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Trump administration clarifies plans for infrastructure investment
Kirill Abbakumov   on Thursday, July 6, 2017 at 11:00:00 am

On June 8th, the President Donald Trump announced his new $200 billion plan to rebuild and modernize American roads, rails, ports, and airports in order to create more jobs, maintain U.S. economic competitiveness, and connect communities to more opportunities. This plan will build on a more ambitious $1 trillion infrastructure plan which made up the campaign promise of President Trump and which he actively advocated for in the first half of 2017.

The new infrastructure investment plan is one of President Trump’s regulatory reforms designed to spur growth and investment in America. Federal rules and regulations apply to virtually all infrastructure investments, while the federal government accounts only for one-fifth of all infrastructure spending. The new plan aims to make the nation more competitive by unleashing private sector capital by significantly reducing permitting time for major infrastructure projects from 10 years to 2 years, as well as slashing regulations to establish tangible response. Federal investments into infrastructure will be more targeted and awarded to projects of high priority. Additional responsibility will be transferred to the States in order to reduce the regulatory burden for infrastructure investment and spending.

Original goal of $1 trillion investment in infrastructure still stands. The administration will dedicate $200 billion in federal funding for infrastructure, while the originally promised $1 trillion in infrastructure investment will be funded through a combination of new federal funding, incentivized non-federal funding, and newly prioritized and expedited projects. Funding will be structured to incentivize additional non-federal funding. As such, the administration is committed to pursuing numerous funding proposals:

  • Expand the Transportation Infrastructure Finance and Innovation Act (TIFIA) to finance surface transportation projects through direct loans, loans guarantees, and lines of credit;
  • Remove the $15 billion cap on Private Activity Bonds (PABs) and expand eligibility to other non-federal public infrastructure to issue tax-exempt bonds on behalf of private entities;
  • Provide competitive grants to urbanized areas mitigating congestion through the Urban Partnership Agreement Program and the Congestion Reduction Demonstration Program;
  • Liberalize tolling policy, which is generally restricted on interstate highways and prevents public and private investment in such infrastructure;
  • Fund EPA’s Water Infrastructure Finance and Innovation Act (WIFIA) loan program designed to leverage private investments in large drinking water and wastewater infrastructure projects.

The administration is also considering two proposals to support better fiscal restraint:

  • Federal Capital Revolving Fund to fund federally-owned civilian capital assets with annual appropriations and address underinvestment in capital assets driven by large upfront costs;
  • Partnership Grants for Federal Assets to fund private partners to build or improve federal facilities and donate it to the federal bodies, since government cannot loan itself funding.

As each $1 billion invested in infrastructure development has the potential to support more than 18,000 well-paying jobs, the American economy would benefit enormously from an ambitious increase in public investment and infrastructure investment. Such investment would not only create jobs, but also lock-in genuine full employment in the near-term, and would provide a needed boost to productivity growth in the medium-term.