Infrastructure bill in limbo, prolonging uncertainty for trucking

A major infrastructure package seems unlikely to be passed this year in Washington, as Congress focuses on tax reform. (Photo: Shutterstock)

A major infrastructure package seems unlikely to be passed this year in Washington, as Congress focuses on tax reform. (Photo: Shutterstock)

Last Thursday night, Transportation Deputy Secretary Jeffrey Rosen briefed state transportation officials, industry groups, union leaders, and other stakeholders on the details of the Trump administration’s yet-to-be-released infrastructure bill. That meeting followed a Thursday morning huddle on infrastructure between President Trump and a select group of House lawmakers that included two Democrats and three Republicans. While legislative wheels are starting to turn, there is little reason to expect major movement on any infrastructure bill in 2017. The most optimistic timelines being floated on Capitol Hill call for the law to be signed in 2018, with funds released in 2020.

Logistics and shipping professionals are watching this bill closely because a massive infrastructure program would have manifold impacts on the industry: large-scale spending generates plenty of economic activity that would stimulate shipping, but the expected increase in construction jobs would tighten the trucking labor market because of the well-known inverse relationship between construction and trucking jobs – as construction picks up, more long-haul drivers move to local construction jobs that often pay better and get them home each night. Finally, carriers are waiting to see where the projects will break ground first, anticipating short- and mid-term delays caused by construction and long-term gains in road and bridge capacity.

Yet questions linger about Congressional Republicans’ ability to pass ambitious legislation, and there are rumors that President Trump has now soured on the idea of large scale public-private partnerships (P3), the key to pushing spending to the $1 trillion mark he touted during last year’s campaign. The 2018 budget outline released by the White House revealed that the federal government only planned to cover $200 billion of the total figure.

A year ago, in the first presidential debate between candidates Trump and Hillary Clinton, Trump’s $1T plan bested Clinton’s $500B proposal and positioned him as Developer-in-Chief. On Fox Business Network last August, Trump explained how his plan would reach the trillion-dollar mark: “People would put money into the fund, citizens would put money into the fund and we will rebuild our infrastructure with that fund and it will be a great investment and it’s going to put a lot of people to work.”

Both candidates’ attention to the issue followed a 2013 American Society of Civil Engineers (ASCE) report that gave American transit, road, aviation, and hazardous waste systems a “D” grade. The report estimated that between 2016 and 2025, infrastructure deficiencies would lead each U.S. household to lose $3,400 per year.

But in the past week, reports have surfaced about Trump’s skepticism regarding the feasibility of the massive public-private partnerships that he advocated for in the 2015 bestseller, Crippled America, and during the 2016 campaign. The reason? It is proving difficult to raise $800B from private investors for infrastructure projects, a sector with notoriously low ROI.

Referring to P3 projects, Rep. Brian Higgins (D-NY), a member of the House Ways and Means Committee, reported that “[Trump] said they were more trouble than they were worth.”

Some commentators, including The Wall Street Journal, have read Trump’s change of strategy as a potential opening for Democrats, who have historically favored federal investment instead of P3. In this scenario, the infrastructure bill would follow the “if you can’t beat ’em, join ’em” script Trump recently tried out with House Minority Leader Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) on DACA and border security.

One thing remains a constant—Trump’s passion for infrastructure and building—but there are other obstacles that might stand in the way of a huge spending bill passed with the Democrats’ help. The GOP’s frustrated attempts to repeal Obamacare leave them with a more constricted budget outlook than the party was hoping for when it captured all three branches of government. For instance, the last-ditch Graham-Cassidy proposal would have trimmed $133B from the federal deficit by 2026, according to the Congressional Budget Office. Passing that bill would have made it easier to justify increased spending on infrastructure. Likewise, the final shape of the GOP’s much-anticipated tax reform bill will also affect the federal government’s bottom line, and projecting that depends on how much faith you have in Treasury Secretary Steve Mnuchin’s Laffer curve economics.

Pitching the Trump administration’s proposed $1.5T tax cut to a Washington conference on Sept. 28, Mnuchin insisted that “not only will this tax plan pay for itself, but it will pay down debt.”

Other Republicans are waiting for more realistic estimates of the cost to emerge. At this week’s Senate Budget Committee hearing, Sen. Bob Corker (R-TN)—who has already announced he won’t run for re-election in 2018—struck an ambivalent note about the tax reform bill. “Unless it reduces deficits — let me say that one more time — unless it reduces deficits and does not add to deficits with reasonable and responsible growth models, and unless we can make it permanent, I don’t have any interest in it,” Corker said.

Ultimately, the fate of Trump’s solution to America’s infrastructure crisis might rely on a paradox: working with Democrats to increase spending while teaming up with Republicans to reduce revenues.