvantaged communities. the bank proposes to capitalized like other demint banks that the united states has helped fund such as the world bank. it would include $25 billion in peaden capital through 5 billion annual appropriations. an additional $225 billion would be available at the call of the treasury secretary to meet the bank's obligation if necessary with a conservative leverage ratio of 2.5:one. this is what the bank does. the bank would potentially issue up to $625 billion in bonds. i emphasize the bank that we are

proposing would need to be self sustaining, meaning loans would need to be repaid including through users or her mechanisms and a good example of a strong candidate project as the mayor villaraigosa will tell you is the los angeles plan to expand the l.a. real system using revenue from a half cent sales-tax increase approved by the voter. as the mayor said here before and government loans would enable the completion of the project in ten years and instead of 30, perhaps even at lower cost. again, drug to the to the subcommittee faces challenges identifying revenue stream to make badly needed investment in infrastructure projects across the country. i believe in national infrastructure bank has the potential to channel private dollars from pension funds, sovereign 12, insurance companies and the like to create the u.s. infrastructure development market that can help meet that need.

calpers spaight 700 million infrastructure commitments and is looking to make more. and so doing has the following path pension funds and australia, canada and europe. so the money is out there. even despite the downturn. we need to make sure that gets put back to work for america. our proposal has been endorsed by mayor bloomberg, the concept of the proposal has been endorsed by mayor bloomberg, governor rendell and schwarzenegger build america's future as well as the national governors' association, by the civil engineers, the u.s. chamber, by labour organizations that have support from across the spectrum of business and labor and has been co-sponsored by about 56 of our colleagues including members of this panel. bye supplementing existing federal programs, this bank could provide crucial revenue to the infrastructure projects that will improve our lives, lead to

job creation and long-term economic growth. the kind of growth america needs to remain competitive in the future. final comment. this nation was built on a brick, mortar and fiber optics with a vision even in difficult economic times and if these kind of efforts, the transcontinental railroad, the road system are all built with public investment which created enormous economic growth in the nation and we need to begin. i think the committee very much for asking me to be here. >> thank you. i'm glad you mentioned the transcontinental railroad. that was a man of massachusetts who met lincoln bluffs on the web. the german recognizes mr. defazio. >> thank you, mr. chairman and ranking member for holding this which as i understand is the

third hearing on the need for additional funding for infrastructure in the u.s.. i am not going to reiterate or bore you with the statistics on the incredible state of disrepair of our current infrastructure. but the gentlelady that spoke before me, ms. rosa delauro has spoken with great passion and i endorse the idea that she's put forward. there is tremendous merit in having this as a part of the solution of a well constructed and for stricter bank could meet the needs of state and local jurisdiction across the country in rebuilding or building out new infrastructure and assisting them in getting their reasonable and flexible financing and i believe it can be constructed in such a way as to protect the taxpayers of the united states would be providing the guarantee

particularly with the collapse or the difficulties in the bond market today. it's very expensive to go forward with public infrastructure projects in the existing commercial market without some guarantees i would certainly recommend the committee looking at the experience of the buy america law bond and the unbelievable demand that's out there and the amount of work accomplished. and as she said also, this would provide a tool for this in place today to the mayor villaraigosa of los angeles would be moving forward with the most ambitious construction of transit projects for heavily congested urban area in memory. it would be not only tens of thousands of people to work indirectly in construction and engineering. it would stimulate our manufacturing sector with orders

for made in america unlike real and streetcars and transit and a host of things and were this to be replicated across the country i would be a tremendous benefit. so i recommend it to you on those terms and the unique thing about los angeles in this case is the of a revenue stream so what they are looking for is a way to leverage that and complete the product more quickly rather than spending the revenue stream overtime and an infrastructure and would be unique and helpful in that matter. but i can't leave without saying this isn't a solution to the huge problems we have an infrastructure into the united states of america. if we just look at transportation 160,000 bridges on the federal system in the ether of replacement or substantial repair.

60 billion-dollar backlog in the legacy transit system for capital and investment. some 40% of the road surface in poor or fair condition causing accidents wasted fuel causing costs to motorists and truckers for repair to the vehicles. it is a disinvestment doesn't come without extraordinary cost. the lost time for those engaged in commercial movement of freight on the system, the detour, that hurts american business and our competitors and we must invest. so, we have to do more than an infrastructure bank. the infrastructure bank will work well with projects that will have a revenue stream. we will not told the entire interstate system in the united states of america and fall of the 160,000 bridges we need a separate and dedicated source of

revenue to undertake the projects. there is no transit system in the world that makes money. so if you don't have an externals or additional way of paying for the bond as does los angeles with its sales tax increment which is extraordinary in the environment that got past, the most transit systems would not be able to bail themselves. so i would redirect and direct the committee's attention to the need for additional taxes and i will use the word taxes or fees because there is a huge cost and not making these investments. the committee has held hearings on this and i think the idea which has the most from a non-scientific assessment talking to people and members of congress is taxing oil by the

barrel for every dollar of tax we would raise 24 billion dollars over the term of the transportation bill. when you raise the tax on a barrel oil it is possible opec will have to eat some of it or bp or exxonmobil. bp brought back $50 billion worth of stock in the last couple of years. they could not necessarily pass on the tax on a barrel of oil directly to the consumers on like a retail tax at the pump. and the speculators and others are engaged. so the cost could be spread. but the benefits would be phenomenal. so i would urge the committee to continue to consider that option. the other id would be to index the gas tax since 1993 we've lost 40% of the purchasing power of the federal gas tax. gas tax hasn't been increased

and if we were to index it for future construction cost inflation, get estimates from the cbo and then use that to finance a ten year bonds we could get somewhere between 40 to $60 billion of the highway trust fund and i would also recommend that to the committee. so i would recommend an infrastructure bank and recommend other sources of funding. we are going to need everything we can to bring together to begin to rebuild our legacy systems and build a 21st century infrastructure the united states of america to make us more competitive, more healthy and more fuel efficient. i think the committee for its attention to this matter. >> thank you, mr. defazio. the chair will now recognize the gentleman from illinois, mr. lipinski. >> thank you, german neal. ranking member, members of the subcommittee, thank you for the opportunity to participate in this morning's hearing. given the enormous need for

infrastructure investment across the nation, i commend you for considering new ways to bridge the existing gap of the funding for the products critical to the nation's future. and i want to commend ms. rosa delauro for her proposal for infrastructure bank's. i know that there are different ways to structure such a bank including questions about funding and eligibility. eligibility for which entities will be eligible to participate in the bank and what projects will be eligible. i want to focus mostly on the of eligibility and as chairman neal said it's good to have different ideas, going to put out a lot of ideas about what may be eligible and why you would be good. before i begin my want to emphasize the innovative proposals such as this should be viewed as a potential piece of a comprehensive solution for providing adequate levels of funding for infrastructure

projects. if this were the only step we took we would still fall far short of the investment the nation needs. one of the infrastructure banks play a role moving projects forward many major critical projects may never be able to generate the revenue needed to repay the loan. this is a plan that must be considered instructor and financing mechanisms of infrastructure links considering the extent to which the bank could fulfil the nation's infrastructure need. chairman neal said the american society of civil engineers said we need to invest $2.2 trillion over the next five years to bring the state of the country public infrastructure a pretty good condition. in order to begin their resting the surface transportation infrastructure needs the house subcommittee on highways and transit shared by mr. fauzi yo passed the blueprint of the transportation authorization act last june.

in july chairman jim oberstar and mr. defazio to supply in the subcommittee regarding potential mechanisms to fund the $500 billion legislation. today we are still challenging the mechanisms we can agree upon. america needs us to get that answered. the sooner, the better. because a multi year bill which is already overdue is the best way to put people back to work quickly while making the long term investment the country so badly needs. but even when we complete this bill we will still have much work to do just on surface transportation. that is one reason why considering options like the national infrastructure bank is selling for him. to fund infrastructure state or local governments often need bonds which carried with them higher costs because overhead and risk. if they can even get these. infrastructure from states saves

another infrastructure developer would get financing options that could allow projects to be built at lower-cost. but the need to invest in infrastructure spans far beyond surface transportation. aviation, drinking water and waste water, energy communication infrastructure all the areas where the infrastructure investment is needed. we may even want to consider it infrastructure banks for financing projects such as exploration of components of the next-generation air transportation system, next-gen, are positive train controls, ptc that would increase the safety and efficiency. finally, as the chairman of subcommittee on the research and science education and science and technology committee i want to raise infrastructure needs for research. the 2005 survey of the science engineering research facilities found academic institutions were

$3.5 billion in the renovations. a hearing in the meeting with academic leaders in on the country, i have consistently heard these gotten much worse during this concession. this under investment means we are spending billions of research dollars and efficiently. but even worse it means we are in danger of losing the position as the worldwide leader of science innovation to the countries such as china. the america competes fact that we are considering on the house floor will help address some of this issue. but certainly there will be more that needs to be done with infrastructure. and infrastructure bank can help the problem. especially when it comes to the infrastructure. we are at a point where advancement of computing power networks are revolutionizing data intensive fields like medicine and ecology. we need to be making investments that go beyond the current generation of broadband deployment and build the infrastructure we need for the remote education, collaboration

and data analysis. i encourage the committee to also consider the projects as target's for infrastructure bank if we want to be successful in the increasingly competitive global economy. thank you for the opportunity to testify this morning. >> thank you, mr. lipinski. at this time i would like to join yield to the gentle lady from pennsylvania ms. schwartz for the next witness. sprick this will be a short introduction of the why of known governor randolph a long time so i could go on a. let me just say that i am very pleased governor windel is here not only on behalf of the commonwealth of pennsylvania. he has been a governor that has led the commonwealth on economic development and has been in the forefront of both the state and national the really the kind of infrastructure using the were broadly that leads to economic diplomat and will lead us to the economic competitiveness we want as a state and a nation. he speaks today not only on

behalf of pennsylvania but on behalf of the governors and the joint, i'm going to ensure its worldwide as the co-chair of building america's future which he is the co-chair and has been a leading place in the need to make the kind of investment in our infrastructure across the country to enable us to be the growing international economy we need to be. so i welcome governor rendell to the ways and means committee and revenue committee and look forward to his testimony. >> governor rendell is recognized. >> thank you mr. chairman and ranking member. let me also, i would be remiss if i didn't think you for the passage of house bill 4849. congresswoman shorts talks about economic to go ahead. 4849 was extraordinarily important. private activity bonds and new market tax credit have been used to great advantage economically in pennsylvania and your bill protecting from the amt was

extraordinarily important. secondarily, build america's bond we need to extend what has been an extraordinarily successful program. >> with all due modesty let me take credit for those provisions. [laughter] >> pennsylvania went to market in december and so $900 million backed by building america bonds has 3.1% interest the lowest the commonwealth has sold general-obligation bonds since the 1960's to it in part due to the good debt rating but in part due to the building america bond program. it's an extra night program and ought to be extended and the senate ought to move quickly to about 4849. it's a pleasure to be here today to talk about the infrastructure bank and we do support the concept embodied in the build america's future supports the concept embodied in the congressman rose of the laura's bill that's a good framework. let me say i want to repeat the question of need. you heard those. let me begin by saying

infrastructure isn't a panacea. congressman defazio is absolutely right. it's part of the broader problem. and we as a country have got to come to grips with the broad problem. we need in my judgment a decade-long infrastructure of finalization program which will do much good for us in terms of a substantive need a transportation and all other parts of the infrastructure. but more importantly is the single best job creator that this congress can do for the american people it's also the single best thing to bolster flagging american manufacturing and ladies and gentlemen if we don't do something about american manufacturing soon there isn't going to be any american manufacturing. let me give you a few statistics from pennsylvania. we were pleased to receive a letter from congressman oberstar saying pennsylvania is the second best state of the union spending its transportation

funds. we've got $1.2 billion under contract. 99.7% of the money given to us under the stimulus. and you talk about small business -- and i know the committee is interested in small business. of the 1.2 billion let me give a brief idea of what the impact is on small business. $993,000,000.2 prime contractors, under contract. 67% of that went to businesses with less than 100 employees. 230 million went to subcontractors. 87% of the contracts went to businesses with less than 100 employees. we have a tendency to think of manufacturing construction activities as big business activities. they are not. the best remedy for small business, the best remedy for the american economy is a significant infrastructure revitalization program. and by the way, the american people agree building america's future took a toll and found 94%

of americans think infrastructure is important. 81% of americans are willing to pay additional taxes if we change the way we allocate transportation and infrastructure dollars. and we took a second poll very recently. we employed frank luntz because we didn't want anybody to think that we were cooking the books so we employed frank luntz and 61% of republican and democratic alike believe the federal gas tax is the next translation to read and they are willing to accept that. 61% of americans. let me just give you an idea what this does for american manufacturing. we did a study in pennsylvania of the increase in manufacturing orders and i think congressman schwartz goes about this to read the first ten months of the stimulus there were 4300 additional tons of steel ordered.

of 43% increase. over the previous year when there was no stimulus to read 3.5 million tons of asphalt, 44% increase in the asphalt that was ordered. 440,000 cubic yards of concrete. 50% increase in the concrete that was ordered the year before. so if you want to get the economy going and do something to bolster the american manufacturing let's do this. what part does the infrastructure play? and important because you can bring additional funds into the mix. private investment is leading for a vehicle to invest in infrastructure. the infrastructure bank can be the perfect entity to leverage private funding. the man who saved new york, the finance your that saved new york sent me a letter to give to the kennedy talking about how important it is and how we can leverage private investment. he believes there are foreign

funds would invest the american infrastructure and he's going to france next week to meet with several foreign funds about the very subject. we do need to capitalize it and spend some government money on the and for stricter bank. but the infrastructure bank can have tools that will help without spending one federal dollar. credit enhancement, loan guarantees. those things are important. they will work without the expenditure of a single federal dollars in most cases. not in all cases but in '95, '96, '97, '98% of the cases. i do believe as congresswoman rosa the lauras that we have to catalyze the bank. her figure is right. i would double that and to 50 billion. the bank has to have its own bonding capacity. ytd de banque? because there really is no vehicle in the kuran transportation system for funding multistate projects of national significance.

we have in the short time because of arra the tiger brands and tiger gransta into consideration funding some projects power multistate. pennsylvania was on two projects funded for the rail freight that have a stake six and five states respect to the freer to do a high-speed national rail system we can do it state-by-state because you have to have one consistent method witter it is maglev or other high speed and can only be financed through a thing like this. the public will support it because the bank will be transparent. will be merit based. there will be product review and cost-benefit analysis and experts making the judgment. this congress lose its power? of course not. in this bill you can set allocation formulas between waste water and water, between transportation. you can set the criteria the bank must consider and rank projects on a. there can be congressional oversight of what the bank does and ranking member tiberi is

right about the loss of federal dollars. but if you eiv, european investment bank, when you have the private sector involved, namely ensure the projects invested are good products, sound projects and are not going to be felt. there are ways of doing this and of protecting the federal dollars. but can bring all of this together in such a way that we can help, absolutely help just by allowing us to use the treasury interest rate as opposed to normal interest rates. that will help make projects doable that previously were not doable. that doesn't cost the federal government any money in fact we get a rate of return. so the banks capabilities are i think with the bank can do for us is very difficult to understand. it's necessary. we have got to move quickly to get this done.

but again, i reiterate what congressman defazio says. let's get together and figure out a long-term way to finance the infrastructure needs of this country. the american people would support it. as congresswoman schwartz has said we've done it in pennsylvania to a great degree. and people are supporting it. it's one of the reasons pennsylvania probably has the most robust economy, not a good economy but the most robust economy of any large industrial >> thank you. i invited congressman the sarah to introduce the next guest. he was busy at a leadership meeting but indicated to me that he should be described as a good guy. [laughter] neyer villaraigosa. >> thank you, chairman neal. a great pronunciation by the way. a ranking member tiberi and members of the subcommittee, thank you for the opportunity to address you today. it's indeed an honor to be here with america's preeminent

advocates for and infrastructure investment here in the united states and your leadership supports an interest in transportation infrastructure are crucial to the future of the country. and your focus on leveraging federal investment comes at the right time. i don't have to tell you american cities continue to grow and as we grow we are struggling with congestion and burdens our economy and increases the cost of goods movement and affects the mental and physical house to veto health of the community. the same time we are facing staggering unemployment. in los angeles, the unemployed in every case at 14%. in the construction trades that number is about 35%. we believe it is a way to address both issues head-on through an innovative federal and local partnership. now i don't have to tell any of you as you have visited my city

you know it is famous for being the car capital of the world. this also makes us the most congested city with some of the worst air quality in the country. though we are doing something about investing in carpooling, synchronizing traffic signals and most importantly investing in public transportation. our current transit program includes the construction of 12 major new lines over the next 30 years. we will double the system in that time. however overall goal was to connect the communities where we live with a major job centers of the region. building these projects will create 166,000 high-quality construction jobs. 2800 permanent operating and maintenance jobs. it will take 570,000 pounds of pollutants out of the air each year, save 10 million gallons of gas per year and increase transit board by 77 million. it will secure our energy future by reducing our dependence on

foreign oil. we can pursue such an aggressive and far reaching transit program because of the measure. the measure was approved overwhelmingly by 68% of the voters on a bipartisan basis. one among every demographic group and every part of the company in the midst of an economic recession. we were able to make the case this isn't just a tax it was investment on the future, an investment in the creation of jobs and the public house and moving the goods and people in the second largest city in the united states of america. measure r is a 30 year transportation sales tax but it's also the third transportation sales tax approved by the voters. measure or a loan will generate $40 billion of new revenue to cover the three local sales taxes generate almost $2 billion

in your money that we are investing in transportation infrastructure. now, we have a unique opportunity to build transit projects sooner and create the jobs and capture the environmental benefits in the future. we want to build our transit project in ten years instead of 30. we call our exhilarated plant fi 3010 initiative. it is 100% consistent with consensus transit program adopted locally and approved by the voters. it accelerates the transit program, accelerating the transit program will save billions of dollars, reducing the cost from 17.5 billion to 13.7 because by accelerating these projects in the tenure period instead of the out years we are reducing the increased cost in construction that we project over time it would cost. we also believe it would cut costs even further by taking at

vantage of markets. currently because of the unemployed and a rate in the construction industry because of the down market we are seeing that in the city 20% reduction and that the state it's even higher. at the metropolitan authorities in the middle between us. it's between 20 to 30% -- 27% reduction in cost because of the down market. we also think we can to get a vantage of the public-private partnerships for design and construction. right now we are working to identify funding strategy to build the projects even sooner the feasibility of existing federal programs such as tiger grants but there is insufficient capacity current to accommodate the 3010 and a shift. we also follow with great interest and unequivocal support recent proposals for establishing the national infrastructure backed by representative rosa delauro and

senator crist dog and i noticed you mentioned the folks have gotten behind it add me to that because it is one of the many tools we need right now to make the kind of investments of infrastructure that will have the economic benefits online. likewise we've noted the president's fiscal 2011 budget proposal to establish a national infrastructure innovation and finance fund designed to assist major investments of national regional significance. each of these programs would substantially expand federal lending capacity beyond the existence of the levels. we support in the approach that can provide lendable funds of the same rate of a flexible terms as the existing tipia program. we also believe there is a special opportunity through in infrastructure precourt fondital allocate new congressional the authorized tax preferred bonding authorities for transit investments much as the denver

schools. we ought to do it for transportation as well. together an expanded tipia stifel critical demand targeted specified tax credit bond program for the transit investments of the national significance would make 3010 possible. the specified new tax credit bond program could be administered by an infrastructure bank. one to end with this. i was the speaker of the california state assembly i guess now a little more than a decade ago. when i was the speaker it was actually a time when california had some money. but everybody came with their hand out. and i would say to the mayors and i would say to the local officials to come to me if it is such a great idea, how much money are you putting up? and what we did it through those exercises is we expanded and leverage with the state was willing to do by encouraging and incentivizing the local

jurisdictions to invest their own money as well. when you look at what we are doing here we are not only are doing for the infrastructure investments that have been made on the federal level. we are seeing is a template for the future at a time of spiralling deficit and stored debt that mr. tiberi, ranking member tiberi talked about. that is in those times we have got to encourage local governments to put their own money. we have done that. this i believe on the vice president of the u.s. conference of mayors i am suggesting for my colleagues this is a template. we know that local bonds, local taxes are preferable to the electorate. they trust local coverage higher degree than the to the state or the federal government. and to the extent that we can encourage the locality to make these kind of investments, this kind of partnership with the federal government will only

leverage the kind of resources that all of the speakers have spoken to that we need if we want to compete with china and compete with europe in terms of the kind of infrastructure investments we need to make. and so i would humbly ask you to consider all of these things as you address the issue of whether or not we need a national infrastructure bank and as has been mentioned other tools to make these kind of investment. thank you. >> if i could add quickly that is the duty of the bill america bond. federal government guarantees one-third of the interest-rate payments with state and local government have to put up the rest. so it is something where we leverage all of the governmental funding together. >> thank you, governor. there are airports across the country right now that are expanding exponentially because the built america bonds. it was weld met by mayors,

governors and people of a variety of political opinion. governor, let me raise this question because i think the mall that you have spoken to is entirely pertinent. i'm curious as to you how you got your bloomberg and schwarzenegger to form the coalition. what have you seen at the local level cost you to take this up and what impact on jobs do you foresee as we move forward to fund infrastructure but emphasizing the fact that you have a i believe republican governor and independent mayor and a democratic governor as well to put the coalition together? >> back at the beginning of 2008 when we formed the coalition i was looking for other public officials who had potentially put their money where their mouth was and governor schwartz and maker had gotten a significant bond issue passed by the california infrastructure and mayor bloomberg probably has done more for the new york city infrastructure than the last five or six before him. so we reached out to them and

was a unique coalition because of the political affiliation of the three, one independent, one republican and one democrat and we thought alike that this is an imperative. this is not a question of should we. the answer is we have to so we built the coalition and its our long-term goal to convince the country to do just what the congress and defazio said to make a major and significant investment in doing this and i'm not surprised that people of los angeles even in these difficult times voted to increase their taxes to fund what they viewed as an important and for structure development. the american people are way ahead of us and way ahead of the politicians, state, local and federal. they understand the need. infrastructure is something they can touch and feel and see. they can experience. if you give someone back one hour of their life by getting them out of control and to and

from work what is the value of that? it is significant. so i think that our ability to act if we act forthrightly and courageously portability to solve the problems exists. we have to be innovative and creative and the infrastructure bank is a model for doing that but we can get there. i just think it is a question of whether we have the political will and i think this is easier in terms of public perception than anybody thinks. we have senator inhofe who is one of the more conservative members of the united states senate said when i appeared before his committee where he is the ranking member he said he believes infrastructure spending is the second most important thing the federal government should spend money on behind the fence. and i believe we can fashion a bipartisan coalition to invest in our country's infrastructure to build jobs. you know the statistics better than i do. 25,000 jobs for $1 billion of

infrastructure spending. even if that is 50% and weighted it is still 12,500 great paying jobs and i know people have a tendency to prove through construction jobs as temporary but if we did a tenure revitalization program those are not temporary jobs. they become the foundation of the america revitalized economy. >> thankmr. chairman to have one comment to that because i think the governor talked earlier on about american manufacturing. one of the things that happened to this great country is we don't build anything anymore. we consume. and we have sensible building in the technology to other countries. and in that respect, this effort of the kind of jobs that can get created and in addition to the long-term construction jobs and revitalizing and laying the foundation for economic growth

you are looking at new technologies whether you are looking at environmental infrastructure, energy and for stricter, telecommunications, water, it is a vast new system of a technological breakthrough that once again could put the united states on the forefront of the cutting edge of technology recapturing what our past history has been in this area. that creates a new and different jobs and opens it up so we need to be quite frankly thinking out of the box in the way that the past others have and watching this nation grow and become economically prosperous and creating a middle class of people who can sustain themselves economically for themselves and their kids and into the future.

today, we are looking at only short-term measures and that is what we need the short term measures and the combination of what my colleagues have been talking about with regard to supplementing what already exist with an infrastructure bank to put us on a path to a plan for the future and once again revitalizing the technological base of manufacturing base and again, this long-term sustainable growth and prosperity. >> we thank the gentlelady. i alerted we will have seven votes on the floor and those will be the final votes of the day so i would ask indulgence of the committee as we proceed to the questions along. mr. mayer, your experience with asking the voters to raise the sales tax is fairly unique and certainly courageous and the reminder there is an element of american public life that is faithful to every ground breaking for been cutting and faithful to opposing every expenditure tell us how you did.

>> we went out linked to go to every part of the county as you know i represent a city of 4 million. i county 10.5 million. we got a bipartisan support for the measure. we made sure that the projects were identified the people would vote on that represented the need of the entire region. i think the fact frankly that we have as much people were bought into this for those reasons as well and then finally we said to them there would be some oversight about how we spend the money because the concern is we are going to tax and how do they get killed and how we make sure

they get built so there is an oversight committee that looks at that will oversee how we spend this money. >> thank you. but i recognize mr. tiberi. >> thank you. just a question for the governor and the mayor. over the last year we have heard from -- let me back up. we have heard over the last year that we need more revenue with respect to transportation infrastructure and with respect to the highway trust fund. during the last year we heard from secretary lahood and we heard from president obama that now is not time to raise the gas tax. mr. governor, mr. mayor, do you agree with the president and of all, why not? >> i am not speaking for build america's future right now because that is an issue that like many your wrestling with but in my own and, for my own part i think the federal gas tax should be increased, number one.

number two, we will submit both poles to the committee. the american people believe it is indexed for inflation. 61% you can hardly get 61% of americans to agree on anything these days. 61% believe it is in the inflation. i told the would be an additional seven or eight tenths right now if it had been indexed for inflation. i think the public understands infrastructure spending is investment. the mayor used the term investment and i got into a little bit of a disagreement with representative pence on fox about investment. the american people understand no business grows without investing in its own future and the understand that for this country. of this country will stay competitive we have to invest in the future and the future growth and the thing that people understand most is investment infrastructure because as i said they can see it, they experience it, it improves their quality-of-life. they are safer on it and it

makes us economically competitive. so the answer in my judgment is guess we ought to do a and index it to inflation. the congressman says we ought to bond of the index. that is not a bad idea. there's a lot of good ideas. it is going to take a little courage. but the american people get it. above and beyond what we in the government seem to understand. >> i unequivocally report an increase in the gas tax. this is something that has had bipartisan support for generations and if we are going to -- if america is going to continue to maintain the highways and bridges and infrastructure it's crucial. but one thing i want to make clear with respect to what we are proposing locally this actually leverage is all of that. what we are seeing is that the cities and the county's, we are

creating a template for cities and counties to put up their own money as well to make all of these investments which frankly have been laid low for a couple of decades to leverage them even further so that we can catch up with china and europe so i think it's important for us to raise the tax to do the reauthorization of also to create an infrastructure bank and also to create opportunities for localities to put in their own money and leverage those efforts as well. >> and i would add just real quickly the surface transportation reform and policy and revenue commission stated first of all although the mayor is right of local and state should be more. we do 75% of the overall transportation infrastructure state and local. that's number one. number two, all told state,

local and federal, $80 billion that goes into transportation infrastructure. approximately 80 billion on a yearly basis. the surface transportation subcommittee said that needs to go look to 225 billion. we are doing about 40% of what we need to do. they made specific funding recommendations i think there were 13 or 14 specific funding recommendations. some of which were hardly cause a ripple so the answer is yes we need to do that. state and federal have to give it to. >> one more question before my time runs out. i'm from ohio and i drive on your rhodes and they're very good roads. thank you. with respect to a stimulus bill, to mention i spoke on monday to a group of transportation engineers and construction folks in central ohio and they said the need of the stimulus bill was a failure because it wasn't enough infrastructure. number one, do you agree and number two, would you think it would be wise for congress to

look at the time spent stimulus funds and redirect the transportation infrastructure? >> absolutely. i think we should have doubled or tripled the amount of and for stricter spending in the original stimulus. interestingly, senator boxer and senator inhofe tried to run the bill in the senate to do that and they got defeated. absolutely. and secondly, i would support that the more we can do for infrastructure the better it is for the country and the better it is for our economy and for american manufacturing. >> i would agree 100%. thank you. >> thank you, mr. tiberi. what i recognize the gentleman from california mr. thompson. >> thank you to all the panel members for being here and i agree with much of your testimony today. governor, if you are right. we need to make these investments. i think it is an importance. but right now it is an interesting time and the poll numbers that you gave are equally as interesting.

i think we would have a hard time passing the gas tax increase in the democratic delegation. i would think we would have a hard time passing it in the pennsylvania democratic delegation. people are finally becoming aware of the debt and problems coming about as a result of that while i think one way to deal with it is to make these investments we need an infrastructure. i just think the polls may not be as telling as we would like to think. and i would be interested in your comments. and mayor rendell, good to see you. i'm interested to know if you are able to get expanded financing and the ability to leverage on the local dollars for transportation numbers were impressive. when you are doing is outstanding work and i wouldn't have expected anything less from

you. but what out transportation versus water infrastructure? argues thinking about using some of that new leverage fund to expand your border infrastructure? you know well the serious problems we have with the very scarce resource and some of the problems that is causing both economically, pot holes from the polis perspective and the political perspective up and down our state. i would like to know what your thoughts or on that. >> first of all, thank you. with respect to -- i think we are currently talking about transportation and infrastructure obviously is a much larger issue than just transportation and water in for stricter is critical. i supported the governor's water bond package. i did not because it was perfect and i didn't want to let it get

in the way. >> you are from southern california and i from northern california. >> one of the things we are doing to address the water infrastructure needs doesn't cost a lot of money as we are engaging a great deal of conservation. we are using the same amount of water today in l.a. that we did 31 years ago when we had 1.5 million people. i have reduced the ability to water the lawn for two days a week. not for a popular in southern california but necessary. what i said is we live in a desert and there is no question the kind of programs we are talking about here could apply to water infrastructure, to the other, you know, important needs we have and i am very supportive of them. >> let me say that, congressman, before you got here,

congresswoman rosa delauro mengin her bill includes more than transportation. we think the infrastructure bank should include more than this transportation therefore it shouldn't be in the u.s. it should be a freestanding or if you have to put it somewhere on the treasury. number two, again, the polls are interesting and i will get them over to you to the chairman, but the polls are very clear the people to support additional funding but they want reform with it. they want more transparency. they want more accountability. they want a cost-benefit analysis. they want some discipline on how we stand at the performance measures and that is why i think the bank fits perfectly into what the national mood is. we do want to spend more money to feed the people get infrastructure spending. i agree with you about your political analysis but i think respectfully your colleagues are wrong because if we don't do the

gas tax by the way the gas tax is part of the puzzle as everyone sit here but if we don't do the gas tax what are we going to do? are we going to let the american infrastructure slid further into disrepair? one of the points the mayor made is absolutely true. the longer that we wait the more expensive it gets with of the brief exception of the last year and a half, construction prices were rising in pennsylvania at. the american society of engineers announced as we have a $2.2 trillion for stricter deficit just to repair and maintain what we have. five years ago it was 1.6 trillion. the longer we wait the more expensive it is going to get and what is the alternative? what is the alternative? give the american people some credit. i think we need to do that. they understand that if you buy a 24,000-dollar car it is going to run better than if you buy a 2004 car from the used car lot. they understand you get what you

pay for it infrastructure is no different. what they want to see is the funding go for the right project is not based on political clout and i say that respectfully. .. l. what projects, they wanted

local control. they wanted a local component to it. they supported public-private partnerships. we said we would encourage that. so, to the extent that we worked hard to kind of figure out what do people want, because everybody generally wants infrastructure, but how do they want it delivered? we were able to sell it and in the end virtually, or at least the majority of elected officials, both democrat and republican can, supported the tax increases. >> thank you mr. mayor. i would like to recognize mr. blumenauer who is a longtime advocate on this issue. welcome. >> thank you mr. chairman and thank you for your continued effort at focusing on how we are going to rebuild and renew america because nothing is more important to restore the economy, revitalize our community and protect the planet that our effort to rebuild and renew america. i appreciate congresswoman

delauro's championing this focus on an infrastructure bank, a critical tool in my colleague from oregon, putting it in a context that it is just one tool, and a panel i think has laid forth the case that i hope we can get into every american home. we have gone 15 years without a super tax. we have no mechanism for broader infrastructure similar to the highway trust fund, and the highway trust fund where we have not increased the gas tax since 1993 is in deficit for the first time in history, and it faces a 400 billion-dollar deficit between now and 2015, making mr. defazio and mr. oberstar's problem with reauthorization critical. and on top of it, as the governor mentioned, we have a $2.3 trillion infrastructure deficit overall and it is growing.

today's hearing on the infrastructure bank is a critical tool to solve the infrastructure challenges. i am hopeful that there are ways that we can engage and leave this into the solution. it is a good way to stretch resources, to have public private partnership that everything still hinges on resources. we need to capitalize the bank. i would hope the subcommittee will consider new revenue sooner rather than later. i appreciate mr. thomson's notion about people's attitude right now but there is no reason that we have to raise a gas tax this year or next year. as long as we establish a revenue tax going forward within the 10 year budget score, we can leverage it. we can borrow against it. we can put some in an infrastructure bank. we can take advantage of this

unparalleled low interest rate environment and the best or worst bidding climate in probably two generations. i would hope that we think about dealing with this prospectively, make sure that it wouldn't kick in, that revenues wouldn't kick in until after the economy has bounced back, but i would hope that this committee start exercising its role to help realize the vision that has put here. and while we are considering new revenues, new flexibility, the infrastructure bank is a part of it that existing bonding mechanisms that have been referenced, there is a lot of tools that can be advantaged, that can stretch, and i hope that we are able to think about how we do that, to be able to

actually save the federal government money. one of the problems is that our budget horizon is one year. the federal government doesn't know how to calculate the value of present value accounting. so that some of the things that happen with the infrastructure banks, some of the achievements -- mayor villaraigosa, i am just fascinated on how much you would save the federal government, because many of these projects are on the hook for 50% federal funding, and if it takes 30 years, the increase in inflation, and interest, in a worse budget or a bidding climate, the federal government will be on for more of a hook than would be required to help you jumpstart 3010.

i would wonder if any of the panelists would care to comment on our ability to be able to use the savings, to be able to finance, to capitalize an infrastructure bank or to be able to make 3010 a reality. >> the whole notion of the 3010 initiative is that. we will save as an example about $4.5 billion by accelerating from 30 to 10 years alone on construction, not to mention what we could save because of the down market for construction bids. not to mention the more innovative private public partnership that could also drive down costs here. we have seen the design bill as

an example. we reduce costs 20 some odd percent. >> mr. mayor, the bell has gone off and i don't want to take any more time because i know some of my other colleagues might be able to get him before a 15 minute boat that will take 20 minutes but let me just say i would like to work with each of you to identify the savings, which i think are actually your conservative and see up there some way that we can route them back into be able to accomplish at least part of the capitalization. >> thank you very much. >> thank you mr. blumenauer. i do believe we can accomplish our goal if we limit our questions but i would like to recognize at this time the gentleman from kentucky. >> thank you mr. chairman. before i answer the question i would like to yield briefly to my colleague from new york. >> for the purposes of setting the record straight i think it is important, regardless of the position of our friends on the panel, just to make the record

straight for observation purposes. the last time this congress took action on a gas tax was in 2007. by colleagues on the other side would have raised the gas tax by $800 million. the house leadership is not for most movement on a gas tax. i just want to make that observation clear, that not a single democrat supported that motion to recommit. my colleagues on the other side propose that back in 2007 for the purposes of clearing the record on that. thank you. >> i think there has been a lot of discussion about infrastructure as a job creator and economic stimulus and so forth and whether or not the recovery act was adequate in that regard. i am curious to hear from the governor and the mayor as to whether the cost of not making these investments was part of

the public debate, and if you both could maybe talk about that aspect of selling the idea of additional revenues for infrastructure, whether that is important to do or whether it is positive. scare tactics sometimes work. >> well, you want to tread lightly on scare tactics. pennsylvania has the highest number of structurally deficient bridges in the country, congressman. we are at about 5600. when i took over as governor, we were at 6000, triple the state funding from 252 over $750 million a year that we put it on bridges, to spend another half billion dollars on top of it. after one year we actually had gone up in the number of structurally deficient bridges, notwithstanding all of that because their bridges are so old. are bridges average more than

the life expectancy of what a bridge to b&h. we are starting to make a dent in it. again, people do understand the cost to their lives. the biggest factor in these is congestion. if you can people find that they sit in cars idling and wasting gasoline in wasting their time, if you can give them back a half-hour going to work and in a half-hour coming back from work, that is an hour they can spend with their kids. there is no price tag they wouldn't pay for that. there is no price tag they wouldn't pay. it is not a question of scaring, although it is very important. we had a pure that supported i-95. an inspector saw a crack in it's about half the size of my hands right now, and i-95 were shut for three days, 180,000 cars a day over that bridge, and we buttressed the bridge but to just repair the bridges in the city of philadelphia, for i-95

is $4.5 billion price tag. the state doesn't have the money, the city doesn't have the money. we had better get on the stick and i think people do get it. i understand the reluctance to do anything that is revenue enhancement, but people get it more than any of us think and i think california is a perfect example of. >> congestion also drove a lot of this debate, and so did public quality, job creation but more than anything, the fact that it was war transparent and that it was locally driven probably was what got us over the threshold. we had just passed a state bonds for transportation, and a number of other things. and then, because of the state's budget, they use the money for the budget instead of for transportation, so there was a lot of locally, a lot of anger

about, hey we just passed that and it didn't work so the fact that it was local, and locally controlled had a lot to do with the success is while. >> i yield back now so we can expedite the discussion. thank you mr. chairman. >> i would like to recognize the gentlelady from them so they need, ms. schwartz. >> thank you mr. chairman for doing this hearing and i want to thank congressman delauro too for her vision for the future and her passion for these issues. this is one of the most important. we are all impatient to create jobs and make the right kinds of decisions for the near near-term, but this really is speaking about the investment into the future as well as jobs right now and the combination is extremely important. certainly to my area, to my state into the nation. the issue i want to raise and i don't know if he will have time for answers on this, is as we do infrastructure and my question comes from senator delauro and i

want to ask governor rendell as well, i am concerned because we have tried to move infrastructure projects quickly. the shovel-ready investment act, we actually been said we really can change these problems to be attentive to what many of us are concerned about and that is issues of flooding and drainage, green infrastructure, of course light rail. the way we build roads and bridges and all other and the structure can either be done attentive to complete streets-- the notions of the way we actually build our streets and build communities and reduce flooding. my area, governor rendell knows this, major issues in terms of both the interest in building it differently and and the need to in terms of not having been spending millions of dollars on repairs, but also, we also have a lot of state roads and our state and not local.

and we have a plan in philadelphia for green works to do things differently and then bend pen that comes in and builds a road the way they did 10 years ago. what about this infrastructure bank? it would either create requirements or incentives are a relationship between building infrastructure and the concerns we have about, i am not just talking about carbon emissions which is a big issue but it is also about stable communities and major concerns that they have together. not to say that is roads and we do differently and break up all this as bold waldman do it differently. that is my question. how can we build a san? >> i will say that, as you craft the infrastructure's bank statute, as you craft the statute you have the ability to put in criteria that have to be applied and followed in the evaluation system and the

sustainability thing, the carbon emission thing that you talked about congresswoman, those are things you can absolutely build and to the criteria. remember, infrastructure banks can have far more applications for projects that you have the money to do. the criterion ranking system are important and you can do that but i know senator boxer also shares your concern. she wants to do the exact same thing. >> if i could? actually my subcommittee is going to be holding a hearing on this very topic next month. there is something that is called, has a horrible name, it is called sensitive designed for lack of a better name but i call it practical design or appropriate design and i intend to include language in the authorization bill which could provide a template for correction to the infrastructure bank, but that would be up the road in drafting map. >> we need a plan. we need to move forward on this.

instead of dealing with the way in which we stovepipe all of these projects, that also addresses the issue the governor and the mayor had been talking about in getting people to accept their participation in this effort as well. we have nothing to show them at the moment that is a plan. we can develop the criteria, the regulation. what does that mean in terms of being environmentally sound? what is the result of that? we have got to get out of our view that is done in the committee. this committee does this, this committee does that. that should not be the blueprint for moving forward in this direction. that is primarily at the core of a national infrastructure bank is about, and we can build it, design it and do what it needs to do. i would make one point to you, that we should have included

additional funding for infrastructure in the economic recovery program. there wasn't the appetite to be able to do that, in order to get it passed, but as well, our short-term efforts, which we need to do, cannot get in the way of the long-term view of how this can sustain us over the future, and if we don't utilize the criteria, new regulations, sustainability, all of that we know, a green bank, a green effort on this, then we really are not moving in the right direction. >> i look forward to working with you. this can't be a separate discussion. it has to be a part of what the federal regulations are in whether we incentivize this are required to something we have to work together on.

>> these are the criteria. that is the intent. >> thank you gentlelady. a brief statement from mr. t. barry. >> thank you mr. chairman. just to set the record straight, i'm not sure what he was talking about in terms of setting the record straight. as advocates of the gas tax increase, the motion to recommit was not-- and i hope to have more debate on that later. >> let me recognize my friend, mr. larsen. >> i want to thank chairman neal and raking member to barry. this is extraordinarily important panel. i want to commend the governor and the mayor for your participation. i wholeheartedly support the efforts of my colleagues and especially the efforts of ms. fazio as it relates to making sure we have a transportation infrastructure system that is needed now. but my colleague from

connecticut has long been a proponent of what i think is game-changing collation, visionary, and if you could congresswoman delauro underscore for us again the importance and how you achieve through private sector initiatives and pensions and greater participation in general to leverage not just government funds but to take the private sector in order to have buy-in across the country. i think in your remarks you alluded to the fact that love, american-- america has to get back to making things and a 10 year plan is the governor pointed out her bites us an opportunity not just for short-term employment but a long-term visionary employment. >> thank you and i appreciate my colleagues commented by thank you or your support of these efforts. the fact of the matter is, and governor rendell mentioned this,

he spoke with the ambassador who was supportive of this effort. the ambassador not only turned new york around, but his whole experience about eating investment. he goes to france, he calls and says we have people there who want to make an investment now. much of the investment of u.s. investors is going going to oversee infrastructure efforts. we need to bring that here. bring it home. make it profitable for them to be able to invest in u.s. enterprises, with a return on that investment. we have pension funds. calpers is ready to do this effort. you have got sovereign wealth funds and some will say are you going to privatize their infrastructure? no, we want to get the private capital into this market so that we can do to multistate projects, and do the regional projects to get us where we are

going. there is money that is available. we have not been making it possible for those investments to be made in the united states and i would just say in order to do that, you need to have an independent agency, one that is under the treasury which can go to the capital market and have projects besides these investors know they will get a return on investment and are willing to put millions of dollars into this effort so that we can grow. that is what is at the core of this effort. thank you very much. >> i thank the gentlelady for her passion and for all the effort she has put into this legislation. >> i thank the gentleman. i want to thank are distinguished panel for testimony and comments today. we now have a vote on the house floor which may take up to an hour. we will convene on conclusion of the last vote and again, if there is no substitute for the knowledge we have extended

today. the committee stands in recess. [inaudible conversations] [inaudible conversations] >> as we reconvene i want to thank our first panel for their thoughtful commentary and now officially will call up her

second panel. let me take a moment to introduce the experts we have assembled for a second panel. first we will hear from the executive director of the california infrastructure and economic development bank in sacramento, california. i will later on deal to mr. yarmouth for the purpose of introducing our guests from kentucky but i would like to note we are welcoming jonathan miller, secretary of finance and administration in frankfort, kentucky. next we will hear from robert puentes, a senior fellow at the metropolitan policy center at brookings institution here in washington. we also would like to welcome michael replogle, global policy director for the institute of development policy here in washington. finally we will hear from samuel staley the director of urban growth and land use policy at the reason foundation in washington. all of your written statements will be made part of the record. mr. hazelroth you are recognized to begin your testimony.

>> thank you chairman richard neal and ranking member pat t. barry, and distinguished members of the subcommittee. my name is dan hazelroth and i'm the executive director of the california infrastructure and economic development bank. it is my privilege to testify before you today. i serve as the executive director at the pleasure of the governor. i was appointed in 2001 by governor davis and have stayed on at the pleasure of governor schwarzenegger. the california infrastructure bank was created by the legislature legislature in 1994. interestingly enough it was a 67 to one vote in the assembly and a 30-3 vote in the senate, which shows i hope the potential for bipartisan appeal. the mission is to finance public infrastructure and private

development to what i feel is the basis for creating jobs. my view after running and i bank for 10 years is a national i beg is not only feasible but a must to rebuild the infrastructure our economy relies upon to compete globally. while they cannot supplant our current systems of financing infrastructure, it can supplement them in a most important way. the california i-bank is the only general purpose on dancing authority in the state of california. it is extremely broad powers, issuing revenue bonds, making loans in providing credit enhancement for a wide variety of infrastructure. we had a one-time net appropriation of $181 million in 1999. we do not receive annual appropriations and we have never received any other than the initial appropriation of $181 million. operations are funded solely

from fees. interest earnings and loan repayments. we began operation in 1999. over the last decade we have grown from $60 billion in bonds issued to approximately $30 billion in debt financing this year. in total over the 10 year. not. and i would point out that less than 1% of that funding is related to the appropriation. most of the funding from additional sources, multiplying the impact of the i-bank financing, working with the national infrastructure bank as the leader of a team would allow the project components to piece together funding for even larger regional projects. one of the things i wanted to point out are the similarities between our california i-bank and they propose national i-bank

, both have a board of directors and i know much of this has been gone over before so i will do it quickly. both have an executive director appointed by the chief executive and confirmed by the senate. in california, the executive director and staff are responsible for developing the structure, the department and employees. the congressional proposals include, commonly include details of sophisticated organizational structure similar to those we find in the european infrastructure bank. and both can issue debt, make loans and loan guarantees. both california i-bank and the federal proposals require the development of objective selection criteria and due to the diversity required by the california financing model, over the last 10 years in the direct loans program, 50% of the projects were in rural areas and 50% of the projects were in urban areas.

i think that california i-bank shows a structure that can work. there are many broad and creative financing in which we have been involved with the infrastructure state revolving fund. we have 16 categories of infrastructure. i know here we are talking from 125. i think we probably make loans in all of those categories. in that program, since 2000, we have made 95 direct loans totaling 417 .6 million. the appropriated funds have been committed to borrowers. additional financing is available because of an innovative leveraged loan program structure. we sold bonds for our own accounts three times to leverage the appropriation. in 2004 we were rated aa. the next time we were really-- rated aa was in september 2008. during that time you will remember that this guy really

was falling. we were upgraded to aa plus. is at the end of the time? okay. we have a variety of other programs-- i wish is going to say about the aa plus, the moody strong management and rigorous detailed credit reviews and smp program and loan screening provided by the state infrastructure banks. we have a plethora of different kinds of programs that we have developed over the years. many using programs that are available in the internal revenue code. industrial development bonds, we have issued 484,235,000,000, 501(c)(3) bonds. we have issued 93, for a total of 5.8 billion since there is no cap on those.

we have issued a number of public agency bonds. we have leverage the energy efficiency bombs. we have issued bonds for the california insurance guaranty association. toll bridge retrofit bonds, 1.16 billion. we leverage the clean water state revolving fund program and we are working with them again. we have issued the tobacco securitization bond. we are currently working on and about to have the final call on a pooling program for the recovery on economic development lawns that were available through our of. i would just say in conclusion that the initial reaction to the mayor's request he spoke of this morning was that the program didn't exist for the type of assistance he was requesting, and that is exactly my point here today.

a national infrastructure bank is designed to respond to just this kind of need and many others. los angeles has a huge infrastructure and environmental need, as do many communities throughout the nation. we have a solution. thank you. >> thank you mr. hazelroth. now would like to yield to the gentleman from kentucky, mr. yarmouth for the purpose of introducing our guess. >> is a great honor to introduce the honorable jonathan miller, the secretary of the finance administration cabinet. prior to assuming that position he was elected twice to kentucky state treasurer and served eight years and acquired a reputation as one of the true national experts in government financing techniques, particularly with innovative steps in education and tuition funding and i might add incidentally a noted author and scholar in the old testament. it is great honor to welcome

mr. miller here today. >> thank you congressman especially for the book club. >> you are recognized. >> thank you mr. chairman and ranking member. i am very honored to testify before the subcommittee today. today. on a state example of what you all are examining on the national level, we have an innovative financing program implemented last year under the leadership of governor steve bashir that we call the green bank of kentucky. the green bank of kentucky is a valuable program that saved taxpayers millions of dollars in house protect their states in and our planet's natural beauty and it preserves and create many needed green power jobs in kentucky. first and foremost i want to give credit where credit is due because our successes with the green bank in programs like it back home in kentucky are fully dependent on the hard work that you have done here in the u.s. congress as well as the work in the obama administration. r. green bank was initially capitalized entirely by funding

through the recovery act, the stimulus package. without the stimulus dollars the successes i will share would simply not been possible during the period of economic distress and an overburdened state budget. the green bank of kentucky's primary-- by providing public agencies with access to to low-interest loans in order for them to reduce operating costs in energy use am i protecting the environment, saving taxpayer dollars, promote economic development and create green-collar jobs. the green bank exist to address projects financing needs that do not work in the conventional commercial performance contracting market. last last year governor launched a comprehensive effort to reduce energy use and kentucky's public holdings through nationally recognized efficiency standards. the standards though posed a challenge for us as a commonwealth. while comprehensive energy efficiency retrofits retro buildings could save kentucky taxpayers millions upon millions of dollars in a long-term there are indeed initial costs that

are prohibited during these challenging economic and lean budgetary times. the green bank of kentucky was created precisely to meet this challenge. provides unique funding opportunity for government agencies to pay for the upfront cost of energy saving projects. first degree the green bank one's public agencies the money they need to pay for these upfront costs. bellone that is repaid to the bank over a period of time with the monetary savings realized through the reduction in energy usage. the green bank therefore functions as a revolving loan program. as loans are repaid green dank capital is recycled and made available for future loans. on december 10, 2009 less than three months after the green bank was launched the revolving loans finance finances first loan and the amount of $1.3 million to the kentucky department of education. we are especially proud to note the large beneficiary of the night grew green finance project is the kentucky school for the blind located in local kentucky in the heart of representative

yarmouth's district. the school of the blind offers programs for approximately 70 blind or visually impaired students grades k-12. this is a vivid and beautiful example of how the stimulus dollars that you authorized to work to benefit some of our country's most deserving citizens. but despite these early successes we still have a long way to go to meet governor bashir's goals. the 14.4 million-dollar recovery act investment provided a good start but we have more than 200 million-dollar needs expressly state agencies. that doesn't even include the much larger universities, county, municipal and school board across this day. we have explored other financing options such as the recovery act, tax credit and build america bonds program but our state's credit is arty burden by type budget circumstance and i know that kentucky's circumstances are not unusual. bust every state would like to see the long-term benefits of investing in energy efficient public buildings but the economic times make these up on

investments extraordinarily difficult and that is why i'm here mr. chairman. we in the bashir administration strongly support the funding of a freestanding, greenbank or infrastructure bank like authority to finance state infrastructure projects. a freestanding national infrastructure bank of the authorized to make long-term low-interest loans or other forms of deposit to independent state green banks across the country. this would love maximum flexibility for the states to meet the distinct and varied needs of their communities. state and local government agencies could compete for funding or receive the formulated allocation from a national opera structure bank and the state green banks in turn would front were the energy and infrastructure projects through loan programs and guarantees. the establishment of a national opera structure bank would address the needs of of the state level claim energy and efficiency financing such as the green bank of kentucky. with this much-needed financing for energy and infrastructure projects states would be able to tailor long-term low-interest

loans to meet the needs of their citizens and communities while also retaining and creating jobs that will-- i also want to mention we are very supportive of efforts led by congressman van hollen to create a freestanding greenbank as an alternative which was part of the waxman-markey bill that passed this house several months ago. thank you for the opportunity to speak today and thank you for your service. >> thank you mr. miller. i would now like to recognize mr. puentes for his testimony. >> thank you chairman neal, ranking member tibiri, members of the subcommittee. i very much appreciate the invitation and i'm pretty pleased to be talking about this issue of infrastructure. at the brookings metropolitan policy program we firmly believe infrastructure is one of the key building blocks to a low-carbon innovation export oriented economy that we need for the future. yet we desperately need new ways of financing and decision-making when it comes to infrastructure in the united states.

today we generally do not collect projects on the basis of their merit or bias against maintenance and they do very little long-term planning. in this context we do feel american national infrastructure banks could be the vehicle for green infrastructure projects from road to rail, ports and pipes that have the highest return on investment in the support of of the 21st century economy. development bank in essence, an ip would have the balance rate of return for the policy goals for the federal agency. the creation of a special financing for infrastructure has been discussed for at least 20 years. across the atlantic the european investment bank has been functioning successfully for 50 years like a major role in affecting the european union across national borders. the eib the european bank rates funds and capital markets that leases them, links them at higher rates keeping its operation sustainable. instruments such as loans to debt guarantees as well as

important. as you heard this morning it can take many forms but at its heart it is really about better selection of infrastructure projects. the niv would lander grant money on a project basis for some type of benefit cost analysis. edition the project would be a regional significance transcending state and local boundaries. and it would consider different types of infrastructure projects breaking down the barriers that exist today. this would be a giant step from the federal funding of infrastructure that exist today most of which was disbursed as federal transportation grant mostly in a siloed manner. yet despite the general agreement about the purpose in need of the national to structure bank some outstanding questions remain. it is unclear whether would be limited to transportation or allow applications through a variety of infrastructure areas. another is the governance structure and here i think there is myriad of options. it could be house in the federal agency is the administration

proposed in the budget. to be established as a government-owned corporation such as amtrak or as proposed by congressman delauro for the shareholder owned corporation like sponsored enterprises such as fannie mae and freddie mac which is no have their own problems. there's a trade-off between independence and cost of borrowing. is the niv is a federal agency and drop on on the these low interest rate activities. if the shareholder owned into the would incur higher costs of borrowing from the treasury to the loans going for recipients who would have to be at higher interest rates. there for the budgetary and that impacts of the federal investments in infrastructure bank depends heavily upon its governing structure to think that is where the conversation should be today. a bank as a shareholder owned-- of it as the power to issue its own bonds and is not a shareholder shareholder owned corporation instead would be on the federal books. and any other case would be treated like any federal agency funded through appropriations

and included in the federal budget. the federal government would have to pay rent freespending which is likely to add to the federal debt. to mandate of a national structure bank in practice would overlap the mandate of other existing programs. one is to transportation for structure finance innovation act program, created to help finance transportation projects of national and regional significance. the program is managed by the highway administration provides three forms of secured loans, loan guarantees and standby lines of credit to a wide range of public and private entities. is his illustrated-- luster because it highlights demand for these financing tools. their three important differences between tibia and the general concepts of in the-- another infrastructure spectrum such as water are not eligible. the related point is they have run out the department of transportation on a stand-alone entity or house in something like the treasury department

which others have proposed. it is not a competitive program. the criteria is basically based on financial viability, not project impact which may impose the infrastructure bank. and ip is providing grants to uniquely eligible projects where it is really only a credit enhanced program. wesley there've been some discussions about an ip using tax preferred bonds is a financing tool for the infrastructure of project. here i think there are relationships between the niv and build america fund. start up of the stimulus package , expectations of 45 billion from the build america bonds now are seeing this whirling tool exceeding $97 billion but while the bab are popular and successful they are largely funding local improvements such as schools and sewer improvements many of which would not meet the national and for structure bank criteria for

nationally significant project so it is not either/or between these two tools. mr. chairman we believe the more competitive united states economy needs a better structure system and a time of limited resources improving the investment process should be coupled with finding ways to increase the amount of funding for infrastructure. yet a national infrastructure bank is not a silver bullet for dealing with reform and in the end we think the bank should be thought of as a provision stool and not a blunt instrument. i thank you for the opportunity to testify and they welcome all of your question. >> thank you mr. puentes. next we will hear from michael replogle, the founder of institute for transportation and development policy. did i get that right? washington d.c.. welcome. >> i think you need to turn your mic on. >> representative lumen hour,

representative yarmouth and other members of the subcommittee, thank you for the opportunity to testify. i'm speaking for the institute for transportation and development policy, nonprofit group that since 1985 has promoted environmental he sustainable and socially equitable transportation. with appropriate safeguards, we support creation of the a national infrastructure development bank that is proposed by h.r. 2521. this would finance needed investments in transportation, water, energy and other things while giving weight to economic environmental and social benefits and costs of each project. it would facilitate public-private partnerships for infrastructure development, management and financing with assurance of appropriate public benefit. while not requiring every initiative to be fully self financed. we also commend to you the proposed national infrastructure innovation and finance fund that is proposed in the president's

2011 u.s. department of transportation budget. this could provide a 4 billion-dollar down payment on a larger national infrastructure bank. our support for these initiatives is predicated on the inclusion of strong project selection criteria with openness and transparency to ensure reduction of carbon emissions, support for smarter growth of public health and use of smart tolling and traffic management strategies as proposed in h.r. h.r. 2521. project should undergo a benefit cost analysis that considers induced traffic, climate pollution and public health and safety impact. reasonable alternatives to propose projects including operational and management strategies that might minimize adverse environmental impacts should be considered. and infrastructure bank should encourage performance-based contracting and ensure ongoing post-implementation evaluation. infrastructure banks funds

should not be used simply to build more toll roads faster but to improve the productivity and effectiveness of america's existing transportation, expanding travel choices and improving community livability. this will require a focus on smart traffic management strategies like bus rapid transit, intermodal brave, smart parking and world user charging, pay as you drive insurance, congestion charging and road user fees, real sister modernization, smarter logistics and supply chain management and real-time travel information systems. a banker fund should encourage new revenues beyond tolls and congestion charges including transit oriented development value capture, tax increment financing, urban improvement district and performance contract-based public rabbit heart worship offering concessions are parking, port facilities, public bike and car

sharing and other infrastructure related services. a banker fund should offer soft loans to cover costs for detailed and costly predevelopment work to establish project feasibility, advance environmental clearances and to undertake or lemon airy design. these are needed to help advance such things as bus rapid transit system development, smart traffic management planning another innovation. these would be paid back on a subordinated basis of a project wins financing and is built that could be forgiven if a project fails to win financing. such investment is needed to unlock value tracking underperforming often poorly managed public asset such as congested roads, free or underpriced free side parking spaces and slow, unreliable bus operations. this approach could boost the flow for private capital and

help innovators in both the public and private sector that are looking for ways of boosting transportation asset performance and value. and infrastructure bank or fund should not only finance large projects but also bundle smaller projects with cumulatively can produce benefits of regional or national significance. for example finance again single bicycle car sharing service that a transit center would not be regionally significant, but the provision of 100 such integrated mobility centers at major activity centers throughout a multistate metropolitan area could be a regional significance and cutting traffic, pollution, carbon emissions and improving public health and livability while generating jobs and consumer travel cost savings and access benefits. in conclusion and infrastructure bank or fund could encourage or

should encourage collaboration among public and private stakeholders and promote coordination with investments and other infrastructure sectors. lessons from european and asian and latin american development banks and critiques from independent banks, independent watchdog groups like bank watch network should be considered in advancing and designing new u.s. finance institutions. my written testimony for the record provides more information about this. thank you very much for your attention. >> thank you. the chair recognizes mr. staley. >> thank you chairman neal, ranking member tibiri and other members. i appreciate the opportunity to testify before you on the potential of the infrastructure bank. what i found pretty interesting and listening to the testimony this morning and this afternoon is that there is a fair amount of agreement among a number of us and that there is a need or certainly the potential for a national infrastructure bank to

meet some very important infrastructure challenges in the u.s.. i would like to focus my oral testimony on i think-- what i think might be the difference between myself and some of the others on the panel and for the purpose of furthering discussion and bringing a few issues out. first of all, some of you may or may not know that foundation has been involved in various forms of innovative finance for over 20 years and we have focused a lot on polling public margaret berner ships and we are and we are innovative in the hot network so this is not an unfamiliar problem for us. and struggling with these issues is financing major project that could upgrade your infrastructure, improve the management of the system. that is a concept in which we look at the potential of the national infrastructure bank. i think it is important that the national infrastructure bank in fact been infrastructure bank and not end up being a nation

bank at if you will, in the sense that it becomes a fun for all sorts of different projects that may or may not have to do with direct infrastructure. i think when infrastructure banks work effectively they are in fact providing for structure. what i mean by infrastructure is as a clump of, transportation facilities, stormwater facilities. i think there is also an incumbent on a national infrastructure bank to ensure that its scope and its mission is very clearly defined. in particular it should be focusing on projects of federal and national significance. i think there are projects that of regional significance. that maybe multistate and it might also fall under the purview of a national infrastructure bank but i think it would be very wise to define the scope and mission of the national infrastructure bank, to avoid local projects as much as possible. we are going to be faced with a limited number of resources and lots of competing projects, and

how we define the mission of the national bank will be very important. i think it is also important, at least from our perspective, to emphasize that as much as possible the bank should operate on a revolving loan type basis. there may be other projects that are worth funding but it is not necessarily true that an infrastructure bank is the best mechanism for funding those project, so if we are adjusted in pursuing social goals are using grants to provide certain projects, that may not be handled through an investment bank. i think we have the accountability and transparency in the operational efficiencies when infrastructure bank operates on a revolving loan basis because they have a bottom line that they have to focus on and that is also a pretty clear criteria for evaluating potential proposals. is also important that the national infrastructure bank be insulated as much as possible.

it must be able to evaluate projects and the devil using clear performance criteria and to that extent i think we should be looking at an infrastructure bank that is independent of an existing agency. so preserving that independence i think is important for ensuring the success of the bank itself. again, a poorly focused national infrastructure bank could also end up duplicating a lot of alternative financing arrangements that might exist or could emerge on the state and local level. i think the key for national and for structure bank is to leverage resources rather than substitute resources and as we mentioned before, infrastructure bank is no substitute for public financing of other types of infrastructure we need to keep that in mind. on page 8 of my testimony i've included a chart which is essentially a check list of what i think are key issues. i'm not going to go through this because i don't have the time but i think we need to think about when does an

infrastructure bank work in a high-performance setting and some of those criteria. that chart was created as a way for me to essentially score different types of proposals. i think we need to make sure it is independent, it uses objective lung criteria, has a well-defined mission and i think it's focused on providing physical infrastructure and filling gaps where they don't exists. also there needs to be a sustainable revenue stream that can support those projects. we of course have talked a great deal about polling but there are other potential mechanisms including tax increment financing on a local level or values capture, in some cases might also be considered but there is sustainable revenue stream in order to support those loans. that again is important for transparency and important for accountability and it is also important for leveraging resources into the bank. with that i'm out of town so i will stop. thank you very much.

>> thank you mr. staley. secretary miller, i hope massachusetts is one of the states that is contacted you about setting up their own green bank and it sounds like a terrific idea. we have got is the way program for some time to assist homeowners with energy efficient improvements and a number of other options and opportunities as well. have you considered extending the bank beyond state agencies? >> massachusetts has been really in a national vanguard when it comes to energy efficiency and impact we have been in touch with the folks in massachusetts in the past couple of weeks to talk about sharing information along the lines that you just suggested. they are looking at our model of a green bank for some of their public financing projects and we are looking at massachusetts model for something that we are going to be putting together in the next few months, which will be precisely what you suggest, a market-based program that will help homeowners pay for energy

and efficiency improvements on their own homes. right now because of limited funding our green bank is strictly about public buildings but we are going to have an additional program again, using stimulus dollars although leveraging them with private resources as well, call kentucky home performance, that will help individuals with their own energy efficiency needs. >> mr. hazelroth i was impressed with the success of the california for structure bank and it seems almost mythical how you occur in a tiny amount of money into billions over the years. one new bomb that i worked very hard to get into the recovery act last year was to build america bonds which proved to be very popular and very successful fbi bank issued any of these bonds and if so i would be interested to hear your thoughts and if not you think they should be expanded to other entities like yours might include them? >> the short answer is yes. we recently issued bonds on

behalf of an entity associated with the university of san francisco, and i recall at the time that during the sale, it was kind of optional as to how many would be build america bonds and what percentage would be the traditional tax-exempt bonds, and it turned out that overwhelmingly, the build america bonds turned out to be the favored of the market. so, we have begun to use the program and hopefully it will be extended so we can make more use of it in the future. >> i want to follow-up on this query regarding the build america bonds. you have noted there could be some similarity of funding projects to an infrastructure bank and what they bonds already

provide. ..

the government of the national infrastructure bank would have much more oversight over of just choosing the projects which would be based on the rigorous built america bonds are designed to be smaller i think for the more local project. there isn't the kind of oversight criteria choosing the project with the america fund. this is why we say i'd think there should be considered containment. they are not an either or but there is enough similarities and they are the same type of conversation and that they are innovative and financing tools but not exclusive. >> thank you. mr. tiberi. >> thank you. dr. staley, under the d l elauro bill, the national

infrastructure bank would be appropriated 25 billion to borrow 25 billion from the treasury and find out 625 billion into the bill goes out to state that the federal government. so to questions related to that. the criteria the bank would choose projects you talk about the political autonomy. the structure in the bill, does it concern you the way it chooses the projects and thus the structure of the bank itself concern you and does it remind you at all about how congress like fi and amy and freddie mac there were any similarities to that structure? >> well, actually both of those concerns me. i think the organizational structure and the bank itself concerns me in looking at it but also there are certainly some

questions that need to be asked in terms of how the financing of the bank would prefer because getting back to this second first keeping in mind that if we are going to capitalize the bank after $12 billion debt leverage essentially loans and liabilities and several hundred billion dollars this and free money and that has to come from somewhere. there listing transportation revenues and repackaging them in a bank type of format that allows us to do this creative work that is on the federal level that could make some sense, but if they are just going to try to come up with extra billions of dollars someplace somebody is going to have to come up with the money either barring it or throw of private capital some place so we have to be concerned with the issues in the private market. in our view the national infrastructure and should be about leveraging the private cattle as opposed to substituting for the other forms

of capital that might exist order to plan one way or the others we have to be careful about how those projects are selected in the criteria. the criteria also worries me because i do believe in order to get the best thing out of the infrastructure bank needs to focus on infrastructure and the core infrastructure with their transportation or whenever and when i have looked at the criteria in the d l elauro bill, what concerns me for example even has a number 11 of the primary criterium for prioritizing the projects is job creation. in my view the purpose of the infrastructure is to provide high-quality services with least cost and job creation might be a myself come. i am an urban economist swain shiastan the importance of infrastructure creating the foundation that the goal is to provide infrastructure that provides the foundation for the economy and providing high

quality. so to the extent we have written into the criteria of the bill job creation is one of the most important gratuitous that worries me because the core function of the infrastructure. >> thank you. i'm sorry to cut you off the lead to more quick questions if i can. one, i would like each and every one of you to answer this question i asked the other panel that is the gas tax increase if you think the gas tax should be increased now or if we should wait and then in the written testimony you also mentioned this issue of concern dr. staley mengin and the governor rendell mentioned above political autonomy of the infrastructure. can you expand on that and then have the rest of you talk about the tax? >> i think one of the generally agreed upon criticism of the transport program as it is today is we are not making those

decisions for projects because it's mostly these grants that come down from the federal government. this is three-quarters of the structure through these grants so the federal government doesn't have a say how the money is spent and doesn't -- there's no accountability for how the money is spent and there is no penalty for projects. so the point is we try to establish some kind of entity that can transcend those parochial leads which are important but have some and if entity that can invest in those projects that do matter to the nation as a whole whether they are poor projects for interstate the transcend state and local boundaries but we just don't have the mechanism to do it right now. the national infrastructure could go a long way. is that a question on the gas

tax >> [inaudible] governor schwarzenegger i would say whatever he says and i can't recall him saying that he would support arra would be unusual for me to recall -- >> no problem. >> governor grumet sustained level and state gas tax as opposed to any broad based we will defer to the delegation of here. >> thank you. >> there's no question the federal transport program is running effectively as it needs funds and the gas tax is the course of the highway trust fund. there's very little option to place at this time. however we do have strong criticisms about the way the program is structured today but i personally would not support increasing the gas tax until we pursue substantial forms when it comes to the transportation

program. once we can be assured there will be reforms the gas tax is really the only viable vehicle viable solution for the short term. that said we know the long-term sustainability of the gas tax goes for driving much less, fuel-efficient vehicles and so for the long term we have to start thinking about other sources of and ways of revenue for the highway trust fund. vehicle mile tax so there's the gas tax in the short term but not before we have the fundamental reform. >> i would agree with the statement mr. puentes made about this. i think we need to see accountability for how federal transportation funds are spent to make sure particularly elite they are not exacerbating the dependence on foreign oil or greenhouse gas emissions burdens and to make sure the we are getting better accountability and improve the performance of the system.

with that we certainly need to be investing a lot more in infrastructure and we need to make sure that as we do that that we focus on investments that can help us better operate and manage the existing roads and public transportation for higher efficiency before we go about building vast amounts of capacity so that is part of the equation of getting better managed systems out of this. i think we ought to take advantage when the price of oil drops to put a floor on the price. i think mr. blumenauer had excellent ideas in the direction of sitting out a long-term roadmap for how to finance the transportation, hold it accountable for the broad national goals. >> i am in agreement with mr. puentes to read our in houses of the transportation finance investment is the current distributions of funds and transportation in particular

are inefficient. they are not into the right project or achieving the right goals or performing measures to justify adding significantly more revenue to the increased tax at this point. so we are less concerned about energy security issues and we are more concerned about the fact that we are not getting the investments improving the mobility or improving the long-term sustainability of the current infrastructure and if we had the increase of the gas tax we are adding revenues to the system is already broken and we are going to waste a lot more of that money. >> thank you mr. chairman. sprick the chair will recognize mr. blumenauer. >> thank you, mr. chairman. the irony of course is we you're involved with a catch-22 because we are spending more money in an inefficient system. we are propping it up with the general fund money right now that is borrowed and we are unable to break the gridlock on the reauthorization.

we just heard from german defazio, chairman oberstar of the full committee has a piece of legislation that actually is moving in the right direction that it was captured in the narrative that we heard from the three of you and your testimony. and we are hearing good moises from the chairwoman boxer. but we can't move that because we don't have money. we are facing a 400 billion-dollar deficit just for the current system between now and 2015. eight -- i guess i would like to first call affirm the thread running through the narrative about accountability and focus. i think it is important for how we craft this. but i would like to take up where my friend mr. tiberi said raising gas tax now, waiting until later has has been

suggested by the administration isn't there a third alternative, which is not increase a levy increase right now when most states are still coming out of the recovery. we have high on employment and we are still trying to stimulate the economy and one of the problems is the stimulus effect of the recovery act is wearing thin and there wasn't god shall be as much infrastructure and that i think as many of us would have liked. is there another alternative, which would be to establish where we are going with transportation finance in say two years after the economy has recovered but within our six year window so we have resources we can count upon which could be used in part to capitalize the infrastructure bank and fund

reforms, transportation infrastructure system while my favorite of course is to expand the vehicle miles traveled pilot project to every state that once it so that we can refine, tested and actually find applications that will make people voluntarily want to do that. and i am familiar with some of your research, some of the witnesses if you could help us design positive incentives the would have every major trucking company in the country voluntarily move in this direction in the course of the next two years and of course they already have the software and hardware to be able to do this. but this is a third option here which is moves us in this direction with the overall refinement that you want. not have impact for the economy

to the eckert economy recovers but the able to fund the reauthorization for stricter bank and the needed reforms that i am hearing come through the testimony to any of you care to speak about this third way? >> when i spoke of praising your ideas about creating a road map of how we could finance transportation in the future events also accountable that is exactly the idea that i was alluding to. i think you have laid out a compelling vision for how we could increase spending in the short term using some deficit spending will come investments and things like infrastructure bank in the next two years and with a policy adoption of an increased various revenue measures fuel tax and other

measures that will take effect that we can use to borrow against. >> interrupting just for a second. but i am talking about what the deficit neutral. in fact it would improve on the deficit situation even if we use some short-term borrowing. but it would be positive. mr. puentes? >> thank you, a congressman. certainly i think that what we want is there are problems with it. the alternative is to do nothing and that is obviously not acceptable, so i completely agree we need to get moving in some four when it comes to how we are going to finance the program, not the short term because as you mentioned this is being funded through general funds right now. it is an honored hannibal's attrition a lot of folks are getting frustrated with that arrangement so we need to do well defeat could deal with a short-term problem and then there's no doubt about it.

one thing we also can do is to get in touch of the innovations happening in metropolitan areas across the country. we're from the mayor of los angeles this morning. they are not waiting for the federal government to act as we have a recovery package which was enormously helpful for these folks but as we know the money is running out so there are a lot of things happening in the metropolitan areas. the government could help those who help themselves and some other measures passing because they are being presented with the atenolol option they know what they're getting for their money. spearman i know mr. chairman my time is expired but maybe mr. staley if you have a brief comment on this would appeal right? >> briefly i think the problems we've experienced in the transportation are so severe. we need to focus on that and i would be -- i'm reluctant to

endorse increase in revenue and gas tax until we stretch that out so i would be in favor of moving through the reauthorization of the existing budget authorities to focus on getting that straightened out in order to reap the foundation that actually creates something that is more transparent and performance driven been commingled revenue raising and be much more effective in terms of promoting and supporting at. >> thank you. >> thank you mr. blumenauer. >> thank you, mr. chairman. let me say i appreciate mr. miller's willingness to refer to the congressional delegation on matters affecting the gasoline tax and assuring him we will be seeking the guidance and advice of state officials when we make those decisions in my state now in the district we've been in the process of trying to finance a

project. i think it is one of the three largest projects involving the interstate highway system that's now on the books on the hialeah administration and it is a 4 billion-dollar project to the bridges over the ohio river conducting global and southern indiana and then realigning the area of downtown louisville were the states converge as too mild a word, collide is probably a more appropriate word and certainly a project of regional if not national significance because it affects the flow of goods and services through on a long north-south axis and also northwest. secretary mother, as i know you've been involved in helping to try to find ways to finance the project i guess what i would like to know was how you feel the national infrastructure bank

could help finance. i think we've been able to accumulate to% of funding for the last 11 years from the federal sources. would he elaborate on how this might help finance the project? >> sure. the national infrastructure bank i believe would be invaluable to helping finance the pr3 >> sure. the national infrastructure bank i believe would be invaluable to helping finance the project like the ohio river bridge project which is a very high priority of the governors. i think what we've seen in the last few years is a very dedicated a bipartisan effort from federal officials such as yourself, congressman, state officials such as governor bushehr and local officials such as a variety of private business folks who recognize that building bridges is critical to the future economic to parliament as well as enhancing the transportation in that area. what the actual infrastructure bank could do with some sort of

combination of the grant and credit support is it could boost the overall feasibility by leveraging the state, local and federal resources that are currently being marshalled and accelerate the delivery of the project so that in the coming years it would be able to help reduce potentially even need the money of the need for that tax increases as well as perhaps even more importantly for those of us who are growing impatient along it's been taking it would help accelerate the timing of the project. and so we really would look forward to the national infrastructure bank being a very valuable partner in this kind of effort. >> getting to the brain banks back in february we had our party issues retreat and one of the speakers of the retreat with a gentleman that ran the company, runs a company called serious material, and his company has developed a new form of window pane that raises the

insulating factor of windows by a factor of about three and one of the things he said was he said they could go into a school district, for instance, replace all of the glass in all of the windows in the schools, flow the bond issue to pay for that and then after, even after paying off the bond and energy savings of the most 20% overall. is this the type of concept to the green bank utilize this and do you see anything like that kind of the potential savings? it seems like almost magical -- >> when i've been digging deep into the energy efficiency improvement with a talking about public facilities or defer to the cattle whether rescission program the congress dramatically expanded during the stimulus package, it is amazing what a win-win this can be by

making these improvements in the long run you are saving real dollars and pay off just a few years' time and then all of the energy savings could directly into your pocket whether we are talking about tax payers for the individual homes. we are protecting the and where and obviously by reducing the carbon footprint and we are also creating the demand for this whole new agreement call for a job sector that we are trying to be at the forefront in kentucky so efforts like the green bank in kentucky and efforts like a national green bay or infrastructure bank when the money as a ticket to the energy efficiency it will lead to budget reducing the state federal and local level while having all the other benefits that we already understand. >> thank you very much mr. chairman. >> thank you. i want to thank the panelists for the testimony today. you might receive some follow-up questions from members and i hope you can respond promptly.

i also want to thank you for your patience today for the schedule conflict on the house floor there is very little that we can do about that and the best way planned. i have great regard for the expertise to bring to the discretion and at the same time a personal thanks for your patience. with that, during a further comments, the hearing is adjourned. [inaudible conversations] dannel goebel conversations [inaudible conversations]

[inaudible conversations] stevan dennis of roll call have democrats stop a final vote from occurring on the science and technology bill. why? >> they pulled the bill from the floor after republicans succeeded in attaching an amendment the democrats say effectively gutted the bill and the way the republicans were able to do that is they were able to attract democratic votes by putting in a provision saying that federal employees who are disciplined for watching porn on their government computers would be fired. and if i was hard for democrats to resist voting for even though there are all these other provisions in the bill that they support this amendment also

gutted. so democrats pulled the bill saying they will come back next week to create the bill to include the antiporn provision and try to keep the rest of the bill intact. this is a science things like research grants and education grants and it doesn't actually spend that money of the rising over a number of years. they have to come back later inappropriate spending so it's sort of like a two-step process but the interesting thing is the republicans now seem to have a formula for four forcing democrats into a tough vote and the democrats have been folding the last few weeks. last week there was a similar amendment that shrank the energy bill, it was an energy

authorization bill and the republicans were able to get the amendment passed by using a provision requiring people who are going to get these grants under the energy bill to make sure they were not child molesters or sexual offenders so republican democrats especially vulnerable races around the country didn't want to vote against the amendment so it seems like democrats are sort of -- republicans have figured out how to put democrats on the defensive but they are crying foul saying the republicans are playing politics instead of really legislating and sort of using these gimmick legislative language to shoehorn bigger changes to the bill. >> typically how often are the successful? >> they are not successful all that often but, you know, they

have been pretty successful the last few weeks. there is a third one that also dealt with criminal background checks that passed in march. so it is not heard of for republicans to be to pass one of the motions to recommit is what they are called. but it is pretty unusual for democrats to have to pull the bill. one of the reasons democrats told me afterwards that they pulled the bill is in addition to the concern that the changes made gutted it was a wanted the committee that backs the bill, groups like u.s. chamber of commerce, as a season of manufacturers, the whole long list of business groups that backed the bill they want to put heat on the republicans and say hey let's let this go don't play games with it because they will actually want this bill so the democrats are hoping a few days

of the lobbying from some of those groups will get the republicans and the republicans meanwhile are pleased as punch. they think they have scored an important victory by saying we were able to cut $40 billion of authorizing money from this bill and i paid the democrats as free-spending, as a free-spending congress and any democrats that ended up voting against the motion and against the antiporn provision have already made tv commercials for the fall. >> stevan dennis of will call, thank you. >> good to be with you. >> up next on c-span2, a senate confirmation hearing for the president's customs commissioner.

now the confirmation hearing for president obama's nominee to head u.s. customs and border

protection. alan berslin has been serving in that position since the recess appointment in march. he faces questions of this hearing about the legal status of several household workers he hired. we begin with comments by the senate finance committee's this is one hour and 20 minutes. >> welcome, commissioner bersin and also to your family and friends. this reinforces the poll but tht senate finance committee serves with respect to presidentiallnom nominations. the administration should learn fromthe admini this hearing thed consent of the segment isn't to something to be taken lightly and due diligence undertaken bye the committee isn't something ty be simply brushed aside and i compliment the chairman forthat reinforcing the point in this earing hearing. was recessed and e pointed on march 27th despiteg

knowledge that the, administration had with the finance committee on thesan basi bipartisan basis and i want to o emphasize bipartisan as serious concerns with respect to conflicting information pertaining to the proper documentation of domestic staff hired by the nominee. and we should put that in the record, mr. chairman. m >> withoutr objection. >> the u.s. customs and border protection plays a crucial role at the nation's borders.. the agencies charged withhomeand protecting the homeland andflowa facilitating the legitimate flow of trade. it has 57,000 employees and it enforces all for over 40 agencies of the government. worth of$710 trillion ofrs imported goods collected about $40 billion on fees so very

impor important. ys a result, decisions made byan any commissioner of customs has a fast impact on economic welfare of the nation and that' why it is imperative the propere balance be struck between the agencies dewolf responsibilities and for several years now i've been concerned at the agencies customs revenue and commercial functions have not beenritiz sufficiently prioritized. it's come to the to important ip commissioner bersin restore the balancerestor for example full implementation of automated ir commercial environment andd inta international trade data systems are critical to facilitate, trading flows and the the development of the systems issys significantly sig behind schedu. i look forward to hearing howhow the commissioner intends to getp thele implementation back on

track. another concern i would like to raise is a level of consultation between customs border patrolo and congressional oversight committee as well as consultation between cbp andgeno other federal agencies over thee past few years. there's been three instances in which the cdp issue a preliminary ruling without consulting appropriately as a result cdp was forced to withdraw and suspend a rule making. i would like to hear the commissioner say whether he thio shares this concern and so heuli would address it as a priority. finly, i finally, i would note last year senator baucus and i introducedd customs facilitation and tradeon enforcement reauthorization act to reauthorize cdp and read repe prioritize its trade functions so any views on that bill would be very much appreciated. instead of my oral presentationo i gave a shortened version of at

longer statement i would like to have the locker statement take the place of what i have just said. >> thank you, senator. >> i have three questions we ask all nominees and i will ask the right now. w.rst is that anything you arero aware of in your background thag might present a conflict ofmighs interest with the duties of the office you been nominated? >> no sir. >> do you know of any reason orn otherwise that would in any wayt prevent you from foley and fully honorably discharged and the responsibilities of the office t resp which you have been nominated? been >> no mr. chairman. sprick to agree without reservation to respond tos reasonable summons to appear and testify before any duly any constituted committee of congress? congress >> ai user e?xit otherwise required by law.requiredby law. >> and what would that be? >> i do sir. >> thank you. i haven't made to the eckert anr other witness made the ithdr

reservation.r and you've now withdrawn the preservation? i >> i hav have, sir. as >> you are responsible for enforcing america's immigration laws of the borders and during the finance committee process my staff found that he failed to ti timely compete and maintain theu to l required i-9 for us tozed showwo that your house workers e legal in the united states too read this list part of theour responsibility res of customs as obviously concerned. can you explain to the committe why you failed to complete andan maintains the i-9 forms for your household employees? >> mr. chairman, i want to emphasize that from the beginning the lack of i-9 forms has been fully disclosed and that in fact my wife and i and a in the case ofnd each of theea employees involved in the household over the last 20

years, their eligibility to work in the united states hasn been. verified. in each case documentation ofthm thee same kind that is required with regard to the i-9. a four month is the location to fill out and maintain andes household files or in thefile business files, passports, permanent resident cards, drivers' licenses, social security cards. in each case with respect toeacy each employee we verify the we y eligibility of that person tot n work in the united states. similarly with regard to each of those persons we are sure to pay taxes do with regard to the em employment and all of those were due and paid with the exception of the $56 a was a deficit that our accountant in connection to the committee staff discovered and has been paid over 20 years

no employee eligible to work ino the united states has ever worked eligi in our household. . no we employees whose work in our household doesn't have taxes paid in connection with employment. mr. chairman, as i have acknowledged my wife and i simply did not know and we weres mistaken in not knowing that awa i-9t form was the form of that needed to report the information that i just alluded to.to, pa passport numbers, social ners, security numbers, driver's licenses.f instead of having iht on that form a we had it on a piece ofpt paper in a file maintained by ue and our home. it was a mistake -->> isn't i >> isn't it true though thevett vetting process began at that point you did not provide anyove i-9s for any employees? >> we did not because we did now

know that they were necessary. but at the same time -- >> i'm surprised you didn't know it was necessary when you are the u.s. attorney or were at that time of i-9s. islamic i was aware in the business context the i-9s needed to be filled out so theyt could be maintained by the business and available for inspection. >> what was your experience of the i-9s as an attorney? >> there were investigations bye the immigration and naturalization service lookinggd to enforce civil requirements of of the immigration act. ac but at no time did i know andi make the connection that in then domestic context of theontext household e mployees that theyet were required by law toasize emphasize mr. sherman -- stomach isn't it an employer whether a business and leisure or domestic i-9 employer? i-9s, these are forms issued is by the department of homeland se

security.cum awar >> sir, i'm aware of a formal requirement now, and i have made cl clear that i acknowledge theerrn error andd the mistake and the violation and i will obviously see to it in the future that the four misspelled on the form on prescribed by the government an maintained in that forum. to emphasize theo wantto e underlying documentationmp was a reviewed and the eligibility ofe every employee who worked for us and with us was terrified and it think it's been acknowledged by the committee staff. >> i find it incredible you didn't know about the i-9he i-9 obligation.oigation. that doesn't pass theedibili credibility test. >> mr. chairman, if i had known about it, if my wife had known out it, about it, it would be i of no difficulty to actually put thee9 information on the i-9 forum. i didn't know about -- i did noy benefit buy not having it in the

final in that form. there was no reason why we would not do it if we knew it. we did not know that it appliedd leann the case of in policeec since 2006 part-time h housecleaning help when we have verified their eligibility and have written down that documentation that indicatedthei their eligibilityr el to work. >> so failure to fill out the i-9s is something this so committee should pay littlee sh attentionould pay to? this piece of paper is worthless in your view? it shouldn't have to fill out and if they don't fill out mayb sometime two years later they get around to it even though the wall provides the exact dates, the date of hire i think orrecal three business days later thethp employer must fill out his portion of the i-9s.you e b you basically are saying it is irrelevant?eous.

>> i'm not saying it is irrelevant >> if you don't know about it, no big deal, filled out later when you get around to it but that's what it sounds like. ge a >> what i am seeing is it was ai form and i acknowledge a mistaki not ahaving the information wem obtained by amol socinian having the information on the other piece of paper that is the same information shows the respectest for the need to verifyfy eligibility eligibility in ai way that not having theha information in the first place would indicate. h if we had known of the forum wew would have used it because wehat had the information and we were. able to make it available to the committee staff and i believe that the substance of the immigration law was observed.not that's not to say and i think wd acknowledge -- >> have we received thosedid what ins? >> yes. islamic what in particular?phots

>> we have photocopies of the passport cards with regard toes the two employees for u.s. citizens and their passportssspe were provided. a third employee was a permanenn resident in her car was provided. i don't believe as well asieve,s copies of social security cards and one case i believe a >> obvious qriver's license. islamic the obvious question isr your job as commissioner basically you oversee a lot of f verification and the truthfulness of employees, a eml person's status and it seemsou e pretty cavalier about the i-9' i-9s and basically say if i hear you correctly i-9s are not that important, other documentation as find i-9s or not that important and you are saying we should overlook the

failure to fill out i-9s forst employees. >> mr. chairman, i am not denying the error or thelation i violation with regard to theegad four men which the informationws was contained.ontained what i am saying and i say this as a former prosecutor withosecu regard to the immigrationgard t customso th enforcement would bd enforcement agency that if a pe person the best thing that fromr my own personal situation, if af person had the informationnfor called for by the i-9, copies of passports, copies of permanent residence cards, copies ofcopies social security cards, o copiesf this information to demonstrate the eligibility of the person tu work inn the united states ittat the violatione but it would put into life and into context the failure to t maintain the information in that forum. f that is as far as i would saytht

there is a difference. >> well-documented use and you have to provide and where pdidd you get the information? docume? >> senator from the time i wasay attorney and the time of the clinton administration from the zoe baird incident and on i kned there were two requirements, and ere wer my wife and i verified each of the laws with regard to eacheach employee over the next 20 years. the first is that people workinw in your household needed to be eligiblese hotol d work inneed d nd you need to see proof neede and evidence of that eligibilitt we did it in the case of every employee to get the secondemplo. requirement was the household employees need to pay household taxes with regard to people working in the household.. er every employee you for 20 years has the taxes paid for and theae documentation established in that is not in dispute.

>> senator grassley. >> the finance committee now ono your nomination dated may 12ed y states that he received a price turing the vetting process thata some of your employees could bee categorized as independentd as n contractors.to of what you know who gave you this that i said what capacity were they working on your nomination? >> senator crist the call asleyr ranking member grassley, let men put that statement in exchange d 2ith your staff in the context from 2006 until now, as indicated in response to the committee's in questionnaire, we employ six people in the household of three of them were providing housecleaning services part-time three days a week. the other three persons who worked in our household were college students who were from

tie local college in san diegoh who drove from time to time our children since my wife and i both worked, drove them to appointments and required school or sporting events.rly they were paid on an hourly basis and they were -- as i say they used their own automobile to drive our children. of those six employees my wife and i treated them the same because inconsistent with what i said in the two decades we looked to assure they weret theg eligible to work in the united states. we verified their eligibility and the second is we paid their, taxes. it was only after thecotio confirmation process or thevetto setting process the distinctiona was made that suggested that the

college students who were paidre on an hourly basis who worked sporadically and used their owne car or independent contractorsro and appeared to me that they --t that was a fairfair characterization. i regret making that distinctiok necause in fact wein haven't mai the distinction in fa terms ofnn paying their taxes and verifyinx theires eligibility. >> did somebody advise you on this because i am notebody advis questioning whether -- i just want to get who gave you that edify is and what capacity were they working on yourd what c non during the vetting process?tting >> in connection with analyzingr the nature of the employment i i received advice from within the department of homeland securityc i also received a device from lawyers and friends from outside of the government. i talked to people obviously inn connection with the vettingcessa process at the white house.

i am responsible for having made the distinction and i take -- if am accountable for that.it it strikes me as a distinction -- that shouldn't have guided my >> d ane to the committee staff. >> did anybody advise you to not discuss the employee independent contractors which with the committee? did anybody advise you not to -- >> center, no, not -- that is at decision that i made but i wanti to emphasize, senator grassley, there was no intent to conceal those three college students because in fact they were listea on tax returns provided to thece committee.. schedule h listed them. of it wasn't a question i stood tod no way from having concealed the employment ofha those three students.hree stden.

their names came to theto the attention of the staff becausett they were in the tax documentst we provided to staff. spec okay. what advice would you giveou another nominee in a similaruath osituation who had received similar advice? >> not to make distinctions than were not made of the time of hiring. that is to say there were no distinctions made in the way, te people were treated inre terms e their of finding theirand payi eligibility and paying their taxes i would not draw the distinction in the context ofyzg than analyzing it in the looking backward. >> i would like to go on lto another matter i want to discusn with you and this comes from a november 18th, 2009 story in this the n'digo reader the story said you had a personal sta financial stake in a border realistic through a partnership

called otai terminal that wascrb created in october of '96 with relatives during this time you served as u.s. attorney for the southern district of californian and also as attorney general southwest border represented in in fact the sf 278 indicates you yv have an einterest in otai pr terminal properties. it would you describe it in your involvement with it and if youor are related to any other investors in otai property. >> this was a family organized-- -- it was organized by my father-in-law and deceased lisa and we took no active role or involvement in the management property and that property was disposed of seven or eight or nine years ago. p the otai arpartnership reflectet

in the 278 does not contain -- icesn't include that property ax the u.s.-mexican border on the edge. >> i do have a question when the when property was invol tved was you, involvement in this partnershipt appropriate given your position as u.s. attorney and as the reps attorney general southwest border representative? >> i believe so, center, there o was no activity that i tooktiviy ether in connection with the property or as the u.s. attorney that affected the value or disposition of that real-estate. >> may be my last question is not appropriate.no aou don't have any interest now in otai properties. is that what you're saying? >> no, sir, otai property is a and llc. at the center of the propertyd

referenced in the articleth but you referred to. >> let me ask you this last question. in the role as the commissionerf of customs border protection is it conceivable what you do on the job could impact the value of the properties? >> no sir. >> the next person is under thes bible was mr. bingaman and mr. bunning and in the senator,h from washington and then the senator from texas. >> mr. alan bersin, thank you for being here andulations congratulations on your intment appointment to this importantt position. that me just state -- i don't to as k you anyneed to more we questions. i think we've gone through the subject extensively but let me justy he state that in my view s clear that you complied with thn spirit of the immigration lawin reason that you made a legal determination to the legalstus f status of employees, you kept

records to verify that had been done and paid taxes as you pointed out on those individuals. the fact it wasn't done on this for my is unfortunate but not fatal in my view. let me ask about the job you are taking on because it is an extremely important of you already taken on and that is as head of customs and the border protection in my state of new mexico as you know this is an extremely important position and i am impressed with all of the background and experience that you have had in trying to deal with border protection particularly on the southwest border. let me ask about infrastructure along that border. one of the things i have been pushing for is a problem of what do we do about outbound

inspections. it's clear when you look at the violence going on in mexico particularly the city of juarez and other northern mexico city'h that much of the violence is fed by the ready availability of large amounts of cash, large amounts of weaponry that come as across from the united states and i am concerned we don't haa in place the necessary in infrastructure, the dedicated outbound inspection teams that he need to really monitor any ot that. is this something that isgettin getting fixed?ur what is your view on this? >> senator bingaman, the notion

we need to pay attention nottent only to the matters coming nortn through the borders but rather leing south and the cycle ofth,c drugs, guns and cash is onesh i continuous cycle that requires attention to outbound as well as xnbound and cooperation with me mexico is that the court oft secateurs in the public, and tht administration's approach to thr problems on the southwest. border.st marc last march in 2009 when the secretary announced theced the initiative with respect to the southwest border she instructeds customs and border protection pr and the midst to engage into nga southbound checks on a regular basis. r there are two parts to this, ths senator. one was the creation of the team's.ms, customs field operations cbporki working with state and locallol police officers under the stones

garden grants as well as immigration customs enforcement agents started to do systematicc inspections of the cars coming i south. the second part is what you'vett alluded to with regard to technology.. we don't have the most of theste points of entries from the of en northern border with thery southern border is system of capturing data with regard to going south.lates but we do in some places across from tijuana. we are moving to remedy that in today's by creating license plate ratings away from the point of entry and where we havp the footprint to to put thet technology in place we are looking to do that because weoog accept this as an important function of the agency.funcon >> let me just ask one more question on that very issue is because this license plate reading capability as youas indicated is in place in a few

locations.ations i it is not in platce in my state at any of the border entrances. i'm told the drug enforcement du agency owns and operates licensg plate readers at interior border patrol checkpoint. does the cbp have access to that information? is there a way to insure that some kind of license plate reading capability be put into all the checkpoints so that wech don't have the problem of stole vehicles in my state this is a m serious one and particularly as you get toward the southern part of the state would even in alla albuquerque lot of cars stolen and they are never seen again but the understanding is they bring that in mexico.ut the ursn so, whg at more is being done os the license plate reader issue?

>> senator, the drug enforcement administration of the department adm of justice and the cbp are engaged in discussions. d we have developed a joint project. i met yesterday as circumstances turnout with mr. placido.rno we discussed theut matter and i believe we will have a believe e arrangement of and working in the documentation of it in the n near future.f >> thank you, mr. chairman. y >> thank you, senator bunning. >> thank you, mr. chairman. i am going to go back just to touch base so i can try to grasa tow a former u.s. attorney fromt the southern district leges southern district california wouldn't know federal law since your job as the