Jobs Money for Main Street, Not Wall Street

If there’s one thing most Americans agree on right now, it’s that economic recovery efforts out of Washington have focused on Wall Street at the expense of Main Street.  You’d think congressional leaders would have learned a lesson by now but, this week, the Senate approved legislation that the House of Representatives beefed up to direct additional new tax dollars to profits for big Wall Street banks, and the President signed it into law.

I voted against this bill because it gives a healthy share of taxpayer dollars to Wall Street bankers instead of Main Street employers.  The Build America Bonds program got richer on every pass through the House and Senate.  Wall Street loves this program, which ought to be a red flag for taxpayers.  And congressional leaders were so eager to pass this new spending bill that they violated their own spending guidelines and voted against applying their own pay-go budget restrictions to the bill.  For billions of dollars, we should see real bang for the buck in job creation, especially among the small businesses that create 70 percent of all net new jobs.  This bill isn’t targeted nearly enough for small businesses.

Here’s what happened.  The legislation that congressional leaders called a jobs bill includes a big expansion of a program created in the 2009 stimulus bill.  The Build America Bonds program gives state and local governments a direct payment equal to 35 percent of the interest rate on a taxable bond for government projects.  The thing is, the program allows underwriters to skim the cream from the U.S. Treasury.  Build America Bonds are 37 percent more lucrative for investment banks and financial advisors than tax-exempt bonds.  An expert quoted by Bloomberg News said that the generous amount of federal money available in the program gives states and cities leeway to spend generously on underwriting fees.

Taxpayers deserve to know that a major portion of the federal outlay for the Build America Bonds program will go to investment banks, rather than infrastructure.  In reality, school districts and green energy efforts will get what’s left after substantial bank fees are paid and city and state governments have released the funding.  Big banks like Goldman Sachs have placed full-page newspaper ads in Capitol Hill papers to urge Congress to support continuation of the Build America Bonds program.
           
In fact, the lawmakers who wrote the 2009 stimulus bill said the Build America Bonds program would be a temporary measure.  Regardless, Speaker Pelosi pushed a bill through the House to expand the Build America Bonds program to two tax-credit bonds.  Then, Senator Reid went further with the bill and expanded the Build America Bonds provision to four tax-credit bonds, up from the two tax credit bond provisions originally passed by the House.  When that bill went back to the House a second time, the House increased the amount of the subsidy on these four tax-credit bonds.  The House bill provides a 100-percent payment from the U.S. Treasury for the two tax-credit bonds related to schools, and a 70-percent payment from the U.S. Treasury for two energy tax-credit bonds, both of which are more generous than the original Senate bill.  The House bill spends $4.6 billion of taxpayers’ money on this Build America Bonds provision alone, and the Senate went ahead and passed it yesterday, so it’s on its way to the President’s desk now.

Taxpayers deserve to know when congressional leaders continue to pass legislation, which the President signs, and say it’s for Main Street when, in reality, a lion’s share of the tax dollars go to Wall Street.