Trump’s $1 trillion infrastructure plan and how to pay for it
Blog Post
What began as a campaign promise is moving closer to reality. During his campaign, President Donald Trump said he would push for a $1 trillion infrastructure program to rebuild roads, bridges, airports, and other public works projects and that he wanted action on the program within the first 100 days of his administration. While that timing now seems questionable, the program itself remains a priority.
Leading Republican lawmakers have been saying for weeks that proposals from the administration could be expected in the near future. In late February, Senate Majority Leader Mitch McConnell told reporters that he “expects to receive some kind of recommendation on an infrastructure bill, a subject that we frequently handle on a bipartisan basis”; however, he gave no details or indication of the timing of such a recommendation. McConnell has previously voiced concerns over increasing budget deficits with federal funds for infrastructure projects, particularly in light of the major highway funding law that was enacted a year ago.
Trump has described plans to create an infrastructure council that would be led by two New York billionaire friends, developers Richard LeFrak and Steven Roth, but those plans have yet to be launched. Trump has also discussed creating a tax credit to encourage private sector investment, but Democrats say that would fail to produce enough rebuilding and put the burden on taxpayers for a tax credit to wealthy developers, who have indicated they would build toll roads that taxpayers would then be forced to pay to use.
Recently, several lawmakers and aides have speculated that the initiative could be attached to tax reform legislation that Republicans would like to advance this year, but no decisions have been made.
Any questions about whether the infrastructure program remains an administration priority were quashed during Trump’s February 28, 2017, speech to a joint session of Congress. Trump said “crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our beautiful land. To launch our national rebuilding, I will be asking the Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States – financed through both public and private capital – creating millions of new jobs.” Trump added that the program will be guided by a promise to buy American-made products and hire U.S. citizens.
Trump has yet to provide details about how exactly the program will be funded or when the legislation will be proposed. A white paper was floated on the campaign trail that relied solely on federal tax credits for private investors.
On Thursday, the administration convened a meeting of at least 15 federal agencies as a first step to crafting Trump’s initiative. The meeting was described as focusing on identifying new projects that would boost the economy, finding existing projects that could be expedited, targeting policies and rules that could delay projects, and developing funding and financing options.
One White House official said that all funding options are on the table, including taxing corporate profits sitting overseas and creating an infrastructure bank.
Democrats argue that: relying on the private sector alone won’t generate $1 trillion of investment; projects involving private investment require revenue streams like tolls, which are unpopular and impractical in rural areas; and tax credits for private investment would only benefit the wealthy.
At the same time, Republican congressional leaders have made it clear that they won’t support a significant increase in spending that is not offset by other cuts. Rep. Bill Shuster, R-Pa. told a group of state highway officials on Wednesday that “it’s not going to be a trillion dollars coming out of Washington, D.C.” He described the question of “how do we get that money” as “the trillion-dollar question” and said it would likely come from a variety of sources, including repatriation of overseas earnings of U.S. corporations and higher user fees. He ruled out an increase in the federal gasoline tax or relaxing the prohibition of tolls on the existing interstate highways.
Within the last few days, the White House issued an energy statement that stated “[w]e must take advantage of the estimated $50 trillion in untapped shale, oil, and natural gas reserves, especially those on federal lands that the American people own. We will use the revenues from energy production to rebuild our roads, schools, bridges and public infrastructure.”
The timing of Trump’s initiative has also been called into question with recent reports indicating that White House and Republican leaders are considering pushing the package back to 2018 to give Congress time to address other GOP priorities.
Nevertheless, Trump has already issued an executive order to expedite environmental reviews and permitting for high-priority projects, and the National Governors Association has provided the White House with a list of 428 priority projects from 49 states.
Trump’s bold infrastructure initiative is sure to be a hot button issue for the foreseeable future that will be closely watched by, and directly impact, a number of industries.