Donald Trump's Infrastructure Plan Will Cost $200 Billion—but What Is It Worth?

By: Bridget Clerkin February 22, 2018
President Donald Trump's $1.5 trillion infrastructure plan mostly relies on city and local governments for funding.

The promise to make America’s roads great again—as well as its tunnels, bridges, waterways, railroads, and airports—was one of the first big pledges made in 2016 by presidential candidate Donald Trump. Earlier this month, the now-commander-in-chief took his first step toward following through on that pledge.

While allocating $200 billion in federal funding for infrastructural developments, the plan passes a $1.3 trillion funding gulf directly on to state and local governments. 

The administration rolled out its highly anticipated infrastructure plan on Feb. 12, with officials touting the measure’s potential for developing new revenue sources to pay for massive construction projects. But like much else about the current White House, the bill’s proposals for doing so are quite unconventional.

While allocating $200 billion in federal funding for infrastructural development, the plan passes a $1.3 trillion funding gulf directly on to state and local governments, as well as the private sector.

The proposal includes enough financial incentives to ensure those additional checks get cut, advocates say, while opponents worry the newly bred competition for money would leave less-popular projects in limbo.

The plan's fate will ultimately fall into the hands of a sharply divided Congress, which will likely feel pressure to vote on the bill ahead of this fall’s midterm elections. And if adopted by the legislative branch, the measure could change much about the way infrastructure is funded in the future.

Broad Strokes

All told, the plan is billed as a $1.5 trillion venture, but a vast majority of that total hinges on a large leap of faith.

The figure actually represents the administration’s fundraising goal for covering infrastructure works over a 10-year period. But just a fraction—about 13%—of the impressive-sounding amount would be provided by the federal government.

Of the $200 billion the plan designates for federal spending, the capital is divvied up among several major initiatives.

Half of the money—$100 billion—is earmarked for general projects proposed by the states, meant to incentivize the creation of local projects by providing supplemental funding, though the state would need to find other sources of income for the endeavors.

An additional $50 billion is reserved for a rural grant program, with each state’s allotment dependent upon how many rural road miles can be found there, among other terms.

Two blocs of $20 billion are set aside for opposite ideas. One of the grants is meant to underwrite private financing for lucrative and popular projects, putting the federal government’s money on concepts more likely to succeed.

The second $20 billion bloc is instead intended for risky ventures designed to fund “transformative” programs. While the bill itself leaves the concept vague, White House officials offered more contour during a background briefing last week, explaining that the money was meant for “projects of national significance” which could “lift the American spirit” through the creation of “next-century type of infrastructure,” as opposed to merely updating current highways, bridges, airports, and other public-use facilities.

With the remaining $10 billion, the government would indulge in a bit of self-care, investing the money in construction on federal office buildings and infrastructure intended for government use.

But how does the proposal intend to draw the additional $1.3 trillion in funding for infrastructure?

Better Left Unsaid

The bill doesn’t spell out where the extra cash flow should come from. The measure places the burden of drumming up the additional capital squarely on the state or local governments requesting the funding.

Specifically, the plan calls for “an increase in State, local, and private investment in infrastructure” by refreshing the formula for calculating how much money the federal government will kick in for a project.

The change in course has left some worried that states will look to a tried and true method for ginning up capital: raising taxes.

The present breakdown dictates that states can count on up to 80% of some projects to be funded by the federal government, while others call for Uncle Sam to cover at least half. But the new proposal reverses those figures, requiring states to raise at least 80% of a project’s cost to even be considered for the “incentive” grant money.

In fact, finding enough cash to pay for the projects would become the state’s true incentive, as the ability to raise the funds would be paramount to getting any federal money at all. The capability to secure at least 80% of a plan’s cost would represent 70% of the calculation used to determine grant winners in the new bill. (Currently, the largest priority considered by the federal government when weighing which projects to invest in is the ability for the infrastructure to generate economic and social growth within its community.)

The change in course has left some worried that states will look to a tried and true method for ginning up capital: raising taxes. (Complicating the matter is the fact that most national highway projects are supplemented with money raised through the local gas tax—a pool that’s quickly shrinking.)

Other groups, including the National Resources Defense Council, have posited that the new equation isn’t balanced, leaving unpopular developments, such as drinking water, wastewater, and storm water infrastructure high and dry—and leading to more crises like the lead-filled water of Flint, Michigan.

Still, before it can pass into law, the measure must navigate through some of the country’s most clogged-up political infrastructure: the halls of Congress. Any bill capable of clearing that tricky path truly deserves to be a blueprint for future transportation.

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