October 30, 2017

Infrastructure Update: What’s The Current Thinking In Washington?

At the beginning of 2017, infrastructure seemed to be the most likely domestic policy issue where there would be broad, bipartisan agreement. Leaders of both parties believed the nation’s roads, airports, waterways, and ports are in bad shape.

Despite the agreement, Republicans have not introduced a broad, comprehensive infrastructure package. While Americans are still waiting for that, it does appear that President Donald Trump has shifted his views somewhat on this issue.

Back in his early days in office, the president proposed to harness market forces to attract $167 billion in equity investment from the private sector to fund his $1 trillion infrastructure spending plan. At the same time, Senate Democrats released a plan that relied on direct federal funding. In the intervening months, the White House has shifted its thinking more toward the Democratic outline. Now, the Trump administration says it wants to pay for infrastructure upgrades through direct federal spending financed by new tax revenue or by taking on more debt.

The president also indicated that he wants states and localities to help pay for infrastructure upgrades. When asked why the president abandoned the public-private financing structure, a White House official said there are “legitimate questions” about the viability of this approach. All of this means that, today, there is not only agreement on the urgency of this issue, but there some agreement on how policymakers should tackle this issue. (Republicans in Congress, however, still prefer a plan that leverages both public and private dollars.)

Congressional leaders still plan to consider an infrastructure package after comprehensive tax reform, which means a bill won’t be crafted until 2018 or even 2019.