Trump's Infrastructure Plan Still Could Use More Planning
Despite America's rapt attention on former FBI Director James Comey's testimony, the White House has been observing Infrastructure Week. Infrastructure is one of the only policy areas that could have crossover appeal, but there has been little real movement so far on getting something through Congress.
To kick off the festivities, the president on Monday pushed his plan to privatize air-traffic control. And on Wednesday, he touted his broader infrastructure spending plan. The basic idea of this plan is that the government will spend $200 billion, using tax breaks to incentivize private business to, in turn, spend more money on infrastructure projects. Altogether, with state and local contributions as well, spending would total $1 trillion. The administration also said that it would cut regulations to help the government "get out of the way" of building projects.
Those are the basic outlines of the infrastructure proposal that the administration has been talking about throughout Trump's first four months in office. However, there's still not a detailed plan, nothing has been introduced in Congress and answers to some big questions remain elusive.
The administration will have to figure out those details before it formally introduces its plan (and isn't simply touting it to attempt a diversion from the Comey testimony). Here are a few more of the questions the administration will have to ask itself — and, perhaps, transportation policy wonks — if the White House is hoping to implement the plan.
1. Where are the details?
Trump's speech in Cincinnati on Wednesday and a subsequent press release contained little new information on how his plan would work. The administration had said ahead of time that it would be announcing new spending on rural infrastructure, for example. That kind of spending might calm the fears of some rural residents, after Trump's initial budget proposed slashing rural development and transportation spending.
But in a Wednesday press release on the plan, the only details were:
"Rural America will receive grants to rebuild crippled bridges, roads, and waterways."
A White House spokesperson told NPR via email on Wednesday that there are no further details on that spending.
And while the plan released Wednesday also said the government would spend $200 billion, it didn't say how that spending would break down — how much would be for tax credits, and how much would be for grants, for example. The White House spokesperson likewise said those details are not available.
One other question, says one expert, is what the specifics of these partnerships between the government and the private businesses will look like.
"The idea that you can spur a larger amount of infrastructure funding than the federal dollars is not, in and of itself, unique," said Jacob Leibenluft, a senior adviser at the Center on Budget and Policy Priorities, a left-leaning fiscal policy think tank. "But it's pretty important to explain how you do it."
2. How many jobs could it really create?
Trump promotes jobs as a big selling point of his infrastructure plan. But given current economic conditions, the job creation could be underwhelming.
"The administration talks jobs, jobs, jobs, but I think most economists would recognize that we have the unemployment rate quite low," said Douglas Holtz-Eakin, president of the right-leaning American Action Forum and a former head of the Congressional Budget Office. "The number of new jobs that would be created is limited."
There could be some economic boosts, Holtz-Eakin added, but it might not show up in those headline jobs numbers. Rather, he said, there are other potential benefits.
"It would be a productivity improvement, and that will show up in higher wages more than in higher jobs," Holtz-Eakin predicted.
There are also certainly other benefits of infrastructure projects — smooth roads and non-crumbling bridges, for example — but as jobs are a big selling point here, it's worth asking how big the effect would actually be.
One related question is about the nature of the projects the tax credits might spur. They are designed to incentivize building, but it's possible, Leibenluft warned, that builders would take the credits on projects they would have done anyway. "Your hope would be that they're only supporting projects that wouldn't happen otherwise," he said.
3. Could the plan be undercut by other federal infrastructure spending cuts?
In the president's budget proposal, the $200 billion would be spent over the next 10 years. But other infrastructure spending would take a hit over the next decade, Leibenluft pointed out in a blog post this week.
The president's budget would cut Amtrak spending, for example, and it would ensure that the Highway Trust Fund doesn't dole out any more than it takes in in revenue. The fund has some major fiscal problems, and a 2015 CBO report showed a shortfall projected to grow in the coming decade. Part of the funding issue is that gas tax revenues have fallen off. (The gas tax pays for the fund.) But how to fix the fund's shortfalls is a topic for a different article.
All of which is to say: the Trump administration's budget focuses heavily on cutting spending. But whatever infrastructure spending is cut means the trillion-dollar plan could have that much more ground to make up, both in terms of projects and economic gains.
4. Will state and local governments be able to afford it?
Infrastructure spending comes from a mix of federal, state and local sources. In fact, only around a quarter of total spending on transit and highways comes from the federal government, according to a May 2014 report from the Pew Charitable Trusts.
The question then is to what degree this plan could leave state and local governments to pony up more money. Earlier information from the White House on its infrastructure proposal said the plan would "support more communities moving toward a model of independence," arguing that local officials know necessary infrastructure programs better than the federal government.
Some state and local officials have balked at this idea of "self-help," as Bloomberg reported earlier this year, saying that they may not be able to afford the kind of investment their infrastructure needs.
"Our citizens think they're overtaxed today," said Oklahoma City Republican Mayor Mick Kornett, as reported by Bloomberg. "If the idea is that we're going to somehow pass initiatives with funding to keep up the roads and the bridges and all of the infrastructure that's out there, that seems like a tough sell to me."