politics

Trump May Struggle on $1 Trillion Pledge to Fix Crumbling U.S. Infrastructure

  • Timing isn’t great as rising budget deficits become a focus
  • Democrats say $200 billion in seed money is a bait-and-switch
Bloomberg’s Jodi Schneider reports on President Trump’s 2019 budget.

Donald Trump ran for president on the promise of $1 trillion fix for crumbling U.S. roads, bridges and airports, but the plan he’s rolling out Monday commits the federal government to spending just a fraction of that amount.

Instead, the White House wants to revamp how such projects are funded and approved to fix what officials call a broken system -- raising questions about how Trump can secure a bipartisan deal and fulfill a central campaign pledge.

The Democrats he’ll need to enact any legislation have already dismissed his approach as a bait-and-switch because it lacks significant federal spending, while many Republicans have never been keen on big infrastructure packages.

The plan also comes on the heels of a a $1.5 trillion tax cut signed into law at the end of last year, as well as a $300 billion spending measure last week that will add to the federal budget deficit, making some fiscal conservatives in Congress squirm. And it will compete for lawmakers’ attention with a battle royale over immigration and other issues.

Opening Bid

The administration sees its plan as the opening bid in a negotiation on the best way to meet the president’s four objectives: stimulating at least $1.5 trillion in new investment, shortening the project permitting time to two years, investing in rural projects, and better training to get more qualified workers, a senior White House official said on a call with reporters. Trump is open to new sources of funding, the official said.

The plan the president is releasing Monday calls for allocating $200 billion in federal funds over a decade, mostly as seed money to spur states, localities and the private sector to spend the balance of the promised investment, the official said.

The strategy is to give Congress a set of principles, much as the administration did for the tax overhaul in 2017, and allow the details -- including how to pay for it -- to be worked out with lawmakers. There are at least six committees in the House and five in the Senate that will consider elements of the plan, White House officials said.

The plan’s main principle is that states and localities own and finance most U.S. infrastructure, so the best role for the federal government is to help create sustainable local revenue streams for projects and focus on federal permit streamlining.

‘Gleaming New Roads’

“We’re an important player and we want to continue to keep that role,” DJ Gribbin, special assistant to the president for infrastructure policy, said in a Jan. 25 presentation to the U.S. Conference of Mayors in Washington. “But what we really want to do is provide opportunities for state and local governments to receive federal funding when they’re doing what’s politically hard and increasing investment in infrastructure.”

The needs are great for the “gleaming new roads, bridges, highways, railways, and waterways across our land” that Trump has promised. The American Society of Civil Engineers has estimated a funding shortfall of at least $2 trillion by 2025 to bring U.S. infrastructure up to a “B” grade from a “D+.” There are nearly 54,300 structurally deficient bridges, and U.S. airports estimate they need almost $100 billion for capital projects during the next five years alone.

Trump will hold a discussion on the plan Monday with governors, mayors, state legislators and other officials, and he expects to meet with Congressional leaders from both parties at the White House on Feb. 14. The president plans to visit Orlando, Florida, on Feb. 16 for an infrastructure event, and he and cabinet members will also promote the plan at events around the U.S., officials said.

The plan would include $100 billion in federal money for a grant competition, giving preference to applicants that raise their own funds for projects, as well as $20 billion for federal lending programs such as the Transportation Infrastructure Finance and Innovation Act fund that can generate $40 in outside project funding for every federal dollar, the White House official said.

The proposal would also expand private activity bonds, which give private entities access to tax-exempt debt, by lifting existing volume caps and expanding eligibility, the White House official said.

There would also be $50 billion in federal block grants available to governors for projects in rural areas, $20 billion for “transformative,” future-looking projects that can’t attract private financing, and $10 billion for a capital financing fund for federal office buildings, the official said.

‘Transformative’ Efforts

The plan doesn’t directly fund major projects such as the $30 billion Gateway proposal that includes a new rail tunnel between New York City and New Jersey. While such endeavors would be eligible for funding under the grant competition or as a “transformative” effort, the federal government doesn’t want to pick winners and losers, the official said.

Senate Democrats have called for $1 trillion in federal dollars for public works, and House Democrats last week proposed a “Better Deal to Rebuild America” that would spend $1 trillion on transportation projects, high-speed internet, schools and other needs.

Big Talker

“The president talks a big act but then he proposes a small bill,” House Democratic Leader Nancy Pelosi said at a press conference on Feb. 8.

The White House also is releasing its fiscal 2019 budget on Monday, which includes lower spending in other areas to offset the $200 billion in the infrastructure plan, the senior official said. That’s also drawn complaints from Democrats about reducing existing funding for transportation, though the White House official said programs such as the Highway Trust Fund -- which receives money from a federal fuel tax to spend on road and transit work -- would remain in place for the most part.

Some governors and mayors of cash-strapped towns and cities with aging infrastructure have said flatly that they need more federal help.

“If necessary, we’ll bypass the plan there and go straight to folks on the Hill who are talking about big, bold action,” Los Angeles Mayor Eric Garcetti, a Democrat who leads the U.S. Conference of Mayors’ Infrastructure Task Force, said at the Jan. 25 event. He backed a successful ballot measure in 2016 to raise his city’s sales tax for pay for works projects.

Investor Certainty

Trump, a former commercial real estate developer, has said that streamlining the environmental review and permitting process will give investors more certainty and by doing so, attract more financing and allow more projects to be completed. Key business groups like the U.S. Chamber of Commerce have endorse that approach.

The president signed an executive order in August establishing “one federal decision” for projects to eliminate duplication. The principles being released Monday call for changes including a 21-month deadline for environmental-review decisions and three months for permitting after that, the White House official said.

While the Natural Resources Defense Council and other green groups say Trump is trying to erode protections to help corporate interests and distract from a lack of funding, the White House official said core environmental requirements wouldn’t be affected.

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