U.S. Representatives Mike Kelly (R-Pa.), William Lacy Clay Jr. (D-Mo.), and Ted Budd (R-N.C.) announced the introduction of the Generating American Income and Infrastructure Act (GAIIN) Act (H.R. 6104).
The legislation would require the Department of Agriculture to sell its distressed assets on the open market and then direct the Department of Treasury to distribute the proceeds to communities below the national poverty line for infrastructure projects that would directly improve their economic viability.
Furthermore, the bill requires that a portion of the workforce for each of these projects must come from the communities being improved.
“Even in this time of historically strong economic growth, some of our country’s poorest communities are still waiting for significant infrastructure improvements,” said Kelly. “This unique, bipartisan piece of legislation will directly benefit them and boost their economies without raising taxes or adding to the deficit. In fact, it will help bring our nation’s record-high debt back down. It’s win-win-win. With this bill, our communities will be overlooked no more.”
“This innovative, bipartisan bill offers a creative way to help our poorest neighborhoods gain employment and critical investments in long-delayed infrastructure projects,” said Clay. “It is also fiscally responsible by taking distressed USDA assets and putting them to work to close the deep disparities that have deprived many urban areas of the vital infrastructure dollars needed to attract new jobs, new businesses and future growth.”
“We need infrastructure investment in our state,” said Budd. “This bill gets us there with bipartisan support.”
The bipartisan coalition believes that many of the poorest areas throughout the United States have been routinely overlooked by policymakers in Washington, and that these areas are in dire need of infrastructure improvements that will facilitate economic growth and lasting self-sustainability.
They consider the revival of these forgotten cities and towns to be a moral, fiscal and economic imperative – one that can uniquely unite conservative Republicans and progressive Democrats from minority communities.
Federal agencies currently hold more than $2 trillion in debt and lease assets that, if sold, could raise a significant amount of money. The sale of these fixed-rated debt assets at this time would maximize asset value, considering that interest rates are on the rise and the Federal Reserve’s quantitative tightening program is on the horizon.
As interest rates rise, the value of the agency assets will decline – perhaps substantially. Importantly, the sales would not alter the terms of the loans. The consumer protection obligations associated with eligible USDA loans and guarantees would convey with the sale, thereby minimizing impact on borrowers.
Additionally, borrowers would be given 30‐days’ notice of any sale and offered the opportunity to refinance at the same price of a potential sale. The GAIIN Act’s authors believe that there are sufficient private sector programs available for borrowers to refinance their loans at the discounted value.
Any loans that remain outstanding would be eligible for sale to investors, which, under the GAIIN Act, would occur without recourse and create no liability for the U.S. government. Servicing would be provided by private entities with the demonstrated capacity to effectively service such loans.
During the Reagan administration, the Omnibus Budget Reconciliation Act of 1986 (P.L. 99‐509) required specified federal agencies to sell certain outstanding loans. For example, the program required the Secretary of Agriculture to sell debt assets held in the Farmers Home Administration Rural Development Insurance Fund over a three‐year period. The proposal outlined within the GAIIN Act is modeled on the earlier program and incorporates its various provisions.