The White House appears to be making a major shift in its infrastructure approach, somewhat unexpectedly. Rather than roll out infrastructure improvements through public-private partnerships, the president seems prepared to think in terms of outright fiscal expenditure. Details remain sketchy.
That tone should satisfy key Democrats who have been critical of over-emphasizing private-sector cash because of concerns over the widespread impact of user fees. Never mind the fact that some major states would balk at any infrastructure-related federal matching requirements. New Jersey and Illinois, for instance, have some of the lowest state credit ratings in the country.
At its core, infrastructure is a bipartisan issue. Insiders are hopeful that common ground can be found this year for a package that may total at least $200 billion in federal funds. The amount could be much larger by the time Congress repackages any White House proposal. But can the federal government afford such investment? Some economists argue that the just-passed tax bill already causes undue budget pressure over the years ahead.
There are also latent concerns about over-stimulating the economy. With a solid growth trajectory now in place, do policymakers run the risk of cyclical overheating if they dump too much money into the economy too fast? Any plan would presumably have to pace infrastructure outlays over time. Some analysts argue that the government may want to withhold certain investment as an antidote to potentially-weak economic activity in the future.
A brewing issue is one of perception. The Trump administration, which has only offered sweeping generalizations about how it defines infrastructure, is likely to be thinking in terms of outsized greenfield projects. But the real need may be maintaining and improving existing structures, given the age of the nation’s roads and bridges, among other elements of the infrastructure mix. Repairing and managing what we have may be much cheaper and more effective than new construction.
Regardless of what a bipartisan agreement looks like, we should brace for the overt politicalization of any infrastructure bill. Comments by President Trump in January 2018 at the American Farm Bureau Annual Convention in Nashville are a prelude to future rhetoric. He claimed, “We are proposing infrastructure reforms to ensure that our rural communities have access to the best roadways, railways, and waterways anywhere in the world. And that’s what’s happening. We’re going to be spending the necessary funds, and we’re going to get you taken care of. It’s about time.” ■
Our Vantage Point: Infrastructure may be a bipartisan issue, but we will see months of political wrangling on Capital Hill. The shift away from outsized private-sector funding acknowledges the low-return nature of many infrastructure projects.
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Image: In America, tight budgets can limit states’ ability to maintain and improve existing infrastructure assets. Credit: Dbvirago at Can Stock Photo Inc.