The Trump administration’s infrastructure plan, released Monday, is designed to “stimulate” $1.5 trillion in spending over 10 years, but the federal government’s contribution to that effort is just a small fraction of the total. Here’s how the White House proposes to rebuild U.S. infrastructure over a decade:
- $100 billion to fund “an incentives program” to attract larger investments from state and local governments and the private sector
- $50 billion in direct grants for rural infrastructure
- $20 billion for “transformative” infrastructure projects that “can lift the American spirit” but would have trouble attracting private financing due to their “unique” or challenging nature
- $20 billion to expand financing programs, including $6 billion for private activity bonds
- $10 billion for a capital financing fund to aid existing projects.
So the $1.5 trillion plan is really a $200 billion plan as far as federal spending is concerned, with the remaining $1.3 trillion coming from state, local and private sources. The plan calls for $20 billion a year in federal spending — a number that left many critics unimpressed given the size of the problem.
But even that level of federal infrastructure spending doesn’t appear likely to get approved this year. The most basic issue is finding the money to pay for the extra spending: Between the $1.5 trillion tax cut and last week’s deficit-fueled budget deal, the federal cupboard is bare, and the plan offers little by way of direct funding or realistic financing. The White House said spending cuts to offset the federal infrastructure outlays will come from “a whole series of places,” without specifying what they would be.
The states aren’t in any better shape, and there’s no indication that private investors have much appetite for much of the mundane infrastructure work that is unlikely to deliver attractive returns.
That’s not to say, however, that infrastructure is an entirely lost cause. In a note to clients Monday, Chris Krueger of the Cowen Washington Research Group pointed out that there is already a considerable amount of infrastructure spending underway or in the pipeline. That spending includes roughly $90 billion for disaster relief, $20 billion for projects that are part of the budget deal, and a whole host of gas and oil projects that are likely to come online in the wake of the administration’s war on regulations.
Infrastructure on a larger scale, however, seems unlikely. Former Transportation Secretary Ray LaHood told NPR Monday that the plan “probably is not going to work” due to the financing issue, adding: “the reason we have an interstate system in America that was built over the last 50 years is because our national government made investments. The reason that Europe and Asia have some of the best rail systems is because the national government made a commitment. And that's where the rubber really hits the road when it comes to having a national vision.”