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Senate leader cool to infrastructure bank

WASHINGTON (Reuters) - President Barack Obama’s plan to establish a national infrastructure bank that would fund public works projects across the country met resistance on Wednesday from the chair of the powerful Senate Finance Committee

Senator Max Baucus (D-MT) squints as he recalls exact numbers on a compromise deal to try to pass President Barack Obama's economic stimulus package at the Capitol in Washington February 6, 2009. REUTERS/Jonathan Ernst

“I think that bank idea will rob the future growth of the highway program and that will destroy the national scope of our highway program,” said Sen. Max Baucus, a Democrat from Montana, whose finance committee holds sway over taxes and spending.

Baucus spoke at a hearing on transportation spending held by the Senate Environment and Public Works Committee where Transportation Secretary Ray LaHood testified.

In his budget proposal, Obama called for $25.2 billion to be set aside for creating and running the bank, which some have called the “Federal Reserve of Infrastructure,” through 2019.

It would use federal seed money and have an independent board that would make capital project grants to state and local governments.

“The key strength of our highway program, our interstate program, is that it’s based on the premise of one country. It links the various parts of our country together -- some that can pay for highways more easily with others, like rural states, that cannot,” said Baucus.

He warned that certain states and projects could vie for favors from an infrastructure bank and the process be overtaken by political fights, locking poorer areas out.

According to the Public Works Committee’s chair, California Democrat Barbara Boxer, Baucus is a key negotiator for the bill to renew the Highway Trust Fund, which is used to repair roads and public transit.

Revenue for the fund comes from a gas tax and is distributed by formula to all states. In 2008 the Highway Trust Fund was depleted and Congress had to pass an emergency measure to provide extra money.

LaHood told reporters later that Baucus had not sapped the Obama administration’s interest in the infrastructure bank.

“It’s an alternative we do have to think about. Some of us that have been thinking about it believe you can raise a pretty good chunk of money and I think it’s one of the options we have to look at,” he said.

For more than a year, legislators have weighed creating the bank, as groups such as the American Society of Civil Engineers point to a large gap between how much money is needed and how much is available to keep roads and bridges safe. So far none of the legislation has moved out of committee.

At the hearing, Pennsylvania Governor Edward Rendell said an infrastructure bank would “play a role as a financing vehicle for projects that have major national impact or are multi-state.”

“I know that many in Congress are concerned about how an infrastructure bank would work, but I ask you all to keep an open mind,” he said.

Rendell is working with New York City Mayor Michael Bloomberg and California Governor Arnold Schwarzenegger to reform how the country pays for its public works.