The Biggest Hurdle to an Infrastructure Deal
Budget

The Biggest Hurdle to an Infrastructure Deal

Flickr/Mike Perry

President Trump confirmed over the weekend that he was considering a large-scale infrastructure plan that Democrats said they had discussed last week. In a tweet Saturday, Trump wrote:

“There is nothing easy about a USA Infrastructure Plan, especially when our great Country has spent an astounding 7 trillion dollars in the Middle East over the last 19 years, but I am looking hard at a bipartisan plan of 1 to 2 trillion dollars. Badly needed!”

The tweet contained mixed messages, simultaneously affirming a great national need for infrastructure investment while reducing the putative value of the theoretical package from the $2 trillion Democrats announced to a range of “1 to 2 trillion dollars” and citing high military spending as a potential fiscal constraint.

Trump’s tweet echoes the central issues critics have been debating since House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) first announced the potential deal last week: how big it should be, what it should do and how to pay for it. The Hill’s Naomi Jagoda and Niv Ellis rounded up some of the latest comments:

A key Democrat said that tax increases may be unavoidable: “It’s $200 billion a year, so that’s not an easy pay-for. I don’t know how you’d do it without raising taxes,” said Rep. John Yarmuth (D-KY), chair of the House Budget Committee. “If we can find a way to pay for it, or pay for a substantial portion of it, I think it’s a great goal to have.”

Other Democrats said infrastructure should be paid for in full: “I think it should be fully offset,” said Rep. Dan Lipinski (D-IL), a member of the centrist Blue Dog Caucus. “Transportation and infrastructure has always been done by user fees, and I continue to support doing that.”

While some Democrats noted that there are plenty of options for paying for it: “There are so many ways to pay for infrastructure,” said Rep. Pramila Jayapal (D-WA), a leader of the Congressional Progressive Caucus (CPC). “From a wealth tax to a financial transactions tax, there’s all kinds of specific, documented ways in our CPC budget that we propose paying for that,” she said.

Others said that infrastructure is worth borrowing to pay for: “I want us to have an honest conversation about what it’s going to take to pay for it and not start with the idea that we take debt off the table,” said Rep. Dan Kildee (D-MI). “We borrow money to buy a house, but we have the asset of the house so we don’t really fret with the amount of debt associated with it. We have to look at infrastructure as an asset.”

A budget watchdog said it could be paid for over time: “Interest rates are still pretty low, so it doesn’t need to be paid for in year one,” said Marc Goldwein, of the Committee for a Responsible Federal Budget. At the same time, the package would have to be paid for eventually, since in Goldwein’s view, deficit-financed infrastructure doesn’t pay for itself (though others disagree) and “we can’t just keep adding $2 trillion at a time” to the national debt.

But several Republicans made clear that they have no interest in raising taxes:

  • “No, I wouldn’t raise taxes,” Sen. Steve Daines (R-MT) said last week. “That’s going to be the heaviest lift of all of this, is figuring out a way here from a fiscal viewpoint making this affordable on our current balance sheet.”
  • “You would have to have a gas tax to do it, and we’re not for a gas tax,” Rep. Mark Meadows (R-NC) said Thursday. “I mean, $1 trillion you could maybe do; $2 trillion, there is no way to get the money other than raising taxes and there is not an appetite for an increase in taxes by Republicans in the House or the Senate.”
  • “I’m certainly not in favor of any type of tax increase, no gas tax increase. That would be a bad idea, and $2 trillion is an unbelievable amount of money, particularly when we’ve got a $20 trillion debt,” said Rep. Jim Jordan (R-OH), a member of the conservative House Freedom Caucus.

In the end, GOP support may hinge on Trump: “We know we can spend the money,” said Rep. Tom Cole (R-OK). “People will be delighted to spend the money on roads and bridges and inland waterways and ports and rural broadband, no problem. But the part of the discussion that's lacking is, how are you going to pay for it?"

Cole added, “I think enough Republicans could support something like that if the president were for it.” The problem for now, though, is that Trump hasn’t taken a clear position on the issue. “I don’t know what the president is for. He hasn’t told us,” Cole said.

TOP READS FROM THE FISCAL TIMES