The Potential for a Bipartisan Infrastructure Bill
July 25, 2017
In the aftermath of the November 8th election, the United States appears to be a country deeply divided along partisan lines. Democrats and Republicans can hardly agree on the major issues, whether they are discussing immigration, health care, or tax reform.
However, according to those politicians seeking bipartisanship, there is still one notable area where the parties could work together: infrastructure revitalization. While the Democrats have traditionally been the party to advocate for a modernization of infrastructure, there is reason to believe that the Republicans might join them in crafting sweeping legislation.  Consider that on the campaign trial, the Republican candidate for president, Donald Trump, styled himself as the “greatest jobs president” and championed “spending more on roads, bridges and rail.”  Following his election, Trump reinforced this commitment to infrastructure investment, saying:
We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it. 
To the chagrin of Republican leaders, who presented themselves as fiscal hawks, Trump priced his infrastructure plan at $1 trillion.  To put the proposal in perspective, Hillary Clinton advocated for $275 billion in infrastructure investment over five years.  Trump had, in effect, departed from the fiscal austerity of the Republican Party and developed an “America First” platform that incorporated the Democrats’ close attention to infrastructure. In this context, the Democrats believed that they had found an issue where they could collaborate with Donald Trump. Nancy Pelosi reflected this view when she noted, “We can work together to quickly pass a robust infrastructure jobs bill.”  Coming out of the election, there was real optimism that Trump and the Democrats could overcome their disagreements and reach a deal on infrastructure.
As recognized by both Democratic leaders in Congress and President Trump, this country is long overdue for a modernization of its infrastructure. According to the American Society of Civil Engineers, the state of infrastructure in the United States is simply appalling, valued at a D+ rating.  The group reports that a fifth of all roads are in poor condition, that there are 15,500 “high hazard potential” dams, and that mass transit systems require $90 billion in repairs.  The failure to address these structural deficiencies could be catastrophic, resulting in the loss of $4 trillion in GDP and the elimination of 2.5 million jobs by 2025.  Given this evidence, there is a strong economic and moral case to be made that Congress ought to revitalize American infrastructure.
However, while leaders in both parties recognize the need for funding infrastructure, they have significantly different plans for spurring investment. For instance, Donald Trump proposes that the government finance the investment with $1 trillion in tax credits to construction and real estate corporations.  Trump said as much on the campaign trail, and his secretary of commerce, Wilbur Ross, later laid out the proposal in detail, noting that tax credits to private businesses would cover “82 percent of the equity” needed to fund infrastructure projects. Ross claims that the proposal will cost the government absolutely nothing because of “increased tax revenue from new private spending, economic activity and employment.”  In short, Trump would like to finance most of the infrastructure revitalization with private sector investment rather than depending on public money.
While Trump’s plan looks promising, some critics have worried that the proposal would be ineffective in practice. Perhaps the sharpest criticism has come from Lawrence H. Summers, the former treasury secretary, who noted that Trump would essentially be giving tax breaks to contractors “on projects that would have happened anyway.”  He added that the tax credit plan would only incentivize companies to work on projects deemed to be profitable, while projects designed simply for the public good, such as toll-free bridges, would be left neglected.  This criticism was echoed even by conservative writers such as Joel Moser of Forbes, who noted that “no amount of tax break will encourage investment in an asset that doesn’t produce revenue.”  Meanwhile, a bipartisan report from the House Transportation and Infrastructure Committee concluded that public private partnerships (P3s) cannot address the entirety of the infrastructure problem. As noted in the report, “P3s are not a source of funding and should not be thought of as the solution to overall infrastructure funding challenges.”  To the contrary, government investment is “a necessary precondition” for any serious effort to revitalize America’s infrastructure.  The House report and the other expert opinions indicate that Trump’s proposal will need to be tweaked to incorporate more direct government funding than the $200 billion currently allocated.
Democrats in Congress favor infrastructure projects that hand money directly to government programs. In that tradition, Hillary Clinton called for $250 billion in direct public investment, and a more recent Democratic-sponsored bill would direct a trillion dollars towards government programs.  In effect, the Democrats have a completely different funding mechanism that does not rely on tax credits. Their vision for infrastructure investment is so strikingly different from Trump’s that Politico recently described the two groups as belonging to “different planets when it comes how to finance a trillion-dollar public works plan.” 
The Democrats’ infrastructure plan is ambitious in its tackling of a decades-old problem, but like Trump’s proposal, it is vulnerable to criticism. Perhaps the most common critique is that the Democrats would be adding a trillion dollars to the national debt, which is worth approximately $20 trillion.  The idea of a major spending program is anathema to Republican leaders in Congress, and Mitch McConnell even decried it as “a trillion-dollar stimulus.”  Additionally, there are notable advantages in leveraging private funding rather than using public funds. As recognized by this intern’s own think tank, the Progressive Policy Institute, public-private partnerships have “several key advantages over traditional public funding.”  Specifically, P3s lift a significant burden from American taxpayers, and they are often better at minimizing costs through “market discipline.”  In short, the Democratic proposal would arguably be more tenable if it embraced public-private partnerships rather than relying on public funds.
Given that leaders of both parties recognize the need for infrastructure revitalization, they ought to explore ways to combine their policy proposals. Republicans arguably have a great deal to gain if they consider spending more direct government money on infrastructure, and Democrats likewise benefit from considering the perks of public private partnerships. A bipartisan infrastructure bill will inevitably draw elements from both Republican and Democratic proposals, meaning that lawmakers must be willing to reconcile their disparate views on the topic. However, despite the hurdles that must be overcome in reaching a compromise, politicians of both parties have much to gain if they succeed in passing sweeping infrastructure legislation. Most importantly, if they are successful, they will prove that the two parties can work together, even in these polarized times.
Student Blog Disclaimer
The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Wharton Public Policy Initiative’s strategies, recommendations, or opinions.
Additional Blog Posts
 Jennifer Streinhauer, “Senate Democrats’ Surprising Strategy: Trying to Align With Trump,” The New York Times, 16 November 2016, https://www.nytimes.com/2016/11/17/us/politics/democrats-house-senate.html?_r=0.
 Russell L. Berman, “Trump Tries to Bend Republicans on Infrastructure,” The New York Times, 15 November 2016, https://www.theatlantic.com/politics/archive/2016/11/trumps-infrastructure-challenge-to-republicans/507656/.
 Jane C. Timm, “Both Parties Say Trump’s Infrastructure Plan Needs Repair,” NBC News, 14 March 2017, http://www.nbcnews.com/politics/donald-trump/both-parties-say-trump-s-infrastructure-plan-needs-repair-n733061.
 “Hillary Clinton’s Infrastructure Plan: Building Tomorrow’s Economy Today,” HillaryClinton.com, 30 November 2015, https://www.hillaryclinton.com/briefing/factsheets/2015/11/30/clinton-infrastructure-plan-builds-tomorrows-economy-today/.
 Steven Mufson, “Economists pan infrastructure plan championed by Trump nominees,” The Washington Post, 17 January 2017, https://www.washingtonpost.com/business/economy/economists-pan-infrastructure-plan-championed-by-trump-nominees/2017/01/17/0ed1ad5e-dc5e-11e6-918c-99ede3c8cafa_story.html?utm_term=.34b1638b6a47.
 Joel Moser, “How To Fix The Trump Infrastructure Plan,” Forbes, 27 November 2016, https://www.forbes.com/sites/joelmoser/2016/11/27/how-to-fix-the-trump-infrastructure-plan/#5274b3ec70f1.
 Transportation and Infrastructure Committee, “Public Private Partnerships: Balancing the needs of the public and private sectors to finance the nation’s infrastructure,” U.S. House of Representatives, 2014, https://transportation.house.gov/news/documentsingle.aspx?DocumentID=393762.
 Ed O’Keefe and Steven Mufson, “Senate Democrats unveil a Trump-size infrastructure plan,” The Washington Post, 24 January 2017, https://www.washingtonpost.com/politics/democrats-set-to-unveil-a-trump-style-infrastructure-plan/2017/01/23/332be2dc-e1b3-11e6-a547-5fb9411d332c_story.html?utm_term=.c99eb8880c6d.
 Elana Schor, “Hopes dim for Trump infrastructure deal with Democrats,” Politico, 29 January 2017, http://www.politico.com/story/2017/01/trump-infrastructure-deal-democrats-234279.
 “US Debt Clock.” US Debt Clock.org, 10 July 2017, http://www.usdebtclock.org.
 Taya Snyder and Jennifer Scholtes, “GOP leaders slow-walk Trump’s infrastructure plan,” Politico, 5 January 2017, http://www.politico.com/story/2017/01/trump-infrastructure-plan-gop-233253.
 Diana G. Carew, “How Public-Private Partnerships Can Get America Moving Again,” Progressive Policy Institute, 29 May 2014, http://www.progressivepolicy.org/issues/economy/how-public-private-partnerships-can-get-america-moving-again/.