President Donald Trump unveiled his long-awaited infrastructure plan on Monday, touting the proposal as a $1.5 trillion investment in the nation’s highways, bridges, waterways, and other infrastructure projects. The plan’s topline number sounds great on the surface, but it wildly misconstrues the actual investment being proposed by the federal government — and Trump knows it.
The proposal aims to turn $200 billion in federal funds into a $1.5 trillion investment over the next ten years by placing most of the financial burden on states and cities, which will have to cover at least 80 percent of the cost of any infrastructure project in order to qualify for federal grants, likely through higher taxes, tolls, and other user fees. The $200 billion number is a dramatic reduction in federal cost-sharing from years past.
In an interview with the Wall Street Journal in January, Trump conceded that the $200 billion in federal funds is “not a large amount,” going on to criticize the amount of money the United States has spent on the wars in Afghanistan and Iraq. In a tweet Monday morning, Trump reiterated his criticism:
This will be a big week for Infrastructure. After so stupidly spending $7 trillion in the Middle East, it is now time to start investing in OUR Country!
— Donald J. Trump (@realDonaldTrump) February 12, 2018
But Trump’s plan barely makes a dent in what’s needed to fix the country’s ailing infrastructure. Instead, it places the onus on cash-strapped states and municipalities to come up with the revenue to improve their own infrastructure. As CityLab reported last year, this will be especially difficult for “cities that never financially recovered from the recession, like Detroit, Cleveland, Stockton, and Memphis,” which are limited in their spending ability and yet need infrastructure investments the most.
According to the American Society of Civil Engineers’ (ASCE) annual Infrastructure Report Card, the United States needs to invest $4.59 trillion by 2025 in order to improve the country’s infrastructure — a figure three times larger than even the rosiest estimate in Trump’s proposal and more than 20 times larger than the $200 billion actually allocated.
“If the United States continues on this trajectory and fails to invest, the nation will face serious economic consequences, including $3.9 trillion in losses to U.S. GDP and more than 2.5 million American jobs lost in 2025,” the ASCE report said.
The $200 billion in federal spending includes $100 billion in incentive grants, aimed at encouraging increased state, local, and private infrastructure investment; $50 billion in rural formula funds, which seeks to promote investment in rural infrastructure needs; and $20 billion in so-called transformative projects, described as projects “that can significantly improve existing infrastructure conditions and services” but are considered too risky to attract private or local investments.
Even calling it a $200 billion investment by the federal government is a misnomer. Instead of finding new sources of revenue, the funds will be entirely offset by cuts to other existing infrastructure programs, including a 19 percent decrease in funding for the Department of Transportation and a 3 percent decrease for the Department of Energy, as highlighted in Trump’s fiscal 2019 budget, which was also released today.
Pointing out the glaring lack of new sources of funding in the infrastructure proposal, Michael Linden, fellow at the Roosevelt Institute, said on Twitter, “All told, he’s basically proposing a $0 infrastructure plan.”
No. No. No. This headline is budget-illiterate. Trump's budget will include $200 billion in infrastructure spending, offset by 20% reductions in base funding for Depts. of Transportation and Energy. All told, he's basically proposing a $0 infrastructure plan. https://t.co/ceWRSSGLVG
— Michael Linden (@MichaelSLinden) February 12, 2018
It is unlikely that most lawmakers on either side of the aisle will support Trump’s proposal — with Democrats, and some Republicans, criticizing the plan’s lack of new revenue sources.
But even if the proposal made its way through Congress and money began flowing to projects around the country, it’s unlikely the spending would have any meaningful impact on the worsening condition of the most vital infrastructure programs.
By leaving local governments on the hook for 80 percent of the cost of a project, the Trump administration is encouraging investments in public-private partnerships. A city will partner with a private developer, for instance, to construct a new building as part of neighborhood revitalization. But spending is most needed where public-private partnerships are hard to come by. Private financiers seek to tap into sustainable revenue streams when deciding what projects to invest in, and there are few revenue streams to be had for street repairs or water pipe maintenance. In states that have ceded some authority to private companies for the management and maintenance of highways, regressive tolls have hit the poorest workers the hardest.