By Anna Denecke, Associate, Blakey & Agnew
As a candidate for President of the United States, Donald Trump promised a $1 trillion investment in the country's infrastructure. Trump's "America's Infrastructure First" policy promotes investments in domestic infrastructure, and the businessman stumped for a new generation of roads, bridges, railways, tunnels, sea ports, and airports at campaign rallies across the country.
Now President-elect, Trump, his transition team, and Congress are working to identify strategies for making the "America's Infrastructure First" policy a reality. During his November 9 victory speech, Trump promised "to rebuild our infrastructure, which will become, by the way, second to none." Congress is on the same page; during a December 4 interview with CBS' 60 minutes, Speaker of the House Paul Ryan (R-WI) called Trump's infrastructure program "a high priority."
There are differing ideas about how to fund such a large investment, but suggestions for how to do so might sound familiar to transportation stakeholders. Private financing, repatriation, and an infrastructure bank were all floated in recent weeks by Republican lawmakers and the President-elect himself.
Private financing is favored by several influential Republicans. A ten-page white paper posted in late October on Trump's website suggested providing approximately $137 billion in federal tax credits to private investors that back transportation projects. According to Trump's estimates, $1 trillion worth of infrastructure investments would be unlocked via these tax credits. Rep. Lou Barletta (R-PA), an advisor to the Trump transition team, publically favors private financing, arguing it would result in good-paying jobs and ultimately allow Washington to recoup money spent.
Should Congressional Republicans and the Trump Administration choose to pursue private financing, they're likely to face stiff resistance from Democrats. In a November 20 interview with The Hill, Transportation & Infrastructure Committee Chairman Peter DeFazio (D-OR) argued that private funding is only realistic for projects that can recoup costs, either through tolls or user fees. Tax breaks for private investment won't help rebuild "the vast majority of the national highway system," according to DeFazio.
Senator Bernie Sanders (I-VT) expressed similar displeasure in a November 21 Medium article, calling any infrastructure investment plan that relies on tax incentives rather than direct government spending a "scam" and a "trap". Sanders is a leading voice on the left and other progressives in
Congress will likely follow his messaging lead.
Another popular idea for funding a major investment in infrastructure is to revamp the tax structure and incentivize corporations with oversees earnings to bring cash back to the United States. The Trump campaign's tax plan suggests "a deemed repatriation of corporate profits held offshore at a one-time tax rate of 10 percent." Republicans and Democrats alike have floated directing proceeds from deemed repatriation towards substantial investments in the nation's infrastructure.
Senate Commerce Chairman John Thune (R-SD) indicated to POLITICO he was open to the idea during a November 11 interview. Referring to Trump's campaign promise of a $1 trillion investment in infrastructure, Thune stated "I think it all comes down to what we could do if we did [have] some sort of a repatriation vehicle for this, and how it all adds up." Several Democrats, including Senator Barbara Boxer (D-CA) and Representative John Delaney (D-MD), introduced repatriation-for-infrastructure proposals during the 114th Congress.
Yet another source of funding floated recently by the Trump team is the establishment of infrastructure bank. Steven Mnuchin, then a key member of the transition team and now nominee for Treasury Secretary, suggested on November 16 to reporters "the creation of an infrastructure bank to fund infrastructure investments."
An infrastructure bank provides long-term bonds, backed by the federal government, to public entities looking to build expensive infrastructure projects. The idea was proposed both by President Obama during his first term and Secretary Clinton during her 2016 campaign, but Republicans in Congress and Trump himself derided the idea, calling it a tool of bureaucrats in Washington. With Mnuchin and others now supporting the idea, it's another possible point of bipartisan agreement in the 115th Congress.
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