Puppets and Infrastructure

There seems to be only two things that Presidential candidates agree on during this election season;

1) Their opponent is a puppet of Russian President Vladimir Putin; and
2) The United States must make significant investments in our crumbling infrastructure.

Hillary Clinton has called for a “$275 Billion, five-year plan to rebuild our infrastructure,”¹ which includes spending for roads, airports, and energy infrastructure.  On the other side of the aisle, Donald Trump has proposed a plan to spend as much as $1 Trillion on infrastructure.²  They are not the first political rivals to call for increased infrastructure spending.  In 2011, Thomas Donahue of the United States Chamber of Commerce and Richard Trumka of the AFL-CIO appeared on ABC’s “This Week” to promote increased investment in infrastructure.


Donald Trump and Hillary Clinton discussing infrastructure finance at Trump’s wedding in 2005.

With opposition in Congress and among the public to increasing the debt burden on future generations, and the difficulties State and local government budgets face regarding funding pension obligations, there may not be the political (or monetary) capacity for the next President and Congress to pass a comprehensive infrastructure bill.  However, if public officials at the Federal, State, and local level can communicate the short and long-term economic benefits of increased infrastructure investment, then the municipal bond market may be in for a busy 2017.

The debate over how to repair our nation’s infrastructure will be a major issue facing the next President and Congress.  A related issue facing public officials regarding infrastructure spending is where to invest and taking into consideration the need and the greatest potential economic benefit (that sound you just heard was late Senators Strom Thurmond and Robert Byrd rolling around in their graves).

Cities such as Atlanta, Detroit, Seattle, and Los Angeles are holding ballot initiatives to fund new infrastructure projects to fund railroads, bus services, and highway improvements.

Below we provide the GEO Scores of these major cities that are holding ballot initiatives for major infrastructure projects.³


As noted above, all the cities’ economies have improved over the past twelve months with Atlanta having the largest increase, of .9 in its GEO Score. However, Detroit’s economy has had minimal improvement over the preceding twelve months as it struggles to rebound from its bankruptcy filing in 2013. Increased infrastructure spending has the potential to improve the economy in Detroit as it recovers from bankruptcy. Whether at the State, local, or Federal level, it is our hope that our nation’s public officials will concentrate on financing new infrastructure in 2017 and beyond. The bipartisan agreement of the cities highlighted above, in a time of deep political divisions, shows there is room for optimism as our nation contemplates the problem of our crumbling infrastructure.  Now we hope the new President and Congress will act soon.


“Underwriters Should Walk Away from Deals with Bad Disclosure”

On Friday, the Bond Buyer featured the above-titled article highlighting portions of a presentation by Ron Bernardi of Bernardi Securities, Steve Heaney of Stifel, Nicolaus and Gregg Bienstock of Lumesis.   The article opens by saying, “Underwriters should walk away from municipal securities transactions when they discover the issuer has failed to disclose key information, dealer officials said here, citing their own experiences as examples.”

The author, Jack Casey, closes by saying,

“Gregg Bienstock, chief executive officer and co-founder of Lumesis, Inc., also pushed for more clarity, saying the market needs a consistent message when it comes to materiality.  “Something that we see by virtue of what we do is that there is a fair level of inconsistency when it comes to the requirement of due diligence that needs to be done,” Bienstock said … Bienstock suggested that regulators could start with “some pretty basic stuff” such as how late is considered material and what is a reasonable level of diligence for competitive and negotiated deals, as well as whether the required diligence changes when a firm is part of a syndicate.” – The Bond Buyer October 28, 2016

Read the full article here


Have a great week,

Eli Molin

Municipal Data Analyst


¹ https://www.hillaryclinton.com/issues/fixing-americas-infrastructure/

² Trump Speech in Ashburn, VA

³ Diver Analytics GEO Score