Trump, Democrats Plan Infrastructure Follow-up on Funding

(Bloomberg) -- President Donald Trump is set to meet next week with House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer to discuss funding options for a $2 trillion infrastructure plan, according to a Senate aide.

The meeting is scheduled for May 22, the aide said. The Democrats said after their last meeting on April 30 that Trump agreed on a $2 trillion goal for rebuilding crumbling U.S. public works but that it was up to the White House to come up way to pay for it.

Democratic leaders want Trump to present the options he could support for raising revenue as the starting point for negotiating a bipartisan plan -- because without the president’s leadership, other Republicans won’t go along and it will founder.

“If the president does not lead on how we’re going to fund this infrastructure investment, it will not happen,’’ House Majority Leader Steny Hoyer said during the kick-off Monday for “infrastructure week,” sponsored by lobbying groups and other entities promoting more investment in public works.

Pelosi said during a meeting of the Transportation Construction Coalition on Tuesday that she wants the bill to include more than just roads and bridges, but transit systems, rural broadband, water systems, and even schools and housing, she said.

“This is comprehensive,” Pelosi said. “We don’t want lawsuits, we want dirt to fly.”

Funding Options

Funding methods discussed in the past include sales of bonds, a proposal to require the Department of Agriculture to sell its distressed assets to raise money for projects, and even selling under-performing student loans, mortgages and other federal debt for cash.

Trump has not stated a clear position on raising federal fuel taxes, which the U.S. Chamber of Commerce, American Trucking Associations and other infrastructure advocates say is the only realistic way to raise significant revenue in the short term.

Lawmakers who attended a closed-door meeting with the president in February 2018 said he told them he’d support a 25-cent per-gallon increase. But Trump never endorsed that publicly, and White House officials including National Economic Council Director Larry Kudlow have said they don’t favor it.

Gas Tax

Michael Burke, chairman and chief executive of the infrastructure firm AECOM and chairman the Business Roundtable’s Infrastructure Committee, said any funding plan can’t rely completely on raising fuel taxes and will likely include other funding and financing methods.

“The short-term fix has to be the gas tax while we’re trying to work on something more long term,’’ Burke said. “If properly postured, there is enough support on both sides to move forward with a gas tax in the 25 cents-a-gallon range.”

Still, Schumer and other Democrats have said they’d only consider increasing the gas tax if it’s paired with a roll-back of tax cuts that benefited the rich in the 2017 tax overhaul. The 2018 Senate Democratic infrastructure plan called for raising taxes on top earners and corporations.

Senate Majority Leader Mitch McConnell has flatly rejected suggestions to pair reductions in the 2017 tax cuts with a funding plan, and other Republican leaders have said a $2 trillion package isn’t doable.

Finding Revenue

Even DJ Gribbin, the architect of the public-works plan the administration released last year, doubts there’s $2 trillion to be found now. The viable options for generating more revenue are well known and have already been explored, said Gribbin, the former special assistant to the president for infrastructure policy.

“It’s hard to imagine where they would come up with $2 trillion,’’ Gribbin said. “There’s not this really clever, three-dimensional chess move we can make and ‘Ah-ha, now we have $2 trillion.’’’

It’s also a mistake to start the debate with a dollar amount, rather than deciding what the proposal seeks to accomplish, how much of that is the responsibility of the federal government, and how much that costs, Gribbin said.

Trump and the Democrats must “jump together” on how to pay for an infrastructure plan, said Neil Bradley, the U.S. Chamber’s chief policy officer. The chamber has backed a 25 cent per-gallon increase over five years as the best short-term method.

“If you’re going to do that, the easiest way – frankly the only logical way -- is for both of them to jump together on raising the gas tax,” Bradley said.

Dave Bauer of the American Road & Transportation Builders Association suggested using the 2017 tax bill as a model for passing a public-works package. While no Democrats supported the tax measure, White House and Republican leaders in Congress at the time agreed on a set of principles that allowed a bill to move quickly.

“If these folks want to make this happen, they can find a way to do it,” Bauer said. “If they want to do absolutely nothing for the next two years and try to justify that, then I guess that’s the approach they’ll take.”

©2019 Bloomberg L.P.

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