President Trump used his first address to a joint session of Congress to renew his call for $1 trillion in new infrastructure investment.
The call for spurring growth through a new national infrastructure program has been a consistent theme for President Trump beginning with his victory speech on election night. However, despite regularly touting infrastructure, the Trump administration has yet to outline a specific plan. And, while many share the goal of boosting infrastructure, it is the details that will prove most challenging on Capitol Hill.
To help shape the development of those program details, APA’s Board of Directors approved a new set of infrastructure principles for federal legislation.
Funding Sources, Tax Reform
In his address to Congress on Tuesday, President Trump did specifically note that his plan would include both public and private funding. That approach echoes comments by the new Transportation Secretary Elaine Chao in her confirmation hearings. The inclusion of public funding is an important component and one that would likely be essential to attracting Democratic support. President Trump also said that his administration’s approach would be guided by two principles on infrastructure: “buy American and hire American.”
While President Trump’s speech did not explicitly connect infrastructure to corporate tax reform, both ideas figured prominently in the address. The pledge to overhaul corporate taxes to encourage companies to bring home earnings held overseas could be part of a plan to pay for the new infrastructure plan.
Several prominent leaders on Capitol Hill, including House Transportation and Infrastructure Committee Chairman Bill Shuster (R-Pa.), have suggested repatriation and corporate tax reform as the surest path to funding infrastructure.
Details to Come
While advocates for infrastructure were cheered by the prominent mention in the President’s speech, many were hoping for more details.
Concern about the specifics of a plan, budget politics, and continued GOP infighting on health care reform has led to broad speculation that action on infrastructure could slip into 2018. Some leaders on Capitol Hill have cast doubt on the viability of any package, suggesting it will run into familiar gridlock on how to fund it.
The Trump administration will have two important opportunities this month to provide more clarity on their desired approach to infrastructure and revive optimism for action. The administration will shortly release its first budget and has pledged to outline specifics of a tax reform plan. Taken together, those two proposals could identify how any infrastructure would be paid for.
One of the most important and interesting questions yet to be answered about the new administration and Congress is whether the GOP focus on debt and austerity will continue and how aggressive the White House will be in promoting policy specifics in the Congress.
Among the challenges of putting together a plan for infrastructure are divisions among leading figures in the administration and GOP leaders on Capitol Hill. Budget hawks in Congress and the administration would certainly push for a deficit neutral plan and would likely argue for no direct public funding, relying instead on adding incentives for private investment. Senate Majority Leader Mitch McConnell (R-Ky.) has urged the White House to avoid “a $1 trillion stimulus.”
However, others in the GOP establishment have acknowledged the likely need for public funding in any infrastructure program. This need is both political — to bring along some Democratic support — and practical — some needed investment would not be well served by a private only approach.
Secretary Chao’s belief that a public element is necessary remains encouraging. Still, she warned the nation’s governors in a speech that agreement on a funding package would be “hard.”
In his speech to Congress, President Trump seemed to throw his support behind this camp. But, that resolve will surely be tested in the challenge to deliver on other budget promises, such as significant growth in defense spending.
Tax reform offers another complication. Capturing revenue for infrastructure through tax reform has a number of bipartisan supporters on Capitol Hill. However, any dollar siphoned off for infrastructure makes it harder to reduce overall rates without adding to the deficit.
Meanwhile, Congress is beginning work on infrastructure with a series of hearings. Three Hill panels have already held hearings on the subject. A further four hearings are slated for later this week examining various specific needs ranging from airports to water.
While the exact path for infrastructure is uncertain, there are some keys to watch for in the weeks ahead. First, Congress will have to finish leftover appropriations work from last year. House Speaker Paul Ryan has commented that work on these initial spending bills could help create “fiscal space” for future infrastructure legislation. Of course, that fiscal space would require politically difficult cuts.
Second, Congress and the administration will have to reach agreement on a budget and spending bills for FY 2018. This second round of budget work this year gives the GOP majorities two opportunities to use a maneuver known as budget reconciliation. The first reconciliation provided a framework for repeal of Obamacare. The second, which would likely be acted on this summer or fall, could be the basis for tax reform. Reconciliation is important because it cannot be filibustered in the Senate.
Although reconciliation is a powerful tool, it doesn’t solve all the problems moving challenging legislation forward. Health care offers a good example. The reconciliation resolution makes it possible, but GOP factions still have to come up with a plan that can attract majorities. This has proved difficult with Obamacare repeal, and the delay is pushing action on tax and infrastructure further into 2017. Still, Speaker Ryan maintains that the strategy of using two reconciliation measures and tackling tax and infrastructure later this year remains on track.
For their part, Democrats remain supportive of the principle of infrastructure investment while insisting on a public funding component and a broad approach to eligibility. The pressure on other domestic priorities and programs in the coming budget battles may well test their support for a big infrastructure package.
Despite the regular attention that infrastructure is getting rhetorically in the White House and on Capitol Hill, the path ahead is likely a long one that stretches at least into late 2017. That may seem a long time, but there is greater urgency for planners and infrastructure advocates.
The time is now to begin working with Congress on shaping an infrastructure package that will truly benefit the nation’s communities. The work on solving the fiscal politics may wait, but key committees will be working through the spring and summer on details.
APA Infrastructure Principles
Promoting specific provisions and guidelines for infrastructure is work for advocates that begins today.
To support this work and advance the interests of good planning, the APA Board of Directors recently adopted a set of principles for any new federal infrastructure package. These nine principles aim to ensure that needed new investment supports vital priorities from equity to resilience. It’s clear that nation needs not only more investment but also wiser investment that supports stronger and more just communities.
These principles are being shared directly with every Member of Congress as part of the effort to shape the infrastructure debate. Advocates are encouraged to work with their representative to highlight these principles and the needs of local constitutes and communities.
Speeches about infrastructure are important, but it is likely the actions of advocates that will determine the fate of this cornerstone priority of the new administration.
Top image: U.S. Capitol at night. Photo by Flickr user Phil Roeder (CC BY 2.0).
About the Author
Jason Jordan is APA's director of policy.