Both sides of the aisle have infrastructure plans but more than talk is needed

If United States Senate Democrats were to get their way, then the recently-enacted tax reform cuts recently signed into law by President Trump would be short-lived. But before anyone gets too carried away, let’s remember that in the Washington, D.C. things tend to move at a glacial pace. And in the case of true progress on the infrastructure front, it often seems even slower than that.

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If United States Senate Democrats were to get their way, then the recently-enacted tax reform cuts recently signed into law by President Trump would be short-lived. But before anyone gets too carried away, let’s remember that in the Washington, D.C. things tend to move at a glacial pace. And in the case of true progress on the infrastructure front, it often seems even slower than that.

Why infrastructure? Well, according to various reports issued earlier today, Senate Democrats would like to remove a portion of the tax cuts to serve as a major financial driver for a proposed national infrastructure plan that would cost $1 trillion.

As for how the Senate Democrats would go about this, a Washington Post report indicated $140 billion would go towards roads and bridges, $115 for water and sewer infrastructure, and $50 billion to rebuild schools. The latter speaks to the somewhat fluid definition of infrastructure, seeing how in the pages of LM and on our Website, our eyes are on transportation infrastructure, but let’s move on.

As per the WaPo report, the Senate Democrats plan would reinstate a top income tax rate of 39.6%, restore the individual alternative minimum tax, reverse cuts to the estate tax, and raise the corporate income tax from 21% to 25%. And Senate Minority Leader Chuck Schumer (D-NY) said that this plan would create roughly 15 million middle-class jobs.

To be sure, this plan stands to be DOA as far as Republicans are concerned, with Senate Majority Leader Mitch McConnell saying that it was a “nonstarter.”

Political differences aside, one thing that has been clear is that both parties have been active, when it comes to at least trying to get the ball rolling on the infrastructure front.

In January 2017, Senate Democrats   rolled out a ten-year, $1 trillion infrastructure plan that came on the heels of President Donald Trump talking on the campaign trail, about a “trillion-dollar rebuilding plan” that would be “one of the biggest projects this country has ever undertaken, which he said would be funded through low interest rates and infrastructure bonds.

The Democrats plan at that time  also called 15 million jobs, with $210 billion allocated towards repairing aging roads and bridges (the new figure is now $140 billion) and $200 billion for “a vital infrastructure plan” to finance transportation projects of national significance.” The plan also dedicated $180 billion to rail and bus systems, $65 billion to ports, airports and waterways, $110 billion for water and sewer systems, $100 billion for energy infrastructure, and $20 billion for public and tribal lands.

And on the Republican side, the White House last month introduced its own infrastructure plan as part of its fiscal year 2019 budget.

As previously reported, some specifics of the White House’s national infrastructure plan, include:

  • a $200 billion investment from the federal government over a ten-year period
  • a $100 billion infrastructure incentives program to maximize investment in infrastructure to increase economic growth and attract non-Federal revenue streams dedicated to state, local, and private investment in infrastructure;
  • a $50 billion rural infrastructure program to improve the condition and capability of rural infrastructure through capital improvements and outcomes-driven planning efforts that enhance private sector productivity , modernize existing infrastructure systems, and prioritize projects essential for efficiency and safety, with 80% of allocated funds provided to the governor of each state via formula distribution;
  • $20 billion in infrastructure financing plans to advance major, complex infrastructure programs such as airport and non-Federal waterways and ports financing options, expanding Railroad Rehabilitation and Improvement Financing and the Water Infrastructure Finance and Innovation Act Funding and broaden program eligibility;
  • provide states the flexibility to toll on interstates and reinvest toll revenues in infrastructure;
  • provide states flexibility to commercialize Interstate rest areas; and
  • incentivize the development of effective and efficient water infrastructure and full life-cycle asset management to improve water infrastructure, among others

Before anyone gets too excited about what these respective plans promise, let’s remember it comes down to money. It always does, right? And, as usual, there does not appear to be a revenue source that anyone can agree on…another familiar Congressional theme to be sure.

Things like a repatriation of funds, tolling, raising the gas tax (please), and others have been floated but nothing seems to stick or at least gain widespread approval. Until that happens, nothing else really does either.

One idea that an industry stakeholder told me a while back, which clearly has merit, is a long-term funding solution that meets the needs of the country as a whole. 

While that sounds initially vague, it goes deeper than that, with the stakeholder explaining that it cannot be a one-off, one-time injection of a lot of money for certain big projects in limited parts of the country. An initial infusion for that could be good, the stakeholder said, but it needs to be a long-term, comprehensive, [multi]modal fix.

Rather than going for a political win, a common theme in these highly polarized political times, meaningful infrastructure investment is required to drive the economy and ensure that people and goods can get where they need to be in a safe and efficient way. Until that happens, nothing else will.

About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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