Yesterday, I took a look at the overwhelming success of local transit referenda at the ballots on Tuesday night—and how the dramatic change in the executive office could put a damper on them. But the new president-elect, Donald Trump, has described, repeatedly and proudly, how infrastructure spending, especially on roads, bridges, and America’s “third-world” airports, will create jobs and stimulate the economy—a belief reiterated in a speech last month outlining his plan for his first 100 days in office. What do his infrastructure funding plans look like, and how might they pan out? What kinds of projects will get federal support, and who will benefit? These are among the many, many mysteries of our new American order. But buckle up: It looks to be a bumpy ride.
Trump has plans to pay for infrastructure...
Unless the noted traffic meddler and current New Jersey governor Chris Christie really does become the next Secretary of Transportation, which some have half-jokingly surmised, there’s no reason to expect a Trump administration to increase the gas tax, which has historically been the main source of the trust fund that pays for federal highway subsidies (Christie raised New Jersey’s gas tax just last month). Instead, in the week leading up to election day, Trump’s campaign quietly slid forward an infrastructure finance plan that essentially calls for full-scale privatization. The administration would provide $137 billion in tax credits to private companies interested in building and managing highways, bridges, airports, and water systems. Those companies, his advisors argue in a policy paper, would be thusly incentivized to spend some $167 billion in initial equity, and use that as cushion to reduce their risk as they borrow even more from private investors.
In that same paper and in prior statements by the president-elect himself, team Trump has also articulated a plan to repatriate corporate cash that’s been stashed abroad, offering a one-time tax holiday charging companies just 10 percent (rather than the current 35 percent) to bring their money back to the U.S. Between that and the private financing scheme, the policy paper estimates the plan would generate $1 trillion in infrastructure investments—with only $137 billion of that coming from the feds. And even that fraction of the total, according to Trump logic, would be neutralized by the increased tax revenue that infrastructure projects would supposedly generate, through jobs and sources like highway tolls and rate payments.
...but they might not work.
Deep breath: These are not inherently bad ideas. The repatriation scheme might not bring in tons of bacon, but it could make some additional cash available for transportation projects. “I don’t see why he wouldn’t follow through on this,” says David Levinson, a transportation scholar at the University of Minnesota. “It’s like a free lunch.” And privatizing certain infrastructure projects can work well under certain circumstances, and such a relationship might appeal to a spending-averse Republican Congress.
But there are major problems with privatization as a mechanism to fund most projects. First, there’s not much money in infrastructure building for private investors, unless they get to build and operate a toll road with a big price tag for drivers—which is all but guaranteed to face resistance from constituents. Infrastructure projects that are crucial for the public good, but that don’t have an immediate financial gain—such as virtually any transit project, or new water pipes in a place like Flint, Michigan—would be even less appealing to investors, given that revenues would have to be driven by spiking fares or rates to an unaffordable degree. Those projects will still have to be subsidized.
Plus, even for infrastructure projects that appeal more to private investors, like highways, it’s very hard to strike a win-win deal between public and private sectors. Just look at the Indiana Toll Road: Initially feared to be a giveaway on the part of the state, its private operators went bankrupt. “Harder deals will be drawn which might not go well for states,” says Levinson.
Speaking of which, the states control highways, not the feds. So unless Uncle Sam somehow usurped control over roads—which would be both out of whack with Republican ideology and possibly unconstitutional—state DOTs aren’t necessarily going to roll over with a plan to sell off highway projects, even if the federal government encouraged it. And it’s not guaranteed that Congress would be game—it’s faced opposition to road pricing in the past, especially from the trucking industry. Besides, Senate Majority Leader Mitch McConnell stated Wednesday that infrastructure spending in general will not be a top priority for Congress. So there’s that.
With the right mix of tax incentives, some private investors, in some states, would probably hop on board a Trump-backed infrastructure privatization scheme, and some highway projects could indeed get built under such a framework. But there are a lot of reasons to believe this won’t work in the vast majority of cases. And given that Trump also proposed passing the largest tax cuts since the Reagan administration, it’s unclear where else infrastructure funds might be found.
Somewhat grimly, Levinson foresees a different potential cash bucket that could pay for Trump’s infrastructure plans: a major stimulus plan, much like the Recovery Act of 2009, which will “tie in well with the new recession that will be coming up shortly.” He says he could see tens of billions getting devoted mostly to infrastructure. “Trump is a builder,” Levinson says. “He likes his big, highly visible infrastructure objects and his ribbon-cutting ceremonies. He will go for quick wins where he can get them.”
All of this, of course, is to say nothing of The Wall—last we heard, Trump still seems to be convinced that Mexico will pay for that.
Certain projects—and select communities—may be favored
Where the president-elect’s “quick wins” will be, and who else will benefit from them besides Donald J. Trump and his attendant businesses, are pertinent questions. As I reported yesterday, there are reasons to wonder whether federal matching funds for mass transport will be cut by a GOP Congress, which has clearly articulated a lack of support for public transit subsidies. And with Republicans gaining governorships in more states, it’s also worth thinking about how much power states have in moving these projects forward, says Yonah Freemark, a transportation consultant and doctoral student at MIT. Look at how the streetcar project in CIncinnati struggled under Ohio’s Republican governor, John Kasich, who cut the state funding that had been promised for it. (The line did get built, thanks to a groundswell of local support, but in a somewhat diminished form.) In North Carolina, a light rail line between Chapel Hill and Durham is in jeopardy in large part because of state budget battles. “The degree of control by conservatives is now so overwhelming that the fate of progressive initiatives like public transportation is not clear,” says Freemark.
Levinson worries less about federal transit dollars disappearing, but he does believe that the geography of investment will track shifting relationships between federal, state, and local leaders. “Funding decisions will be more overtly political,” he says. As infrastructure spending bills get earmarked, federal funds may wind up more concentrated in Republican districts. A shiny new commuter light-rail project in one of the more conservative counties surrounding Minneapolis, for example, might be more likely to get assistance than a light-rail or a bus-rapid transit project that serves the city itself. Perhaps not surprisingly, that could mean that the people who form the core of U.S. transit ridership—lower-income Americans who live in urban areas and do not own vehicles—might draw the short end of the stick.
Speaking of economic equity, the current Department of Transportation administration has placed a strong focus on transportation and environmental justice, with funding and support for initiatives like Ladders of Opportunity. We can probably expect that to end under a conservative regime. Susan Shaheen, a shared mobility expert at the University of California, Berkeley, thinks that a business-oriented administration such as the one Trump will assemble might support burgeoning partnerships between transit agencies and the likes of private operators such as Uber and Lyft, seeing as they can reduce public transportation spending. “A shared mobility system that could help fill gaps between public and private services is not necessarily counter to the instincts of a Republican administration,” she says. Yet such partnerships already raise important equity concerns. At this point, it’s hard to imagine the Trump administration thinking carefully about how to get riders who lack smartphones and bank accounts to tap into these services.
It also seems abundantly clear that planet-warming impacts of the transportation sector will not be considered by the Trump administration. Famously a climate-change skeptic himself, Trump has picked the noted climate-change denier and conservative think-tanker Myron Ebell to lead the EPA’s transition. The president-elect has threatened to weaken, or even repeal, fuel economy and emissions standards governed by that agency and has said that all EPA regulations will be subject to review. That may well include laws that attempt to keep environment impacts of large transportation projects to a minimum.
The upshot? Infrastructure dollars will get spent, probably mostly on highways. Transit projects designed for people who actually need to use transit may suffer. And the planet seems sure to lose. For those who care about protecting the commons—in terms of both transportation and the environment—local dollars and leadership now matter more than ever.