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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. [1] 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.” [2] 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. [3]

To the chagrin of Republican leaders, who presented themselves as fiscal hawks, Trump priced his infrastructure plan at $1 trillion. [4] To put the proposal in perspective, Hillary Clinton advocated for $275 billion in infrastructure investment over five years. [5] 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.” [6] Coming out of the election, there was real optimism that Trump and the Democrats could overcome their disagreements and reach a deal on infrastructure.

Image: Donald Trump. Source: Wikimedia.Image: Donald Trump. Source: Wikimedia.

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. [7] 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. [8] 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. [9] 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. [10] 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.[11] Ross claims that the proposal will cost the government absolutely nothing because of “increased tax revenue from new private spending, economic activity and employment.” [12] 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.” [14] 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. [15] 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.” [16] 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.” [17] To the contrary, government investment is “a necessary precondition” for any serious effort to revitalize America’s infrastructure. [18] 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. [19] 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.” [20]

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. [21] 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.” [22] 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.” [23] Specifically, P3s lift a significant burden from American taxpayers, and they are often better at minimizing costs through “market discipline.” [24] 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 Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

References

  [1] 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.

  [2] Ibid.

  [3] 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/.

  [4] 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.

  [5] “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/.

  [6] Berman, “Trump Tries to Bend Republicans.”

  [7] Timm, “Both Parties.”

  [8] Ibid.

  [9] Ibid.

  [10] Ibid.

  [11] 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.

  [12] Ibid.

  [13] Mufson, “Economists pan infrastructure plan.”

  [14] Ibid.

  [15] Ibid.

  [16] 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.

  [17] 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.

  [18] Ibid.

  [19] 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.

  [20] 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.

  [21] “US Debt Clock.” US Debt Clock.org, 10 July 2017, http://www.usdebtclock.org.

  [22] 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.

  [23] 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/.

  [24] Ibid.

PENN WHARTON PPI
RESOURCE SPOTLIGHT:

  • <h3>MapStats</h3><p> A feature of FedStats, MapStats allows users to search for <strong>state, county, city, congressional district, or Federal judicial district data</strong> (demographic, economic, and geographic).</p><p> Quick link: <a href="http://www.fedstats.gov/mapstats/" target="_blank">http://www.fedstats.gov/mapstats/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Aviation Administration: Accident & Incident Data</h3><p><img width="100" height="100" alt="" src="/live/image/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg" class="lw_image lw_image80 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 2x, /live/image/scale/3x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 3x" data-max-w="550" data-max-h="550"/>The NTSB issues an accident report following each investigation. These reports are available online for reports issued since 1996, with older reports coming online soon. The reports listing is sortable by the event date, report date, city, and state.</p><p> Quick link: <a href="http://www.faa.gov/data_research/accident_incident/" target="_blank">http://www.faa.gov/data_research/accident_incident/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>