Assuming the Electoral College doesn’t do something shocking Monday, it would appear that this Donald Trump White House thing is really going to happen.
That means the incoming president’s $1 trillion infrastructure plan, which he touted in his middle-of-the-night victory speech after the Nov. 8 election, becomes a relevant and real thing. Well, at least a relevant thing. How real it is is a matter of interpretation, and politicking to come.
So, what is worth knowing about the Trump plan?
First, know that it is largely unknowable, based on what little the president-elect’s campaign and now his transition team have released. But here is what is essential to understand:
It is not $1 trillion a year, but that amount spread over 10 years. The $1 trillion is not all for transportation, but rather to pay for an unspecified mixture for roads; utility services such as electricity, water, drainage and sewage; telecommunications; and “security infrastructure,” whatever that might be. The big, beautiful border wall that Mexico was going to pay for? The plan doesn’t clarify this.
Most of the $1 trillion would not be government spending. Rather, the plan foresees $1 trillion in private investment, which would be teased out by up to $137 billion in proposed tax credits and $167 billion in “government-funded equity,” according to a report put out in October by Trump campaign advisers. Presumably most of the rest of the money would come from private investors or the bond market, so this money would have to be repaid with interest. That means most, if not all, of the projects would have to be revenue- and profit-producing or hold the promise of being so. In the transportation realm, that means toll roads and the sort of long-term leases with private groups such as occurred with the Texas Department of Transportation’s troubled Texas 130 agreement. Any project without toll charges, such as repairing deficient bridges or improvements to interstate highways, would have to be converted to tolling or could not be done under the Trump plan. And lightly traveled rural roads, which can’t generate enough tolls to pencil out for borrowing, would be off the list as well.
Transit spending would not fall under the plan. Trump, a lifelong New Yorker, presumably understands the role of bus and rail service in dense, urban environments. But even in New York City, transit fares bring in less than 40 percent of what it costs to operate the buses and trains. Taxes cover the original capital cost and later rehabilitation of aging systems as well as much of the annual operating costs. So investors, looking for a return on their money, would not be interested in investing in urban transit.
The Trump plan says the spending would be “deficit-neutral.” That means that any added federal spending (that $167 billion in equity, for instance) would have to be covered by new revenue or offset by reduced spending elsewhere. Trump’s plan, harking back to President Ronald Reagan’s trickle-down theory, postulates that the added spending would spark economic growth and thus bring in more tax revenue. And there has also been talk by Trump people and other Republicans of levying a 10 percent tax (lower than normal income tax rates) on “repatriated” income that corporations have stashed overseas and using that for the infrastructure plan. We’ll see on that one.
So, to review, it’s a $1 trillion government plan that is really at most $167 billion in government spending, and almost surely only on projects such as toll roads or utilities that charge user fees. And we don’t know how much of it would go to transportation. If it becomes law.
It is also worth knowing that in 2015 Congress passed, and President Barack Obama signed, a $305 billion, five-year transportation reauthorization bill. That’s about $61 billion a year for roads, transit, aviation and maritime projects, covered by the existing 18.4-cents-a-gallon federal motor fuels tax, fees and from Uncle Sam borrowing — that is, adding to the federal deficit.
So even if the Trump plan never goes anywhere, the federal government could be expected to spend somewhere above $600 billion over the next decade on transportation alone. The Trump plan, presumably, is to come on top of that.
I couldn’t help noticing an interesting coincidence in all of this. Obama’s 2009 stimulus plan, which he pushed through a Democrat-controlled Congress (yes, such a thing did exist way back then), authorized $832 billion in one-time federal spending in an effort to buck up what was then a reeling economy. That $832 billion, adjusted for inflation to 2016 dollars, is about $940 billion. Within shouting distance of Trump’s $1 trillion, in other words.
The Obama stimulus, however, was basically deficit spending. Trump’s plan, remember, is supposed to have no effect on the deficit.
That will be the key as Congress in the coming months considers what the president-elect has in mind. Anything that has even a hint of the odor of a tax increase (that repatriation tax, for instance) almost surely would have trouble making it through a Republican-controlled Congress. And in the weeks since the election, other media outlets have quoted several GOP members of Congress saying that anything Trump puts forward would “have to be paid for.”
Fortune magazine, beyond that, quoted Senate Majority Leader Mitch McConnell, R-Kentucky, saying that infrastructure spending will be a “low priority” for the Senate. However, McConnell said that several weeks ago, before Trump named Elaine Chao — McConnell’s wife — as his nominee to be secretary of transportation.