Trump Administration Unveils Public Works Plan

February 12, 2018 10:23 AM
 

(Bloomberg) -- President Donald Trump Monday released his long-awaited proposal to upgrade roads, airports and other public works, kicking off what will likely be a tough sell in Congress with Democrats saying the plan falls short and Republicans wary of another big spending measure.

The 53-page document details how Trump plans to stimulate at least $1.5 trillion in new investment, shorten project permitting time to two years, invest in rural projects and improve worker training. While many of main points of the plan have been known for weeks, newer elements in the proposal include expanding the use of private-activity bonds to finance projects, which would extend the use tax-exempt debt by private entities and broaden the types of projects the bonds could be used for.

Other changes include letting states add tolls on interstates, fostering public-private partnerships in transit projects and promoting the lease of airports and other public assets by removing the requirement that any outstanding tax-exempt debt must first be paid off.

The infrastructure plan also proposes a variety of steps to streamline legally required environmental analysis by shifting the timing of certain reviews, putting a single lead agency in charge of the work and by imposing a 21-month deadline for completing those assessments.

The White House also wants agencies to make final decisions on permitting specific projects within three months after required environmental reviews are done and is proposing limiting the breadth of agencies’ environmental analysis. Under the plan, regulators would have more latitude to waive environmental reviews. 

"For too long, lawmakers have invested in infrastructure inefficiently, ignored critical needs, and allowed it to deteriorate,"Trump said in a note to Congress introducing the plan. "It is time to give Americans the working, modern infrastructure they deserve."

The plan’s premise is that the U.S. would spend $200 billion to spur states, localities and the private sector to raise the $1.3 trillion balance. Since the federal government owns very little infrastructure, the Trump plan aims to create local revenue streams for investment and focus on permit streamlining.

The White House said it isn’t including specific projects, such as the $30 billion Gateway proposal that includes a new rail tunnel connecting New York City and New Jersey, although such initiatives could be eligible for funding under the plan.

The plan allocates $100 billion for a grant competition with preference given to applicants that raise revenue such as taxes, fees or tolls, and would limit federal help to 20 percent of new money generated. It includes $20 billion to boost federal lending programs and private-activity bonds used to attract private investment. There would also be $50 billion in block grants to governors to choose rural projects, $20 billion for “transformational” projects and $10 billion for a capital financing fund for federal infrastructure.

The White House said it wants to offset the $200 billion in the 2019 budget, which is also being released Monday, with spending cuts elsewhere -- including from some transit and transportation funds the administration doesn’t think have been spent effectively. But Trump is open to new sources of funding, a senior White House official has said.

“This will be a big week for Infrastructure,” Trump tweeted this morning ahead of the plan’s release. “After so stupidly spending $7 trillion in the Middle East, it is now time to start investing in OUR Country!”

There are big questions about whether Trump can get his plan approved this year. He’ll need Democrats to pass a bill in the Senate and many have already blasted the proposal as “fake,” saying it doesn’t include anywhere near the amount of federal investment required to meet U.S. needs.

The proposal also comes on the heels of a $1.5 trillion tax cut and a $300 billion spending measure signed by the president last week that will add to the federal budget deficit. Republicans have been wary of another big spending measure, especially with mid-term elections approaching in November.

The administration sees its plan as an opening bid in a negotiation with lawmakers and will be flexible on the ways to meet the objectives, a senior White House official has told reporters. There are at least six committees in the House and five in the Senate that will consider elements of the plan, White House officials have said.

Trump ran for president on the promise of a $1 trillion infrastructure fix and pledged a plan in his first 100 days in office, but the initiative was delayed as the White House and Congress pursued overhauling health care and the tax code.

 

Copyright 2018, Bloomberg News

 

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