Trump to unveil long-delayed $1.5tn infrastructure plan

Donald Trump will unveil his long-delayed plan to galvanise $1.5tn of new infrastructure spending and speed up the approval of new projects on Monday, but is expected to commit only $200bn in federal funds over 10 years to pay for the programme.

The plan, to be presented as part of a 2019 budget proposals to Congress, would find cash for the new spending by cutting elsewhere in the federal budget — including on some transport investment — and urging state and local governments to shoulder more of the costs.

Mr Trump made fixing America’s decaying infrastructure one of the focal points of his presidential campaign. In last month’s State of the Union address, he urged a bipartisan push for better roads and bridges, lauding America as a “nation of builders”.

However, with the administration facing federal budget deficits on track to balloon to at least $1tn next year because of tax cuts, the White House is relying heavily on other sources of finance to meet its ambitions.

“Moving towards a more stable platform for funding is part of this initiative — and that more stable platform is at the state and local level,” a senior White House official said on a call previewing Monday’s plan. “The federal government continues to play an important role, but we should move and rely more heavily on what state and local governments are doing.”

The Trump plan to use $200bn in federal funds to underpin $1.5tn of projects is viewed by some specialists as a heady multiplier that is likely to prove unrealistic. Some $100bn of the funds will be used to match state and local spending.

There will be a $20bn expansion in loan programmes and bonds, a $50bn rural infrastructure initiative, and another $20bn on transformative projects that “lift the American spirit”, according to the official. The final $10bn will be used in a fund for federal buildings.

The White House hopes that the rest of the $1.5tn will be funded by state and local governments and private investment.
Alongside the spending plans will be an effort to accelerate the process of approving new projects following repeated complaints from the president about slow clearances, with an effort to reduce duplication and second-guessing by different agencies. The administration also wants to help train more individuals to work on projects.

Some business groups have said that any attempt to tackle the infrastructure deficit will have to involve an increase in the federal gas tax that finances the Highway Trust Fund and has been eroding in value for years. The US Chamber of Commerce has proposed increasing the federal tax on fuel by 25 cents a gallon over five years. Congress has expressed little appetite for such a politically contentious move, however, and given Republican opposition to any tax increase it would require enthusiastic backing from the administration.

The $200bn infrastructure price tag will instead be balanced by cuts elsewhere in the president’s budget, which is due on Monday. Some of the savings will come from other parts of the infrastructure regime, including transit funding and the Transportation Investment Generating Economic Recovery grant programme, which was set up under Barack Obama’s recession-fighting stimulus package to inject cash into surface transportation.

The White House official stressed the president is “open to new sources of funding”, adding that the administration aimed for the programme to be bipartisan. It was not a “take-it-or-leave-it proposal”, the official said. “This is the start of a negotiation.”

Given Congress struck a two-year funding deal on Friday, Mr Trump’s specific budget proposals on Monday have become less important. The president is due to host lawmakers from both sides of the party divide for a discussion of his infrastructure plans on Wednesday.

The White House official argued that in putting an intense emphasis on state and local activity the administration was not watering down the federal government’s role. “Not only are we not walking away from the federal responsibility; we’re taking even more responsibility to ensure that we get infrastructure funding and permitting on a sustainable track for generations.”

The need for re-energised investment in US infrastructure is not contested across party lines. The American Society of Civil Engineers estimates that the funding shortfall over 10 years for infrastructure systems, including surface transportation, waterways, electricity and airports, is $2tn. But Mr Trump’s hopes of fostering a bipartisan deal face long odds as midterm elections loom larger and Democrats clash with Republicans over how to fund new projects.