A Peek Inside a Percolating Infrastructure Package

 With the tax bill passed and despite looming spending decisions, the next big thing in Congress could be the long-promised, but still percolating Trump infrastructure package.

With the tax bill passed and despite looming spending decisions, the next big thing in Congress could be the long-promised, but still percolating Trump infrastructure package.

With the tax bill in the rear-view mirror, the next big thing for Congress could be the long-promised $1 trillion Trump infrastructure package.

Based on conversations with Hill committee staff members and leaked reports, details of the package, which President Trump says he will unveil in January, are coming into view. Here is a sneak preview:

 One of the four funding pots in the Trump package would invest in innovative transportation projects such as Elon Musk’s proposed hyperloop subsonic train.

One of the four funding pots in the Trump package would invest in innovative transportation projects such as Elon Musk’s proposed hyperloop subsonic train.

  • There is a 70-page outline of the package under review in the bowels of the Office of Management and Budget.
  • Four pots of money will be created, backed by $200 billion in direct federal spending.
  • Half of the $200 billion would be distributed to states to use as financial incentives for road, transit, broadband, water and housing projects that can attract at least 80 percent of non-federal funding. This would theoretically attract $500 billion in new infrastructure investment from public and private sources.
  • A separate pot would be established for rural projects, using the more tradition 80 percent federal/20 percent non-federal funding split.
  • The third pot would be assigned to innovative projects such as Elon Musk’s hyperloop initiative or other technological advances that revolutionize transportation systems.
  • The fourth pot would add financial incentives to the Transportation Infrastructure Finance and Innovation Act (TIFIA) and Water Infrastructure Finance and Innovation Act (WIFIA), which provide federal credit assistance in the form of loans, guarantees or lines of credit.
  • All projects receiving funding from the $200 billion would be exempt from federal requirements such as NEPA (environmental review), Davis-Bacon (prevailing wages) and Buy America.

The Trump plan would face a rough road to passage, especially in the Senate where the Republican majority has been trimmed to just 51-49. GOP congressional leaders are reportedly working on their own infrastructure proposal, with an eye on what it would take to attract at least some Democratic support.

While there will be vigorous debate over how to invest billions of dollars, the main political stumbling block will be resistance of GOP conservatives to spend more money and drive up the federal deficit even further. That stumbling block is already in the path of Congress finding a way to avoid a partial federal government shutdown by a self-imposed deadline of December 22.

Congress may skirt by the December 22 deadline by agreeing to another short-term spending resolution until January 19. Sooner or later, Congress will have to face the larger spending and deficit picture, which includes GOP demands for a major increase in defense spending, $200 billion for hurricane and wildfire relief, another $2.4 billion for the Veteran’s Choice Fund, $50 billion extension of the Children’s Health Insurance Program and continued funding for health insurance stabilization.

The spending splurge in Washington has already prompted GOP leadership to talk openly about mandatory spending cuts for SNAP, Social Security, Medicare and Medicaid. Trump’s decision to postpone signing the $1.5 trillion tax-cut bill until January is an attempt to push off mandatory cuts until 2019, after the 2018 mid-term election. GOP Senate Majority Leader Mitch McConnell has announced the Senate won’t look at what Republicans refer to as “entitlement reform” in 2018.

There also could be pushback from economists who warn that adding a major transportation bill on top of huge tax cuts intended to stimulate the economy could resurrect the sleeping bear of inflation.

Despite all that, Trump is expected to push for his infrastructure package and McConnell appears to be a willing ally. The package might be the best shot for a major bipartisan legislative effort during 2018.