Still smarting from the failure of Obamacare repeal, the Trump administration is accelerating its effort to produce an infrastructure bill that could win congressional approval with bipartisan support. But like health care, funding improvements for roads, bridges and transit is complicated.
Transportation Secretary Elaine Chao said the Trump infrastructure plan could be unveiled as early as May, much earlier than the original White House timeline of later this fall and some even predicted a package wouldn’t be acted upon until next year.
In his campaign, Trump touted a $1 trillion billion infrastructure plan, which critics panned for relying heavily on tax credits to private-sector developers instead of direct federal spending. Now Trump officials are suggesting the package could be larger and contain as much as $300 billion in direct spending. They also hint regulations could be loosened to stretch construction dollars and shorten the time it takes to turn dirt.
Public-Private Partnerships, referred to as P3s, work best with highways or bridges with lots of traffic and no realistic alternate routes that can turn profits from tolls. Trump has said the plan would favor road and bridge projects that could start within 90 days, which gives preference to projects already in the pipeline.
Tolling is rare in the Pacific Northwest, but not unknown as a way to pay for bridges. The Oregon Department of Transportation has already started to lay groundwork to allow toll facilities.
Generally, P3s aren’t realistic for public transportation projects because transit agencies aren’t big profit centers. To their credit, Trump officials are looking for creative financing and streamlining ideas to include in the Administration’s infrastructure package.These options could even benefit transit projects, but it’s too early to tell how creative the Trump administration will get.
The overriding complication is how to fund the program. One idea floated by Trump’s team is to lower the 35 percent corporate tax rate to encourage repatriation of an estimated $2.5 trillion in overseas profits. At a 10 percent tax rate, that inflow of cash could generate up to $250 billion in federal tax revenue, which Trump would dedicate to infrastructure funding.
That concept isn't popular in the House or Senate tax-writing committees, whose leaders see taxes on repatriated profits as a way to fund a broad overhaul of the federal tax system.
The most obvious way to raise money for roads and bridges is to raise the federal gas tax, but congressional Republicans tend to view that as a political third rail.
Another complication the Trump Administration is mulling what should be included in the infrastructure package in addition to roads and bridges. Last week, Housing Secretary Ben Carson said housing would be included. Other Cabinet members have indicated water and sewer infrastructure, broadband deployment, electricity grid modernization, Veterans Administration hospitals and airport improvements could be in the mix. Ironically, many of the same programs that could be awash with cash in an infrastructure plan are at the same time being zeroed out or significantly reduced in Trump’s proposed FY 2018 budget.
To earn Democratic votes, Trump and congressional Republicans may need to live with labor protections on projects included in the plan
Public works projects generate jobs and goose the construction industry and their supply chains. They also provide distributed economic benefits throughout the country. The appetite for an infrastructure plan is strong, broad and bipartisan, but getting to the end of the road requires negotiating a lot of sharp curves and deep political potholes. It will be complicated.