Five things to know about Trump’s infrastructure plan

Greg Nash

Buzz is growing around President-elect Donald Trump’s plans for a massive infrastructure package.

Republican and Democratic lawmakers frustrated by the lack of significant federal transportation spending are hopeful they can work with Trump on a bill, making it one of the few bipartisan issues that could see action next year.


Construction stocks soared following Trump’s acceptance speech in which he pledged to rebuild the country’s crumbling infrastructure, according to the Wall Street Journal.

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” Trump said. “We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.”

While the final details of Trump’s plan are still in flux, the real estate mogul has offered clues on the campaign trail about how he would work to repair the nation’s ailing transportation system.

Here are five things to know about Trump’s infrastructure ideas.


Trump’s plan relies heavily on private financing

A 10-page white paper posted on Trump’s campaign website last month makes private financing the cornerstone of his infrastructure plan.

The proposal would offer $137 billion in federal tax credits to private investors who want to back transportation projects, which the blueprint says would unleash up to $1 trillion worth of infrastructure investment over 10 years.

Historically, the country’s infrastructure is financed through state and local governments using a mix of their own revenues, federal highway aid and issued bonds.

But the sketch of Trump’s proposal claims that construction costs tend to be higher and take longer when the government builds projects instead of the private sector.

“The Trump infrastructure plan features a major private sector, revenue neutral option to help finance a significant share of the nation’s infrastructure needs,” the outline says. “This innovative financing option would serve as a critical supplement to existing financing programs, public-private partnerships, Build America Bonds, and other prudent funding opportunities.”


Private funding won’t help all projects

Critics of Trump’s private financing plan, however, say that private investors would only fund projects that have tolls or user fees that can recoup investment costs.

Therefore, critical infrastructure needs like repairing aging pipes, deepening ports or fixing existing roads and bridges without tolls may go neglected under Trump’s plan.

Public-private partnerships (PPPs) “only work on projects that create revenues,” said Rep. Peter DeFazio (D-Ore.), ranking member on the Transportation and Infrastructure Committee. “The vast majority of the national highway system, and our bridge problems and all our transit problems, do not generate revenues. It will not help them.”

Public-private partnerships allow private firms to bid on transportation projects, build and maintain the project for a set amount of time, and recover costs through tolls or set state payments.

The Congressional Budget Office says only 14 highway projects have been completed using PPPs with private financing.

While most transportation advocates agree that getting more private capital off the sidelines is beneficial overall for the nation’s infrastructure, they also caution that it’s only one tool in the tool belt.

“If it’s managed well, it’s a wonderful way of creating a hamburger helper, in terms of increasing the overall level of investment,” said Norman Anderson, president and chief executive officer of CG/LA Infrastructure.


Trump wants to cut regulatory ‘red-tape’

In his infrastructure package, Trump wants to tackle the “mountain of red tape” that slows down construction projects.

“Infrastructure projects across the U.S. are routinely delayed for years and years due to endless studies, layer-upon-layer of red-tape, bureaucracy, and lawsuits—with virtually no end in sight,” his campaign website says. “This increases costs on taxpayers and blocks Americans from obtaining the kind of infrastructure that is needed for them to compete economically.”

Rolling back regulatory hurdles could be a key factor in attracting conservative support for Trump’s infrastructure plan in Congress. One of the major critiques of President Obama’s “shovel-ready” transportation projects in the 2009 economic stimulus plan was that they took too long to get off the ground.

But thus far, his proposal has been light on details about exactly how he would cut red tape.

Trump’s website simply notes that he wants to link spending to reforms that “streamline permitting and approvals, improve the project delivery system, and cut wasteful spending on boondoggles.”


Trump thinks the plan would pay for itself

Trump claims his infrastructure proposal would be revenue neutral because it would pay for itself.

His blueprint assumes that the tax credits offered to private investors would be offset by tax revenue from new wages to construction workers and new profits from contractors.

“Importantly for the government budget, there will not be much of a time gap between the granting of the credit and receipt of the tax payments under the Trump plan,” the summary says.

But a research fellow for the Competitive Enterprise Institute called many of the financing specifics of the plan “dubious.”

If Trump’s final plan isn’t revenue neutral, it could spell trouble for the bill’s fate in Congress. Fiscal conservatives on Capitol Hill are already warning the president-elect that they will not support any legislation that adds to the deficit.

“If Trump doesn’t find a way to pay for it, then I think the majority of us, if not all of us, are going to vote against it,” Rep. Raúl Labrador (R-Idaho), a member of the House Freedom Caucus, said at a Heritage Foundation event Wednesday.


Trump’s open to ideas — including from Democrats

Trump has laid out his basic vision for infrastructure spending, but his plan is far from finalized.

Just this week, Trump’s transition team said it was exploring whether to establish a national infrastructure bank, which has long been favored by Democrats but gone nowhere under a GOP-led Congress.

That talk shows his team is willing to explore new policy ideas — even Democratic ones.

In Congress, though, Republicans are leaning toward taxing corporate earnings that are stored abroad when that money returns to the U.S., a process called “repatriation,” and using that revenue to pay for infrastructure spending.

“I look forward to working with the administration,” said Rep. Mario Diaz-Balart (R-Fla.), chairman of the Appropriations Subcommittee on transportation. “I’ve always had the attitude that it doesn’t matter if the idea is brought up by a Republican member or Democratic member. The issue is: Are there good ideas?”

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