Gaping Potholes in the Trump Infrastructure Plan
After a turbulent start to his Administration, President Trump is looking for ways to change the national conversation. With controversies swirling, and following a deeply unpopular decision to withdraw from the Paris climate agreement, this week the Administration is beginning to talk about its infrastructure agenda.
But the facts of the President’s plan remain sketchy six months after an election in which he proclaimed infrastructure a top priority. The Administration is still months away from presenting an actual bill to Congress.
A look at his six-page fact sheet on infrastructure, released in conjunction with the Administration’s recent budget plan, reveals some potentially sound ideas. But what appears to be the underlying philosophy—tax credits for private investors in infrastructure—is surely the wrong answer for a major portion of our most critical infrastructure needs.
Public-private partnerships have had success in the U.S. and around the world. Indeed, many parts of our infrastructure are already privately owned or financed, including most rail lines, power transmission, some water systems, etc. They can work well when users pay fees—such as with highways, trains, power plants and airports, and they make sense when multiple communities of all income levels can share the costs and benefits. But they don’t work well in critical upgrades in low-income communities that can’t afford to pay. Lots of local needs could go unmet if federal dollars are unavailable. Nor does it make sense to sell existing working assets for cash without any assurance of reinvestment in other necessary infrastructure.
Unfortunately, the President and his closest advisers seem to favor this trickle down approach, which offers private investors attractive returns or ownership stakes in economically viable public assets, while leaving our most distressed and disadvantaged communities to largely fend for themselves. Simply disposing of public assets for cash offers no assurance of renovation or improvement.
The president also characteristically favors large-scale projects and would do away with the popular TIGER transportation grants to metropolitan areas and regions—perhaps thinking bigger is better when it comes to impact. But communities have shown repeatedly that smaller strategic spending based on a closely identified need can have huge positive effects.
The figure that the President has highlighted for infrastructure spending is $1 trillion, but his fact sheet shows that the federal government will pitch in $200 billion to spur new investments, leaving the rest to come from unspecified private sources without any detail of how the public sector dollars will attract them. This could be through bad deals—overly generous incentives, asset sell-offs, tax breaks and accounting sleight-of-hand—or through partnerships that we would support that are thoughtful, balanced, and serve both public and private interests equitably.
A federal role that looks beyond private gain
Trump’s infrastructure principles state that the current system isn’t working, and for some sectors of the economy and neglected cities and towns, that is certainly true. Yet to make that criticism self-fulfilling, the Administration’s budget would actually reduce traditional sources of public funding for key infrastructure, such as transit.
Many communities have never had a major public-private partnership and could be at risk of falling prey to bad deals. Not every infrastructure project will make money, meaning that there remains a significant need for direct federal and state investment in critical infrastructure where the ability to monetize benefits is most challenged. And public money must always be spent for the public good.
NRDC’s own infrastructure principles favor (1) projects that deliver economic, social, and environmental benefits through public and private dollars; (2) innovation in efficient water and energy systems; (3) public input and review, and ensuring compliance with environmental policy; (4) flexible funding allocated for local and regional planning, (5) investment in climate resilience projects and smart technology; and (6) clean energy and sustainability jobs. Our concept of High Road Infrastructure specifically offers a holistic approach to create consensus among government, citizens and investors by ensuring infrastructure investments reflect the long-term needs of the communities they are meant to serve, including clean air and water, healthy living conditions, access to jobs and opportunity, sustainability and resiliency to climate change effects.
If, as Transportation Secretary Elaine Chao says, “everything is on the table” when it comes to infrastructure, then let’s advance those policies that ensure that Main Street will benefit at least as much as Wall Street.