MENU

Reason.com

Free Minds & Free Markets

Trump Infrastructure Plan: Privatization, Deregulation, and Spending

The plan would see $200 billion in new federal spending, but it would also open up opportunities for private infrastructure investment.

LEIGH VOGEL/UPI/NewscomLEIGH VOGEL/UPI/NewscomIt's finally here. After a year of delays, drafts, outlines, and leaks, the Trump administration has released a detailed $1.5 trillion infrastructure proposal.

The 55-page document conforms largely to previous reports of what the package might look like. On the downside, there is a lot of new federal spending here. On the upside, there is an effort to shift a lot of the financing burden for new projects onto states, localities, individual users, and private investors, to streamline regulations on those new projects, and to make it easier to privatize existing federal assets.

In a statement, the president expressed his desire to work with Congress on a law that "will enable America's builders to construct new, modern, and efficient infrastructure throughout our beautiful land."

His infrastructure plan purports to do this by spending $200 billion in direct federal dollars in order to spur an additional $1.3 trillion in investment from non-federal sources.

Half of that federal money—$100 billion—will be allotted over 10 years to projects bringing non-federal revenue sources to bear for capital construction and maintenance. Federal funds would be limited to 20 percent of overall project costs, and could be clawed back if a project falls behind schedule or fails to live up to certain promises.

"It's a pilot program in effect, trying to get states and localities to come forward with innovative financing ways to do some important, major, well-justified projects," says Bob Poole, transportation policy director at the Reason Foundation (the nonprofit which publishes this website).

The proposal would also shift some infrastructure financing to user fees. Federal restrictions on tolling would be largely repealed, allowing states both to toll existing interstates and to spend that money on a wider array of highway projects. The plan would also make it easier for smaller hub airports to impose "passenger facility charges" on travelers, opening up a new stream of user fees to pay for maintaining and expanding aviation infrastructure.

To speed up infrastructure projects, the legislation would enact a "One Agency, One Decision" environmental review structure. A lead agency would conduct environmental reviews of projects, and the government would face a two-year deadline for to complete the review and permitting process.

Projects would also be allowed to get a jumpstart on some prep work—moving utility lines and purchasing rights of way—before the permitting process is complete.

More radical are the proposal's privatization provisions, which could diminish the current federal involvement in infrastructure.

The administration suggests allowing federal agencies to sell off assets that would be more efficiently owned and operated by the private sector. The possible examples listed include Reagan and Dulles airports in the D.C. metro area, and also the power transmission assets of the Tennessee Valley Authority.

Airports' ability to privatize on their own initiative would also be streamlined. Private Activity Bonds—tax-exempt bonds issued by private sponsors to raise capital for infrastructure projects—would likewise be expanded.

Not all of the plan would reduce the federal government's role. Much of the other $100 billion in direct federal funding would go to traditional infrastructure pork. Some $50 billion would be doled out to states, tribes, and territories to spend on mostly unnecessary rural projects—perhaps even broadband internet.

Another $20 billion would go a "Transformative Projects Program" that would "fundamentally transform how infrastructure is delivered or operated." Federal funds could pay for as much as 80 percent of these projects' construction costs, putting taxpayers on the hook for any number of risky ventures.

These provisions are likely necessary to buy political support for a program that is already facing criticism for not spending enough money.

Paul Krugman, an economist and New York Times columnist, is calling the proposal a "scam" that will bring almost no new investment while giving away the nation's infrastructure to corporate fat cats. Congressional Democrats have echoed the critique. Rep. Peter DeFazio (D-Ore.), the ranking Democrat on the transportation committee, said, "President Trump cannot pretend to solve our infrastructure woes by slashing real investments to States and local governments, pushing the responsibility off Federal balance sheets, cutting existing transportation programs to pay for Wall Street and foreign investors to toll our roads, and gutting bedrock environmental protections,"

DeFazio, along other House Democrats, have unveiled a $1 trillion proposal composed entirely of federal funding.

On the flipside, small-government advocates—such as the Cato Institute's Chris Edwards—argue that there should be no new federal subsidies to infrastructure, and that many of the incentives included in Trump's plan would only layer more bureaucracy on projects.

Poole sees the new federal funding as a compromise allowing the proposal's more market-oriented reforms to go forward. "It's decentralist in some ways," he says. "There are a lot of things that move the needle in the right direction."

Photo Credit: LEIGH VOGEL/UPI/Newscom

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Rich||

    To speed up infrastructure projects, the legislation would enact a "One Agency, One Decision" environmental review structure.

    Projects could be sped up even more by enacting "One Dictator, One Decision".

  • Microaggressor||

    DeBlasio's 5 year plan?

  • The Last American Hero||

    Ah yes, the Thomas Friedman plan.

  • Incomprehensible Bitching||

    As a progressive, I have mixed views about this. On the one hand, I love massive deficits and infrastructure spending, which creates union jobs and stimulates the economy.

    On the other hand, I don't really like the party that's doing this and taking credit right now.

    Hmmm. Such a mixed bag. What's a girl to do?

  • timbo||

    You should hate the guy that is doing it now then absolutely worship the next guy that does the exact same thing with a D in front of her name.

    The government really should just try helicopter money. How could it be any more wasteful than their regular drunken sprees?

  • Incomprehensible Bitching||

    Now, that's just crazy. If you just dropped money from helicopters, people might decide to buy themselves all sorts of things. What's the good in that?

  • BYODB||

    Yeah, you only get points if you convince someone to spend their money in the ways you want without you explicitly telling them that's what they must do.

  • The Last American Hero||

    Support it with abandon, my friend. 2016 had 2 corrupt, big-government, NY Democrats running for president. The one with the penis won. It really was a heads you win, tales I lose election.

  • Hugh Akston||

    It's amazing that Trump was able to find the revenue for all this extra spending after that big beautiful tax cut of his.

  • BYODB||

    It's amazing that Trump can find revenue anywhere given that Congress has the power of the purse.

  • shortviking||

    "Paul Krugman, an economist"

    lol

  • Juice||

    Former economist.

  • Incomprehensible Bitching||

    You mean Nobel price-winning economist Paul Krugman.

  • BestUsedCarSales||

    Nobel prize-winning former economist Kraul Pugman.

  • Incomprehensible Bitching||

    That's what I said.

  • The Last American Hero||

    At this point - given what his prize was for and the direction he's gone since - isn't his prize kind of like the guy who was a stud high school quarterback trying to trade on his glory days 25 years later?

  • Calidissident||

    My prediction? Trump and the Congressional GOP reach a "compromise" with the Democrats where the federal spending is drastically expanded and the privatization incentives are drastically scaled back compared to this proposal.

  • I am the 0.000000013%||

    The federal government should abandon support for all non-interstate freeway roads and let the states pick up the tab for everything else.

    Many (most?) projects probably wouldn't be seen as budget worthy if the money wasn't coming from the federal government, and that would be a very good thing.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online