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Trump Infrastructure Plan: You Pay for It

It’s infrastructure week!

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The first thing you need to know about Donald Trump’s $1.5 trillion infrastructure plan is that it is, in fact, a $200 billion infrastructure plan. For those keeping score at home, it’s $200 billion from Washington and another $1.3 trillion dollars of state, local, and private money to be determined at a later date.

It comes out to $20 billion a year, over 10 years—a modest increase in the federal outlay for building projects. The government routinely spends several times that amount on this stuff: In 2014, for example, Washington spent $96 billion on transportation and water alone. Trump wants this new money to cover those projects—plus rural broadband and power, Superfund sites, and perhaps even commercial space travel.

About that $200 billion, though. It’s not being funded by, say, finally raising the federal gas tax. (That levy hasn’t changed in more than two decades, and it falls far short of paying for the Highway Trust Fund.) Instead, the plan depends on shifting the money from other parts of the government—including the departments charged with funding transportation and water projects. In Trump’s budget, which was also released today, the discretionary budget for the Department of Transportation falls by $3.7 billion; the EPA’s is cut by $2.8 billion. More broadly, the Center for American Progress says it has counted $281 billion in infrastructure cuts in the budget—making the two proposals a net negative for infrastructure spending.

The breakdown of money in the 55-page plan looks like this: $100 million in federal grants to be leveraged alongside state, local, and private money. To some extent, this constitutes a continuation of the status quo, as states and cities already bear the bulk of infrastructure spending for operations and maintenance. (A trial is underway with one DOT grant, INFRA, to see just how much states and cities will fund on their own.) But because December’s tax bill quashed the federal deduction for state and local taxes, initiatives for new local spending have gotten more expensive and less likely. In discussions with USA Today and the Los Angeles Times, Trump officials cited Los Angeles’ Measure M—a landmark ballot initiative to raise $120 billion for road and rail transportation in America’s largest county—as an example of localities taking the initiative. But Measure M–funded projects like the Purple Line extension are jeopardized by the administration’s desire to eliminate the popular TIGER and New Starts competitive grant programs.

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Another $50 billion would go toward rural infrastructure, under the assumption that those projects are unlikely to raise as much local matching money as their metropolitan counterparts. Twenty billion dollars will go into private-activity bonds and loan programs, and another $20 billion is earmarked for “transformative projects,” a high-risk, high-reward category that seems designed for private ventures like the Hyperloop. That money, distributed through the Commerce Department, would fund “ambitious, exploratory, and ground-breaking project ideas.”

The plan would also make changes in the permitting process, which Trump has criticized since the beginning of his administration and mentioned again during his State of the Union address two weeks ago.* At a press event touting the infrastructure plan today, he once again invoked Wollman Rink, the Central Park ice skating rink that he renovated in 1986 after New York City had botched the project, as a model for the nation’s airports, bridges, and waterways.

One provision, for example, would allow the relocation of utilities to begin before environmental reviews have been completed. Another would transfer powers from the EPA to the Army Corps of Engineers. A third would put pressure on the National Marine Fisheries Service to quickly evaluate fish habitats. A fourth would transfer the approval of pipelines in national parks from Congress to the Secretary of the Interior. A fifth would make it easier for federal agencies to build on public land and historic sites.

Those permitting changes could end up being the most tangible results from the president’s big plan. Infrastructure was once thought to be the ground for bipartisan consensus, the place where Democrats might, perhaps, be willing to work with Trump. Democrats have been pushing new infrastructure spending for years, and they are eager to reclaim their appeal with the kind of white working-class tradesmen who could benefit from a massive building boom.  But several Democratic lawmakers have already come out against the plan, as have building-happy allies like the Transportation Trades Department at the AFL-CIO.

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All in all, it’s a plan much more in line with Republican orthodoxy than the grand rebuilding Trump promised during his campaign. The emphasis on leverage—including tolls, user fees, value capture, and private-sector interest—is likely to tilt the balance of projects toward those that generate the most revenue. At best, that strategy employs a short-term measure of success; at worst, it discounts a huge variety of investments in clean water, public schools, mass transit, and other endeavors whose utility is not measured by the bottom line.

*Correction, February 12, 2018: This piece originally stated that the State of the Union was last week. It was two weeks ago. How time flies.

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