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Trump Proposes A Cool Trillion For Infrastructure, Ball Now In Congress' Court

President Donald Trump has proposed a $1 trillion infrastructure plan as part of the administration's proposal for the federal government's budget for fiscal 2021, which begins on Oct. 1. Under the plan, infrastructure spending would be done directly by the federal government, and take place over 10 years.

Trump Proposes A Cool Trillion For Infrastructure, Ball Now In Congress' Court
President Donald Trump

The proposal is wide-ranging, with the lion's share of spending in the form of an $810B, 10-year plan for transportation. Most of it is for highway infrastructure ($602B), but lesser amounts are allotted for transit ($155B), traffic safety ($20B) and railwork ($17B). Also included would be money for loans and grants to local authorities for transportation infrastructure work.

The other major component of the Trump administration's plan devotes $190B over 10 years to needs including water, broadband and rebuilding bridges, as well as funds to repair infrastructure on public lands, such as national parks. A request to establish a $10B “Federal Capital Revolving Fund” to enable new construction and renovation of federal buildings is a part of the FY 2021 budget as well. 

"This fund has been proposed a few times since Trump took office and hasn't yet been appropriated," Colliers International Executive Vice President, Government Solutions Kurt Stout said. "But if it were, it could siphon substantial demand from leased space."

Previous infrastructure proposals by the administration have tended to evaporate in Congress, so the fate of the latest plan is uncertain at best.

"The president’s budget is more of a political statement than an expectation," Stout said. "Sen. [Mitch] McConnell has already signaled that the spending levels won’t be approved in the Senate and, of course, it’s DOA with the House leadership." 

Even so, infrastructure spending is one thing that the parties can agree on, at least when the topic is viewed broadly, Stout said.

"I don’t expect any infrastructure legislation to look exactly like what Trump has proposed, but I do see the potential for negotiated bipartisan agreement, at some point," Stout said. 

In January, House Democratic leaders rolled out their own infrastructure plan, a $760B, five-year blueprint with details and priorities different from the administration's version. Spending under the Democratic plan would target highways, transit and water, but also funds to boost rural broadband and improve climate change resiliency. 

Neither the president's plan nor the House Democrats' plan suggests raising the federal gasoline tax, traditionally the prime source of highway funding, but which has been frozen at the same level since 1993. A tax hike of that kind is generally considered a non-starter among both parties, Politico reports.

Bridge infrastructure

Still, both parties agree that the state of U.S. infrastructure, which has been an important talking point for Trump since before he took office, is a chronic problem. In 2017, the American Society of Civil Engineers gave U.S. infrastructure a grade of D+, recommending $2 trillion more in funding for its rehabilitation over 10 years.

“Inadequate infrastructure creates a hard ceiling to economic growth, as it affects the efficient distribution of goods and services," said Michel Couillard, 2020 chair of the Counselors of Real Estate.

Much of the country's future economic growth depends upon improved productivity, as demography is no longer as favorable as it has been since World War II, Couillard said.

"Productivity, in turn, will be a function of efficiencies across the core systems in the economy," Couillard said. "Better infrastructure is required to support growth, and real estate values, both residential and commercial, are tied to more sustainable growth."

Some experts argue for a broader definition of infrastructure than roads, bridges and rail, as the country continues to grow and climate change stresses existing systems.

“Sixty-five million more people are expected to call the U.S. home by 2050 and we will need more of everything: roads and highways, bridges and tunnels, public transit and rail, as well as water, wastewater and energy facilities to sustain life," Autodesk Director, Government Affairs Allison Rose said.

Autodesk specializes in design and construction software.

"Emerging technologies, including cloud-based digital design and construction tools, can play a key role in building better and more cost-effective infrastructure," Rose said.

"We hope Congress and the administration will promote better use of technology in publicly funded projects, as well as investment in training the workforce on new technologies, as part of its infrastructure proposals," she added.

The 2021 budget proposal is the latest in a line of proposals from the administration suggesting accelerated levels of infrastructure spending. Such proposals, in fact, formed part of Trump's campaign rhetoric in 2016, when he proposed spending $1 trillion on the problem.

But despite such administration initiatives as "infrastructure week" — the idea of discussing infrastructure plans for seven days in hopes of spurring bipartisan action — the president's proposals have yet to translate into much in the way of congressional action.

In early 2018, Trump presented an infrastructure plan to Congress that proposed spending of $200B by the federal government and $1.5 trillion by the private sector, which would be incentivized to invest by the government. That proposal ultimately fizzled in Congress, with Republicans broadly objecting to its cost, and Democrats criticizing its reliance on incentives as a giveaway to private companies, The Hill reports

On his own, the president has taken a few steps to address infrastructure. In January, the administration proposed easing environmental regulations under the National Environmental Policy Act, with a goal of speeding up environmental reviews on infrastructure projects. 

NEPA, enacted in 1970 along with the creation of the Environmental Protection Agency, requires the federal government to assess the impact of infrastructure projects. Critics immediately blasted the proposed new rules as a way to get around environmental review for such projects as oil pipelines.