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Infrastructure: The Next President and Congress

capitolatnightThe 115th Congress will be sworn in on January 3, 2017, and President-elect Trump will be sworn in on January 20th. For the first time since President Eisenhower launched the federal highway program in the 1950's, a national infrastructure program seems to be coming to the top of issues to be addressed in 2017.  The magnitude of overall infrastructure spending being discussed encompasses the broadest application of federal resources since the 1930s.

What will the next President and Congress do about the nation's infrastructure needs?

President-Elect Trump has a $1 trillion, 10-year infrastructure plan that may become legislation during his first year in office. This plan, which does mention dams, is mostly tax incentives designed to leverage public/private partnerships. Senator Charles Schumer [D-NY], newly elected as the Senate Minority Leader, likes the idea of spending $1 trillion for infrastructure but not through tax incentives, he wants direct federal spending. Congressional Democrats wanted to form a national "infrastructure bank" in the last Congress, a proposal vehemently opposed by Republicans.

The good news is that Congress, occasionally, likes spending money on infrastructure, in the 114th Congress having passed a 6-year highway bill and a new WRDA. The bad news is, coming up with $1 trillion for anything, especially infrastructure, will come headlong into opposition from those who contend federal infrastructure spending is not necessary, wasteful and another part of the Washington pork barrel buffet. We will hear that the American Recovery and Reinvestment Act of 2009, $800 billion for "shovel-ready" jobs, didn't end up creating jobs or buying shovels. There are deficit hawks who will oppose more spending given the nation's overall public debt. There are already powerful voices rising in Washington in opposition to new federal infrastructure spending.

"The American Society of Civil Engineers produces a report card on the nation’s infrastructure which documents the deteriorating state of much of the nation’s infrastructure as well as the amount of additional funding it would take to bring our infrastructure back to "good" condition within a reasonable time span. This report suggests that we can profitably employ an additional $8 billion per year for bridge repairs, $2-4 billion per year for airports, and an amazing $80 billion per year for roads. In addition to those three categories, needed repairs on the country’s dams and levees are estimated at $121 billion in total. Adding all this up and spreading costs over ten years, we already have over $100 billion per year in spending needs without even going to categories such as schools or water and sewer systems (which are somewhat more local and have clearer existing funding sources)." 1/

All non-defense, discretionary spending in the $3.9 trillion federal budget is about $585 billion. With defense and income security program cuts off the table, one cannot cut enough from this $585 billion to pay for new infrastructure spending. Adding to defense and cutting taxes by the largest amount since 1981 makes this magnitude of additional spending tough. So where would we find $100 billion for new spending?

The country is now on the precipice of being $20 trillion in debt. With the new President promising massive tax cuts, where do we find $1 trillion - or the $3 trillion  - that is actually needed, to begin repairing the dams, levees, water systems, airports and other major infrastructure in America?

One proposal, based on the Federal Reserve's response to the 2008 financial crisis wherein the Fed purchased mortgage-backed securities totaling over $1 trillion over twelve months, envisions that a similar approach could be taken with monetizing the new national infrastructure program.

The new President will almost assuredly present legislation concerning improving the condition of America's infrastructure, perhaps even in negotiation with Congressional and Senate Democrats who favor the spending more than some of their Republican-majority colleagues.

If dams and levees are to be included in new infrastructure legislation in any meaningful way, given competition from roads, bridges, airports, municipal water & sewer systems and the like, then a strong coalition of USSD, ASCE, and many others ranging from labor unions to municipalities will need to form and be at the table when the legislation is written.

The jockeying for position has already begun. Having the engineers and construction experts from around America directly involved in which projects receive priority treatment means America has its money spent well. The decisions made about where these funds ultimately go is in itself a tortured process of the politics of "build it in my state first." Engineers and other experts involved can take this process and focus it on sound science and economics and less on politics.

As the new President only has his first year within which to accomplish much of his first-term agenda, from now until one year from now determines whether America gets the largest infrastructure overhaul since the 1930s. It will be an exciting and challenging year for the national debate about America's infrastructure.

1/ Forbes, 12/4/2016, "The Best Infrastructure Spending Plan Will Build No New Infrastructure."