Political Block
However, federal data does not support the notion that the U.S. is suffering an infrastructure crisis, although there is a hefty backlog of needed repairs to roads, bridges, airports, railways, and ports.The slim chances of congressional action this year were underlined by the resignation in April of D.J. Gribbin, the president’s special assistant for infrastructure and the chief architect of the plan. Soon after, on April 27, the House approved a pro forma five-year reauthorization of the Federal Aviation Administration without considering the president’s proposed reforms. Lawmakers are also fast-tracking reauthorization of the Water Resources Development Act—which funds harbors, locks, dams, flood protection, and other water resources infrastructure—without reference to the administration’s infrastructure plan.
Conservative Philosophy
The president’s financing strategy is also audacious, calling for 80 percent of the cost of new infrastructure projects to be shifted to state and local governments, in concert with the private sector. A variety of reforms are intended to facilitate private investment, such as allowing states and local governments to commercialize nonessential services of public facilities (e.g., highway rest stops), authorizing the sale of public assets such as airports and power plants, and opening federal funding to privately owned public-purpose waste and water treatment projects.That approach would reverse three decades of growth in the federal share of infrastructure financing. For transportation, in particular, this funding now extends well beyond highways and mass transit to include state and local roadways, parks and even sidewalks. The Trump plan thus represents a significant policy shift. The new approach regards states as best suited to determine infrastructure needs and grants broad discretion to governors.
The $200 billion federal share would be split among five new programs. The most ambitious is an “incentives program” under which states would compete for a slice of $100 billion in federal funding (over 10 years). Authority to award financing would be divided among the U.S. Department of Transportation, the Environmental Protection Agency and the Army Corps of Engineers. According to the proposal, up to 70 percent of the evaluation criteria would pertain to a project’s ability to secure new, nonfederal financing.
- $50 billion for rural infrastructure projects, including transportation, the electrical grid, water and waste, and broadband networks. Governors would be granted discretion over financing in areas with populations of less than 50,000.
- $20 billion for a Transformative Projects Program involving “bold and innovative” infrastructure that possesses unique technical and risk characteristics that would deter private-sector investment.
- $20 billion to increase federal credit programs for infrastructure financing, including expanded use of private activity bonds.
- $10 billion to create a Federal Capital Financing Fund for purchasing federally owned civilian real property.
Bad Practices
Congress has for years failed to address profligate spending on infrastructure, particularly from the Federal Highway Trust Fund. Originally created to support building and maintenance of the interstate highway system, its spending has increasingly been lavished on relatively frivolous non-highway projects.Instead of instituting reforms, Congress has covered trust fund shortfalls with $62 billion in transfers from the U.S. Treasury over the past six years.
There is bipartisan support among some lawmakers and corporate allies such as the U.S. Chamber of Commerce for raising the federal gas tax, which hasn’t been increased since 1993. The White House, too, has signaled “openness” to all potential revenue sources. As Trump told members of Congress at a White House meeting, “Come back with a proposal. We put in our bid. Come back with a proposal.”
Democrats’ Response
Key Democrats, meanwhile, are holding out for a colossal funding commitment before giving any consideration to the president’s proposal. As Rep. Peter DeFazio said, “We would just be wasting our time over here to move forward or say we’re going to move forward with some legislation that isn’t going to be paid for or financed.”There remain about eight months in the current session of Congress, although the House is scheduled to be active for less than three. The demands of campaigning will effectively leave only a few weeks to address legislation.
Facing a variety of budgetary and political hurdles, Trump’s infrastructure plan, unfortunately, is unlikely to progress this year, further delaying the much-needed reforms to America’s flawed and mismanaged system of infrastructure funding.