The Trump Infrastructure Plan - Global Trade Magazine
  November 18th, 2016 | Written by

The Trump Infrastructure Plan

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  • Trump faces the challenge of how to turn his infrastructure promise into a plan that will succeed.
  • An infrastructure bill fits with the America-first philosophy that propelled Trump to the White House.
  • Trump brings real-world industry knowledge to an infrastructure building plan.

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. 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.”

That was a quote from Donald J. Trump that was part of dozens of campaign speeches delivered in states that have long been concerned about crumbling roads and hazardous bridges.

Now that Trump has won the election, he faces the same challenge of every previous president—how to turn a promise into a plan that will actually succeed.

He starts with some advantages: a U.S. infrastructure bill would be the perfect foundation for the America-first philosophy that helped to win him the White House. And as a builder, it’s an issue where he brings real-world industry knowledge to the table, something his critics contend will not be the case when it comes to foreign policy and other areas.

Plus, there have been several infrastructure bills introduced by Democrats over the past eight years, so there would not be a philosophical objection to its intention from the minority in Congress, as there would with a wall at the border.

However, given the contentious nature of the presidential campaign, it’s difficult to envision a “honeymoon” period for the Trump presidency, though its presence may not be as crucial with the Republicans having majorities in both houses of Congress. Will the Democrats choose to obstruct, and risk getting tagged with the Party of No designation they attached to the GOP over the past eight years? Or will they work across the aisle to help a president they distrust (some would say despise) to make American roads, bridges and tunnels great again?

Whatever happens, it certainly won’t be boring.

The Plan

According to a Trump policy statement, the objective is to invest $1 trillion in infrastructure spending over the next 10 years. That includes not just the oft-cited roads and bridges but transportation, clean water, telecommunications, the electricity grid, and infrastructure related to national security.

The plan would be financed in a deficit-neutral way, by enlisting private companies to invest $167 billion of their own equity into projects, in exchange for a tax incentive equal to 82 percent of that investment. Those funds could then be leveraged to borrow more money on private financial markets, at a time when interest rates are historically low. They would also receive additional revenue from project beneficiaries—such as tolls on new roads.

The cost of the government tax credits would be recouped through the increased tax revenue generated from wages of those involved in the projects, and from taxes paid on the increased revenues of the companies doing the work.

Proponents claim that one advantage of relying on private enterprise is the ability to avoid the bureaucracy and red tape that result when government takes the point. With schedules and approvals streamlined, projects can be brought to fruition more efficiently. There would also be an emphasis placed on using American steel and other raw materials in the projects, providing a lift to domestic manufacturing.

The Challenges

Obviously this isn’t the first infrastructure bill that has been considered by Congress. Previous efforts stalled for different reasons. A $305 billion bill proposed by the Obama administration was shot down by Republicans. A $478 billion bill backed by Senator Bernie Sanders of Vermont, that would have been funded by closing corporate tax breaks that Sanders claimed allowed corporations to “stash money overseas” also met with resistance.

With these bills, as will likely happen with the next one, any delays or objections are likely to stem from funding, and how funds are allocated.

Critics, among them some economists, claim that tax revenues alone will not be enough to offset the costs associated with such an ambitious plan. Will some taxes have to be raised to generate additional funding? The last time a Republican president reneged on a promise of “no new taxes,” it didn’t end well.

Given the manner in which Trump has attacked opponents during the campaign, there have also been worries that the states that supported his candidacy will benefit more from his plan than those that voted against him. However, the president-elect’s meetings with former rivals and some of his harshest critics, from South Carolina Governor Nikki Haley to 2012 GOP presidential nominee Mitt Romney, suggest that there will not be that much carry-over from political grudges.

Perhaps the greatest bipartisan cause for concern is that, even if the $1 trillion investment is approved, it still won’t be enough. According to the American Society of Civil Engineers, there is currently a $3.6 trillion infrastructure investment gap.

And, while that first step toward improvement still awaits congressional approval and a presidential signature, the American Institute of Architects (AIA) is petitioning government to expand its view of what constitutes infrastructure to also include schools and libraries. “It’s not just the infrastructure that moves people and things,” said Andrew Goldberg, AIA’s managing director of government relations. “It’s also what happens once you get there.”


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