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Nov. 21 — Cracks in party unity may be exposed if President-elect Donald Trump moves forward with establishing an infrastructure bank or advocating for federal spending on mass transit.
Details about the $1 trillion infrastructure plan Trump discussed on the campaign trail are beginning to emerge. His transition team revealed the week of Nov. 14 that an infrastructure bank could be wrapped into the plan, but they provided scant details on how the bank would be organized or funded.
While congressional Republicans generally seem open to Trump’s developing proposal to invest in the nation’s infrastructure over the next year, whether they are unified in backing it could largely depend on the details of the infrastructure bank proposal.
One key Republican who has opposed the idea in the past is House Transportation and Infrastructure Chairman Bill Shuster (R-Pa.), who is expected to remain the committee’s top Republican in the next Congress. Shuster has previously said he worries an infrastructure bank could become another Fannie Mae- or Freddie Mac-type lending institution.
That’s been Shuster’s position on past infrastructure bank proposals, but let’s see what any new proposals look like, one committee aide told Bloomberg BNA.
The concept of an infrastructure bank isn’t new. It was pitched last year in the lead up to the enactment of a five-year surface transportation law known as the FAST Act. Rep. John Delaney (D-Md.) sponsored legislation that would impose an 8.75 percent tax rate on offshore corporate earnings to create a $50 billion infrastructure fund. He applauded news that Trump might add an infrastructure fund to his plan, saying there was a big bipartisan coalition in Congress that would be willing to get behind the idea.
The idea also has been backed by President Barack Obama, and was the linchpin of Democratic presidential candidate Hillary Clinton’s $275 billion infrastructure proposal that was previously criticized by Trump’s camp. That plan would have also been funded by taxing offshore corporate earnings.
Prior to the election, Trump initially floated the idea of providing tax breaks to private companies that invest in state and municipal projects.
Transit funding could be another source of potential conflict between Trump and congressional Republicans, particularly those in the House.
The Republican Party platform released in July contends the federal transit program should be blocked from drawing funds from the Highway Trust Fund (HTF) because it distorts the trust fund’s original purpose to support road projects. The position is similar to that taken in legislation introduced by Reps. Thomas Massie (R-Ky.) and Mark Sanford (R-S.C.) last year that would remove the federal transit program from the Highway Trust Fund.
But Trump has said he plans to invest in public transit. In fact, American Public Transportation Association Vice President of Policy Art Guzzetti said the group recently met with Trump’s transition team to discuss the “mechanics” of transit funding.
“It was very general, Guzzetti told Bloomberg BNA. “But it was a good meeting in the sense that there was a connection on transit being part of a balanced plan going forward.”
He highlighted Trump’s history of making sure transit was included in his development projects as indicative of the soon-to-be-president’s recognition of the need for transit investments. Trump is from Manhattan, so he sees transit investments at work everyday, Guzzetti said.
So how does that jibe with the Republican Party’s transit position?
“It clearly doesn’t match,” Robert Puentes, president and CEO at the Eno Center for Transportation, said. “How that plays out, I couldn’t even begin to speculate.”
It might be hard to reconcile Trump’s emphasis on public-private partnerships with a push to increase transit funding, Puentes said. Transit projects have a greater potential for not generating revenue adequate to cover construction costs, and the industry is moving away from availability payments—payments that states and localities can make to investors regardless of the demand for the project—he said.
There is also the possibility that the tax credit portion of Trump’s proposal to use infrastructure investments as a short-term job creator could strike conservatives as too similar to the Obama administration’s argument for the 2009 stimulus, he said.
“I don’t know if folks will be kind of raising an eyebrow about that,” Puentes said.
Third-ranking Republican and Commerce Committee Chairman John Thune (R-S.D.) has suggested including a big infrastructure bill within a larger tax overhaul—an idea that also has been backed by House Speaker Paul Ryan (R-Wis.).
On the other side of the aisle, Ronald A. Klain, who oversaw implementation of the 2009 stimulus package as an Obama administration aide and was a Clinton campaign adviser, told Democrats that they would be making a “mistake in policy and political judgment” if they backed the tax cuts in Trump’s plan, equating it to massive corporate welfare for contractors.
Without a clear funding mechanism, Trump’s infrastructure plan could add to the national deficit, he said.
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