Infrastructure plan rolled out by Senate Democrats is only the beginning of the bargaining

As reported on this site’s news section yesterday, United States Senate Democrats rolled out what could be viewed as an ambitious ten-year, $1 trillion infrastructure plan.

There is a lot going on in that plan, especially when one considers it is 11 pages. But that makes sense, as its title is “A Blueprint to Rebuild America’s Infrastructure.” And that is what it really is at the end of the day, a blueprint, which is fine.

Make no mistake, though, there is so much more to be done to see this plan, or anything resembling it, come to fruition.

That was made very clear in a conversation I had with James H. Burnley, a partner at Washington, D.C.-based law firm Venable LLP and former Secretary of Transportation under the late President Ronald Reagan. 

“This is basically an opening offer by the Senate Democrats in what both sides expect will be fairly complex and probably lengthy negotiations to try and put an infrastructure package together,” he said. “That is the proper way to look at it.”

And like previous infrastructure package proposals, Burnley pointed out that this one, too, has an “incredibly broad” definition of infrastructure, as it includes things like veterans hospitals and schools, for example, and expanding broadband access in rural areas, which go for beyond what the conventional definition of infrastructure is.

Aside from what is and is not infrastructure, Burnley noted that a funding mechanism of any sort to cover the Democrats $1 trillion price tag is absent in the blueprint, save for the call for a call for a new infrastructure finance entity, like an ‘I-Bank’ that the Democrats’ plan said “would unlock pools of capital to provide low-cost loans or loan guarantees for appropriate projects across a broad range of sectors, including transportation, energy, affordable housing, and water infrastructure.” 

And they added that it is estimated that the creation of such a fund with $10 billion in seed money could leverage over $100 billion in private investment over 10 years for infrastructure projects, coupled with protecting and strengthening the existing financing programs available under USDOT and other agencies, including the Railroad Rehabilitation & Improvement Financing (RRIF) program, the Transportation Infrastructure Finance and Innovation Act (TIFIA), and EPA’s Water Infrastructure Finance and Innovation Act (WIFIA).

OK, so that is something, but $100 billion, as lofty a sum as it sounds, is not $1 trillion, nor it is really all that close. And to be sure, as the Republican leadership has said, any type of capital commitment will need to be offset in order for any effort to move forward.

As for where things go from here, Burnley said that we need to wait and see at least until President Trump has senior leadership in place relevant to this development not just for the Department of Transportation but also for the Office of Management and Budget.

“Then you will see things move fairly quickly in terms of Republicans putting together their own proposal, which, I suspect, will include tax credits, but I would not expect that they feel obligated to stick to that exact number ($137 billion in tax credits to infrastructure investors) and it may well be part of a tax reform bill or there may be two distinct packages that overlap with respect to tax packages like tax credits for infrastructure,” he explained. “There are a number of paths that they may go down.”

Burnely cited the Partnership to Build America Act, which is basically a proposal for an infrastructure bank that was introduced earlier this month by Representatives Rodney Davis (R-Ill.) and John Delaney (D-Md.) as an example of a forward-thinking approach towards financing large-scale infrastructure investment. This legislation calls for the creation of a fund to provide financing to state and local governments for new infrastructure projects and also encourages public-private partnerships and uses bond sales to finance the fund. 

And for anyone holding out hope that the federal gasoline tax may be raised to help cover the infrastructure funding gap, Burnley said don’t count on it, as there are no public signals indicating that to be the case.

The Senate Democrats plan is really a pre-emptive strike in some respects to say they are here, explained Burnley, adding that it is just way too early in the game to expect much. In many ways, this development can be viewed as the beginning of the bargaining, when it comes the nation’s infrastructure roadmap, or, in this case, blueprint. Let’s see where it takes us. It certainly requires our attention, considering there are no Republican-only roads or Democrat-only bridges. We are all in this together, and that needs to be remembered.