Paying more for less: the blueprint of the newest Trump infrastructure deal

Like a bad baseball team entering spring training, hopes are rising once again, for a costly infrastructure package, now that Democrats have resumed control of the House of Representatives.

An infrastructure package containing perhaps as much as $1 trillion in combination of outright spending, tax beaks and subsidies for more public-private partnerships is being floated in Washington as a way for Democrats and Republicans to feign bipartisanship in this hyper-partisan era of confrontational politics.

“I’ve long believed our committee can lead in bipartisan fashion on this issue,” Sen. Tom Carper, D-Del, ranking minority member of the Senate Environment and Public Works (EPW) Committee, said recently.

Bipartisanism is, of course, nice. But what’s really needed is a concrete and sustainable way to lay all that concrete. “There has to be real investment,” said Rep. Peter DeFazio, D-Ore., expected new chairman of the House Transportation and Infrastructure Committee. “It needs to be done soon.”

That was echoed by Rep. Richard Neal, D-Mass., the new chairman of the House Ways and Means Committee, and expected to be a major power broker in the new Democrat-controlled House as chair of Ways and Means. Any significant spending package on infrastructure will have to clear Neal’s committee following its markup out of the House Transportation and Infrastructure Committee.

Neal recently told New England business leaders in Boston that while there is “no shortage of outrage” in Washington, Democrats on Capitol Hill should “check their emotions at the door and try to build some kind of consensus on a path forward.”

Neal has largely avoided direct criticism of President Donald Trump and cautioned Democrats to go slowly in their first days of power. But he told the New England Council he was encouraged by prospects for a bipartisan infrastructure bill, and that he had recently discussed the subject with U.S. Treasury Secretary Steven Mnuchin.

The sticking point, as usual, is how to pay for what could be a $1 trillion bill.

“The secretary said to me, 'How do you intend to pay for this?' And I said I can assure you that when we reach that decision we will all be standing together to announce it,” Neal was quoted recently.

One thing is absolutely certain. Between when then-candidate Trump began talking about spending $1 trillion on infrastructure in 2015 and now, the buying power of that $1 trillion has fallen by perhaps one-third.

That’s partially because of now-President Trump’s decision to begin 25% tariffs on imported steel. Just since last summer, officials from several state departments of transportation say there has been nearly a one-third run-up in the cost of steel, a major component of steel-reinforced concrete for roads and bridges.

According to the Bureau of Labor Statistics, costs of asphalt paving mixtures were up more than 11.5% while steel-related products were up 18.2%. If Trump’s 25% tariffs on imported steel from China and other countries remain, officials in the transportation sector say highway, bridge and other construction costs will continue to rise.

This is causing considerable angst among those state transportation officials who must somehow weigh these increased costs in deciding which of a backlog of construction-related projects gets the green light.

“Our nation is at an inflection point in its transportation history,” says Carlos Braceras, the American Association of State Highway and Transportation Officials president and executive director of the Utah DOT.

Braceras recently said at a Senate EPW Committee informational that fuel taxes need to be raised in the near-term while longer-term alternative funding mechanisms are found.

“Just to keep our current FAST [Fixing American’s Surface Transportation] Act funding levels, Congress has to find $90 billion in additional revenues for a five-year bill or $114 billion for a six-year bill,” Braceras told the committee in written remarks.

Also, he said, purchasing power of Highway Trust Fund revenue has declined substantially due to the flat, per-gallon motor fuel taxes that have not been adjusted since 1993. That fund has lost half of its value since those fuel taxes – 18.4 cents on gasoline, 24.4 cents on diesel—were raised.

Braceras said federal highway programs are expected to endure a 51 percent drop after the FAST Act expires in 2020.

Furthermore, federal transportation funding continues to fall short of the amounts needed while the construction industry faces attracting, training and retaining thousands of highly skilled workers.

This is causing some states that voted heavily for Trump in 2016 to go to their voters with proposals that will hit them in the pocketbook. Some 31 states successfully enacting state-level transportation funding packages since 2012, according to AASHTO.

Even deep-red Alabama, which hasn’t raised its fuel tax since 1992, is mulling an increase of its 18-cent-a-gallon levy on drivers.

In 2017, a similar measure failed. It would have increased the tax by 4 cents in 2017, 2 cents in 2019, 3 cents in 2024. But Alabama House speaker Mac McCutcheon recently was quoted as saying this time is different because the public is more informed and traffic conditions have gotten worse. It is on track to be introduced in March.

In deep blue California, voters  recently rejected Proposition 6, which would have rescinded an increase in the Golden State’s fuel tax. The vote wasn’t even that close, 56-44 percent, clearing the way for tens of billions of dollars of road and transit upgrades in California.

The American Society of Civil Engineers, while giving the U.S. a “D+” on infrastructure grading, estimates the U.S. needs $4.5 trillion in infrastructure upgrades by 2025. But even if the country’s politicians find the will to fund that list, that $4.5 trillion will not nearly go as far as it would have a decade or so ago.