Trump ups ante on infrastructure to $1.5T in SOTU

President Trump smiles during his first address to Congress, February 28, 2017.

Article II, Section 3 of the U.S. Constitution requires the President to periodically “give to Congress Information of the State of the Union, and recommend to their Consideration such measures as he shall judge necessary and expedient.” Over the years, this simple stipulation has evolved into a full-on annual television spectacle befitting the over-the-top pageantry of American politics, complete with network anchors offering their predictions, special guests serving as political talking points, rebuttal speeches delivered by the opposition party, and live tickers tracking the TV audience’s reaction moment by moment. 

Last night President Trump addressed both houses of Congress and the American people in his young administration’s first State of the Union, using the opportunity to call for both parties to support his ambitious infrastructure plan. FreightWaves reported on the six page outline of the plan leaked a week ago with stories on the White House’s plan to let states commercialize rest stops and the details of how Trump will stimulate more private investment in infrastructure. 

Trump began his speech by recognizing VIP guests such as the firefighter who helped rescue summer campers from California wildfires and a Coast Guard officer who shielded strangers during the Las Vegas shooting, then pivoted to economic news. African-American unemployment is at its lowest rate ever recorded; so are the numbers for Latino Americans. Then came the tax bill: “Millions of Americans will have more take-home pay starting next month—a lot more,” said Trump. “We slashed the business tax rate from 35% all the way down to 21% so that American companies can compete and win against anyone else in the world.”

“This is in fact our new American moment,” Trump continued, saying “there has never been a better time to start living the American dream.”

Then Trump put on the mantle of Builder-in-Chief: “America is a nation of builders. We built the Empire State Building in just one year — isn’t it a disgrace that it can now take ten years just to get a permit approved for a simple road? Any bill must also streamline the permitting and approval process, getting it down to no more than two years, and perhaps, even one,” Trump said. 

The imagery of crumbling highways and ‘third world airports’ that candidate Trump was so fond of on the campaign trail gave way to “gleaming new roads, bridges, highways, railways, and waterways all across our land” as the president raised the stakes for his infrastructure bill from the oft-cited $1T figure to “at least” $1.5T. As FreightWaves reported last week, this doesn’t mean the federal government will spend a trillion dollars: the government plans to contribute up to 20% of a given project’s total cost, with the rest picked up by a mixture of state, local, and private funding. Last week the American Road and Transportation Builders Association released a report that painted a dire picture of the United States’ under-funded infrastructure, including more than 54,000 bridges that the association rated as ‘structurally deficient.’ 

“I am asking both parties to come together to give us the safe, fast, reliable, and modern infrastructure our economy needs and our people deserve,” said President Trump. 

It’s unclear exactly how an infrastructure bill along the lines proposed by the Trump administration would impact trucking and transportation in the United States. As far as short-term impacts go, there is a well-known inverse correlation between trucking and construction employment—meaning that when construction employment rises, the number of drivers declines, and vice versa—that may affect localities as individual projects break ground in a piecemeal way. In the mid-term, record amounts of spending on construction would certainly stimulate demand for truckload miles and railway freight as building material and machinery criss-crosses the country. But the long-term effects of $1.5T in infrastructure spending would benefit transportation and logistics the most: increasing the capacity of the nation’s highways would go a long way toward reducing our congestion problems, which have gotten worse in recent years. Smoothing out the bottlenecks on our interstates would benefit everyone: carriers would see each truck’s productivity increase; drivers would be able to log more miles per day; and shippers would see transit times fall.

It’s an ambitious goal, and a worthy one. FreightWaves will continue our coverage as the White House unveils official details and the proposed legislation starts making its way through Congressional committees. 

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John Paul Hampstead, Associate Editor

John Paul writes about current events and economics, especially politics, finance, and commodities, and holds a Ph.D. in English literature from the University of Michigan. In previous lives John Paul studied Shakespeare in London and Buddhism in India, but now he focuses on transportation and logistics in the heart of Freight Alley--Chattanooga. He spends his free time with his wife and daughter herding cats, collecting books, and walking alongside the Tennessee River.