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Trump promised $1 trillion for roads and bridges. The trick now is finding the cash.

🕐 5 min read

President-elect Donald Trump’s promise to spend $1 trillion on America’s worn-out infrastructure has been embraced by advocates who hope it was more than campaign rhetoric, but there is little consensus on the long-standing question of where the cash will come from.

“A trillion dollars is a good number. It’s a number than needs to be said,” said Rep. Bill Shuster, R-Pa., chairman of the House Transportation and Infrastructure Committee. “Where you get it becomes a little more difficult.”

Awareness has grown in recent years that vital pieces that support the U.S. lifestyle – roads, bridges, transit networks, the electrical grid, and water and sewage systems – are near the end of their lives. The American Society of Civil Engineers projects a need to invest $3.6 trillion in infrastructure by 2020.

Shuster said that he is awaiting discussions with Trump’s representatives and hopes a bipartisan plan to finance infrastructure recovery will emerge. The plan Trump presented during the campaign is built around encouraging private investment, but few analysts think that will generate the cash needed to meet his $1 trillion target.

“When we sit down with the administration and our [congressional] leadership we’ll devise a plan that I think will encompass many different [funding] options,” Shuster said.

The Trump plan that emerged late in the campaign would give private investors an 82 percent tax credit to pump money into projects, credits that theoretically would reduce their need to profit from the investment. Trump said that his plan is a win-win for taxpayers because tax dollars lost by granting the credits would be recouped by taxing the wages of people put to work on the projects and from taxes paid by contractors hired to do the work.

The second part of the Trump plan involves repatriation, a much-talked about idea to lure home $2.5 trillion in cash stashed overseas by U.S. corporations. It is an idea championed by Rep. John Delaney (D-Md.), but in the Trump plan it comes with a twist.

Trump has proposed reducing the rate companies would pay to bring the money home from 35 to 10 percent. Those companies then could invest slightly more money in infrastructure projects, gain the 82 percent tax credit and effectively erase that 10 percent tax.

“We believe that this tax credit-assisted program could help finance up to a trillion dollars’ worth of projects over a ten-year period,” the Trump campaign said in an Oct. 27 white paper. The Trump transition team did not respond this week when asked whether his thinking had evolved since Election Day.

None of the longtime transportation analysts interviewed for this report shared Trump’s confidence that tax credits to private business would generate $1 trillion for infrastructure projects.

“In certain parts of the country, those kinds of private financing work,” said Ed Mortimer, infrastructure director at the U.S. Chamber of Commerce. “In other parts of the country we need to use general funding.”

Analysts also questioned Trump’s belief that the outlay from tax credits would be recouped in taxes collected from construction workers and from the profits of contractors. With unemployment down to 4.9 percent – many construction workers already are back on the job, and most contractors are engaged with post-recession jobs – the projected net gain in income taxes seems likely to fall short.

The Capitol Hill crowd – members of Congress and lobbyists – has been talking for years about the billions of dollars in private capital that has been “sitting on the sidelines” while infrastructure projects want for funding.

The reality, however, is that investors expect a return for their money, and very few projects promise to make money. The most common way to profit is through tolling roads or bridges. But while tolling could work in high-volume urban settings, investors are not going to flock to build roads and bridges in vast stretches of rural America.

The Congressional Budget Office said last year that just 26 private-investment projects were completed or underway nationwide.

“The only place that people are going to privatize are places where they can make money, and that’s not the vast majority of the system,” said Rep. Peter A. DeFazio (Ore.), the ranking Democrat on the House Transportation Committee. “That’s going to leave out a lot of those 143,000 bridges and thousands of miles of interstate that need repair. And you also can’t make money on transit [systems].”

Paying for thousands of projects that will never turn a profit requires what DeFazio calls “real money.” Despite years of melodramatic hand-wringing on Capitol Hill, for more than a decade Congress has not provided enough money to meet its infrastructure desires.

Lawmakers have come up with about $60 billion a year for highways and transit, or about $40 billion less than Trump promises to spend each year. With the traditional source of funding – the federal gas tax – now bringing in only about $34 billion a year, Congress has gone through contortions to fill the gap, finding cash in a number of ways that virtually everyone conceded were gimmicks.

“You need to plus up the existing programs with real, true [federal] funding,” said Marcia L. Hale, president of the advocacy group Building America’s Future. “The way to bring some additional dollars to this is through international tax reform and repatriation.”

Hale said that she wants that money used to create an infrastructure bank, further leveraging cash for rebuilding and new projects.

Pete Ruane, president of the American Road and Transportation Builders Association, said that he worries repatriation schemes would provide a one-time boost for infrastructure, but not a long-term replenishment of the Highway Trust Fund, which relies on gas tax revenue.

“You combine a program that’s supported by taxes, a transportation-type tax, with tax reform and I think you have a winning combination,” Ruane said, adding, “They’re talking about moving on this right away. This is a huge opportunity, not just for a new administration, but the Congress as a whole, to get a win.”

The challenge, however, for Congress is that options including tax reform, repatriation, raising the gas tax and levying a tax on the number of miles driven have rattled around on Capitol Hill for several years without seeing the light of day. The first tax overhaul in three decades promises to be messy, complex and very lengthy.

“At the end of the day, whatever folks thought about this election, people are looking for lawmakers to actually get things done,” said Mortimer, whose chamber has pushed for a gas tax increase. “And this is something where I think you could find common ground for Republicans and Democrats, so we’re very optimistic that somethings going to move forward.”

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