The Trump administration has put the focus on infrastructure. Law firm Holland & Knight explain the path the administration may take and what will need to be done to engage the new team as it moves ahead on broad infrastructure changes and potential investments.
“Donald Trump's Contract with the American Voter promised that the administration will prioritize infrastructure development during the first 100 days in office by seeking to introduce and pass the "American Energy and Infrastructure Act."
The package, which the President-elect has stated will leverage $1 trillion worth of public-private partnerships and private investments, may include support for transportation, energy, water, telecommunications and cybersecurity projects. The President-elect's selection of Elaine Chao for the Department of Transportation (DOT), along with his selections of Wilbur Ross for the Commerce Department and Steve Mnuchin for the Treasury Department, confirm his plan to focus on private infrastructure will likely continue to be the hallmark of his push to develop American infrastructure. Ross is the co-architect of the 10-page memo outlining the President-elect's proposal, which would offer $137 billion in federal tax credits to private investors.
Not surprisingly, certain campaign promises, including repealing the Affordable Care Act (ACA) and focusing on comprehensive tax reform, are first in queue. However, action on infrastructure already has begun and, while it may take time to create the compromise needed to complete any package, perhaps beyond the first 100 days, it is still critical to engage decision-makers early in the process.
Democrats, including House Minority Leader Nancy Pelosi, have expressed a willingness to work with the President-elect to develop this bipartisan infrastructure package. The Presidentelect intends for the package to be based on tax incentives -- a proposal that has been the subject of widespread criticism, with both right- and left-wing economists asserting that private investors only will fund projects that have tolls or user fees that can recoup investment costs. Projects to fix existing roads, repairing aging pipes or repairing bridges may fall through the cracks, critics assert. The American Society of Civil Engineers (ASCE) has likewise expressed skepticism about the plan, stating that the promised $1 trillion investment falls short of the $3.6 trillion America needs to update its infrastructure.
In a speech he made in Cincinnati on Dec. 1, 2016, President-elect Trump made an additional announcement regarding his infrastructure plan: "We will have two simple rules when it comes to this massive rebuilding effort: buy American and hire American." Congress quickly rallied around the promise, particularly Senate Democrats that supported the "Buy America" provision included in the Senate-passed Water Resources and Development Act (WRDA) of 2016 -- though Republicans stripped the Buy America provision from the House version of the bill and during conference negotiations.i During the speech, the President-elect also indicated his intention to provide funding for projects to deepen harbors in addition to the road, bridge and hospital infrastructure financing he previously had suggested the package would support.
Republicans and the business community have pushed back on the proposal insofar as they are concerned such a package will resemble the American Reform and Recovery Act of 2009 (ARRA). U.S. Chamber of Commerce Executive Director of Transportation Infrastructure Ed Mortimer has insisted the President-elect should consider America's long-term transportation needs, rather than focusing on employing people by pursuing immediate, "shovel-ready" projects. Yet, government spending on concrete and steel also could result in economic influxes in the rust belt and rural communities that the President-elect pledged to help during his campaign.
In a conference call with reporters, the Senate's Democratic Minority Leader, Sen. Chuck Schumer (D-N.Y.), also pushed back on the President-elect's proposal, insisting that the package must include traditional government-funded highway and water projects, not just privately financed initiatives. Democrats continue to argue that allowing the private sector to make infrastructure decisions may result in more toll roads and bridges without addressing some of the nation's most critical infrastructure needs. Congressional Republicans, including President-elect Trump supporter Rep. Chris Collins (R-N.Y.), likewise have expressed support for a package with mixed incentives for both private and public sector projects.
While the President-elect has stated that infrastructure is a top priority and has tasked a highlevel team to fill in the details, there is no clear picture yet of what it will look like and how it will be funded. House Speaker Paul Ryan, Vice President-elect Mike Pence, Senate Majority Leader Mitch McConnell, incoming White House Chief of Staff Reince Priebus and the President-elect himself all have signaled that they want healthcare, nominees, overturning regulations and tax reform to be considered before infrastructure. Recently Speaker Ryan stated that he plans to consider infrastructure in "our spring budget." He provided few details, but reiterated plans will be focused on "leveraging private sector dollars" and streamlining regulations.”
For the full article see Holland & Knight’s website.
