According to a recent report from Reuters, President Donald Trump is expected to release the principles for his long-awaited infrastructure plan on February 12, coinciding with the release of his fiscal year 2019 budget. These six potential items to watch for in Trump’s infrastructure scam show why elected officials and the American public should be highly skeptical of the president’s so-called infrastructure plan.
1. Cut at least $1.69 for every $1 of proposed expenditure on infrastructure
If the president’s fiscal year 2019 budget is anything like his fiscal year 2018 budget, the effect of Trump’s infrastructure scam would be a net cut to employment and total construction.
Special Assistant to the President for Infrastructure Policy DJ Gribbin recently stated that the administration would not seek any new revenues for infrastructure. Instead, the administration may again call for cuts to existing infrastructure programs and repurpose the money for their so-called plan. For instance, the president’s fiscal year 2018 budget called for cutting $338 billion from infrastructure programs and other discretionary programs—such as the Transportation Investment Generating Economic Recovery (TIGER), New Starts, and the Community Development Block Grant (CDBG)—or a cut of $1.69 for every $1 of proposed spending.
The biggest could come to the Highway Trust Fund (HTF). The president’s fiscal year 2018 budget called for “Highway Trust Fund outlays [to] conform to baseline levels of Highway Trust Fund revenues.” According to the U.S. Congressional Budget Office, this would result in a cut of $138 billion to state and local governments. The Center for American Progress has analyzed how these cuts would affect all 50 states and the District of Columbia.
2. Slash funding for vital family benefits programs
According to the The New York Times, the administration could also use “unspecified budget cuts” to redirect $200 billion toward infrastructure. This is just another sneaky and cruel way to slash funding for vital programs such as nutrition assistance, affordable housing, and other lifeline supports that struggling families rely on to make ends meet.
Americans across party lines overwhelmingly oppose proposals that cut funding for Medicaid, nutrition and energy assistance, affordable housing, and Meals on Wheels—to name a few. These critical programs help families keep their loved ones from starving, seniors from being kicked out of their homes, in addition to preventing them from freezing to death during winter; and ensure that children can get a head start on their education with the nutrition they need to be healthy and to succeed. If Trump uses benefit cuts to pay for his infrastructure plan, it will serve as nothing more than a massive giveaway for private investors and corporations at the expense of the very supports that help individuals and families meet their daily, basic living needs.
3. Call for hundreds of billions in state and local taxes and user fees—a massive cost shift to states and cities
Fiscal policy is a reflection of priorities—and thus far, the Trump administration has prioritized tax cuts for wealthy corporations and the richest Americans. At the same time, the administration has plainly stated that it will not invest any new federal revenues into infrastructure and will instead call for states and cities to raise as much as $800 billion in new taxes, tolls, and other user fees, which will fall disproportionately on working and middle-class families. This isn’t a real plan for national investment, but rather an abandonment of the federal government’s historic role in supporting investments that produce national prosperity as well as opportunity for working Americans.
4. Allow project developers to sidestep public health and environmental protections
The U.S. Chamber of Commerce, oil and gas industries, and others are urging the administration to fast-track the permitting process for large projects by weakening environmental protections. In 2015, Congress enacted new measures—referred to as FAST 41—to make the environmental review and permitting process more efficient and transparent. Under the guise of additional project “streamlining,” however, the Trump administration is likely to propose deep rollbacks to the National Environmental Policy Act (NEPA), the Clean Water Act, the Endangered Species Act, and other bedrock environmental laws. These changes will make it easier for project developers to secure permits for projects that tear through existing communities, harm wildlife, and pollute the nation’s air and water.
Cutting environmental corners not only removes key health and environmental safeguards, but it can lead to higher costs later on. For instance, the inflation-adjusted cost of the U.S. Army Corps of Engineers channelizing the Kissimmee River in Florida prior to the federal requirement to conduct an environmental review was $194 million. The restoration will cost more than $1 billion—a roughly fivefold increase.
Gutting environmental protections is not only shortsighted and dangerous, but it is deeply unpopular. Polling by CAP and Defenders of Wildlife shows that 87 percent of Americans strongly support federal investment in infrastructure, but 94 percent of those respondents reject the idea that it is necessary to gut environmental protections in the process.
5. Push states to use more private equity financing through public-private partnerships
The Trump plan would push state and local governments to privatize existing facilities and use more private equity financing through public-private partnerships (P3s). Equity financing is typically three to five times more expensive than municipal bond financing. This adds massively to the cost of building new projects. States do not lack access to financing but often have insufficient tax revenues to repay new project debts. Replacing low-cost bond financing with high-cost equity capital will only make this problem worse.
Additionally, P3s are typically for transportation projects with a total cost of more than $1 billion, while the average state project, often focused around smaller repair and rehabilitation needs, is much less than $20 million. For instance, Ohio plans to complete 1,510 highway and transit projects in the coming years with an average cost of just $12.1 million. Similarly, highway and transit projects in Arkansas have an average cost of $5.6 million.
6. Deepen regional inequality and political divisions
For 60 years, the federal government has provided every state and region with core highway and transit funding through the HTF. This money is the foundation upon which states and regions build their infrastructure programs. However, in fiscal year 2018, the Trump administration called for slashing this core support by $138 billion and replacing it with a smaller pool of discretionary dollars that would flow to states and regions that engage in so-called self-help—raising new taxes, tolls, and other user fees.
This approach would promote regional inequality and political division. Most working Americans have not seen a real, inflation-adjusted wage increase since the early 1970s. Thousands of communities still face persistently high levels of unemployment, structural budget deficits, and even population loss. For states and local communities facing deep hardship, raising revenue is simply not an option. The Trump plan would leave them behind.
Additionally, the idea of self-help regarding infrastructure is based on the false premise that state and local governments don’t contribute their fair share. In fact, state and local governments already contribute more than their fair share, making 80 percent of surface transportation expenditures and 98 percent of all drinking and wastewater expenditures each year.
The truth is that infrastructure projects cost money, and no amount of budgetary gimmicks can hide the fact that the Trump administration has no plans for real national investment. The Trump plan only really promotes two things: pollution and privatization. If enacted, the Trump plan would lead to further deterioration of vital national infrastructure assets while increasing pollution and Wall Street profits. A real plan for national investment would provide at least $1 trillion in federal spending over the next ten years—cover everything from highways and transit to schools and affordable housing; promote equitable access to opportunity; protect neighborhoods and natural habitats while allowing the United States to meet its climate commitments; and target federal funds to those communities most in need. The Trump plan would accomplish none of these goals.
Kevin DeGood is the director of Infrastructure Policy at the Center for American Progress. Alison Cassady is the managing director of Energy and Environment Policy at the Center. Allison Preiss is the managing director of Communications at the Center. Rejane Frederick is an associate director for the Poverty to Prosperity Program at the Center.
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Author: Kevin DeGood, Alison Cassady, Allison Preiss and Rejane Frederick