Under Biden, Infrastructure Is Back in Play. but Making a Deal Will Still Be Tough
There’s talk of an infrastructure package stirring again in Washington. In recent days, Democratic lawmakers in Congress and an adviser to President-elect Joe Biden suggested that having him in the White House raises the odds for bipartisan legislation that could pump money toward roads, transit, water systems and other public works.
House Speaker Nancy Pelosi last week highlighted infrastructure as an area where her party might be able to work across the aisle, something that will be required if Republicans hold onto their Senate majority.
U.S. Rep. Peter DeFazio, chair of the House Transportation and Infrastructure Committee, was also upbeat, saying he and “Amtrak Joe” share goals when it comes to things like improving America’s rail network, cutting down on pollution from the nation’s transportation sector and making infrastructure more resilient to extreme weather.
And on Thursday, John Porcari, an adviser to Biden on transportation policy, told an audience of state officials during an online forum that there are “real prospects for a bipartisan, broad infrastructure program” and indicated that the incoming administration will likely seek to beef up funding for existing transportation accounts.
But the rifts between Democrats and Republicans in Congress promise to make a major infrastructure deal difficult no matter who is president. This is true even as groups across the ideological spectrum, from the U.S. Chamber of Commerce to environmental organizations, view an infrastructure plan as crucial, both for improving people’s lives and advancing policy changes that they’d like to see.
On Capitol Hill, even routine business can be difficult to accomplish. Lawmakers this year failed to agree on a new surface transportation reauthorization bill, recurring legislation that guides how federal highway and mass transit dollars are spent. Instead, they extended the five-year policy expiring at the end of September for another year.
Democrats and Republicans have for years struggled to reach a consensus on how to raise new funding for infrastructure, especially with transportation. Dwindling gas tax receipts due to more fuel-efficient vehicles are a chronic problem, eroding revenues flowing to the Highway Trust Fund, a major pot of federal money for roads and transit. The rise of electric vehicles and slow growth in the miles people are driving are expected to make this dilemma even worse.
Rather than raising the gas tax, now 18.4 cents per gallon and last increased at the federal level in 1993, or beginning the shift to a mileage-based fee of some sort, lawmakers have instead chose for about 12 years now to siphon money from elsewhere in the federal budget to keep the trust fund afloat.
There are needs outside of transportation also. Environmental Protection Agency findings issued in 2018 estimated that water utilities, which have over 1 million miles of buried pipe, need to invest $472 billion for capital improvements over two decades in order to ensure that equipment remains in good repair and homes get safe tap water. Similar investment backlogs exist with sewers and wastewater systems, locks and dams and the power grid.
As debate in Congress carries on about what combination of funding and tax incentives might best be deployed to fill in America’s infrastructure gaps, pockets of the country continue to deal with the problems that subpar public works cause—dirty water, overflowing sewer systems, delayed commutes, and unreliable internet service at a time when many households now need to go online for work or school.
‘Divides are Deep’
Apart from funding, there are other potential stumbling blocks for infrastructure legislation.
Democrats believe policies meant to address climate change and environmental issues must be embedded into their public works plans—a concept Biden generally embraces in his platform. And, along with progressive groups focused on transportation issues, they are becoming more united behind the idea that the federal government should funnel more money to mass transit.
These sorts of priorities don’t always sit well with Republican members of Congress who tend to represent districts and states that are more rural, dependent on cars and, in some cases, have economies that rely heavily on gas and oil drilling and other fossil fuel related businesses. GOP lawmakers also chafe at certain proposals that can be branded as part of Democrats’ Green New Deal.
“The partisan divides are deep, there’s no question about it,” said Bill Shuster, a former Pennsylvania Republican congressman who chaired the House Transportation and Infrastructure Committee before opting not to run for reelection in 2018. Differences between the parties will particularly come into play if the GOP maintains its control over the Senate by winning runoff elections in January for two seats in Georgia.
But Shuster, now an adviser at the law firm Squire Patton Boggs, said that coming together on infrastructure makes sense from a political standpoint because it would provide Democrats and Republicans in Congress, as well as Biden, all with a chance to claim a win.
And it’s sensible policy, he said, because greater federal investment in the nation’s infrastructure is sorely needed and could help to stimulate the economy at a time when it’s getting dragged down by the coronavirus pandemic. “Most of the states have done a good job getting their revenues and doing their part,” he said. “But the federal government needs to step up.”
“I hope that people put down their battle axes and do something that’s positive,” Shuster said. “Of course the funding is really the tough thing.” Billions of dollars the federal government poured into coronavirus relief programs over the past year could make building political support for new infrastructure spending even more challenging, he added.
Shuster argues that bringing back earmarks—which ensure that money will go to specific projects in districts or states—could help to grease the rails with infrastructure legislation, giving lawmakers an incentive to vote for a bill even if they don’t like all of what is in it.
“Members of Congress have to be able to say ‘I’m getting money for this significant infrastructure project in my district,’” he said.
DJ Gribbin, a former policy adviser to President Trump who was a lead architect of his now-shelved infrastructure proposal, sees a strong chance for progress on infrastructure under Biden and with Democrats still in control of the House. He also noted that new presidents often want to differentiate their administration from the one that came before them.
“That’s a nice tailwind for the issue, to say, ‘Hey, here’s something the last guy talked about for four years and didn’t do,” said Gribbin, who now leads Madrus, LLC, an infrastructure-focused consultancy.
Trump repeatedly expressed interest in an infrastructure package during his time in office. But a plan he sent to Capitol Hill in early 2018 fizzled. Senate Republicans were especially lukewarm about it—even after the White House took steps like dispatching five cabinet secretaries to testify before lawmakers to drum up support.
At one point last year, Trump and Democrats agreed to work together on a $2 trillion plan. But those talks quickly cratered. Pelosi and others have blamed the president for not staking out a clear position on how to pay for a package—a move that might’ve provided political cover to Republicans otherwise reluctant to support a policy change like, say, raising the gas tax.
Trump’s 2018 package called for about $200 billion of direct federal spending, with the hope of spurring additional investment from state and local governments and the private sector that would total upwards of $1 trillion. It was designed, in part, to reward greater amounts of federal funding to states and localities that came forward with more money of their own for projects.
State and local government groups lobbied hard for an infrastructure package in recent years. But some local leaders balked at the Trump plan, saying that the federal government needed to pitch in more money and that their own budgets were already stretched thin.
Critics also claimed that Trump’s strategy threatened to leave behind places that needed investment the most, but couldn’t afford to raise local dollars, and some worried that federal money would be diverted from existing programs to pay for the new proposal.
‘What is the Federal Government’s Role?’
Jeff Davis, a senior fellow at the Eno Center for Transportation, predicts it will be extremely difficult for a divided Congress to agree on a budget blueprint next year, raising the possibility that any major upcoming decisions on fiscal policy will be pushed off until lawmakers are forced to vote on raising the nation’s debt limit, probably sometime around next September or October.
The Treasury can’t borrow more than federal debt limits allow and periodically asks Congress to raise this threshold so the government can keep covering its expenses. The debt limit increase is generally considered “must pass” legislation and controversial bills have been rolled into it in the past. Davis suspects if there are major changes to tax rates or infrastructure spending they’ll be tied to the debt limit vote. “Everyone knows the real deadline is debt limit,” he said.
Gribbin and others say a problem with the infrastructure debate in Washington is that it too often gets short-circuited by the focus on taxes and funding levels.
“The biggest challenge I had is that when people heard we’re doing an infrastructure bill, what they heard was, ‘The federal government is going to give me a bunch of money for projects,’ as opposed to, ‘We’re going to transition to a new system that addresses the needs not of 1950 but the needs of the 21st Century,’” Gribbin said.
“I was always mystified that the question was: How much should we spend? As opposed to: What is the federal government’s role … and what are the most important assets?” he added.
Scott Goldstein, policy director for the left-leaning Transportation For America, offered a similar critique. “The conversation is almost entirely about the dollar figure and how much money are we going to spend and how are we going to raise that money,” he said. “There’s a need first to decide what types of investments you’re going to make.”
Goldstein argues that more money under the status quo will worsen social inequities, traffic congestion and climate change and that “it’s increasingly hard to tell the American public we just need to keep doing what we’re doing, we just need to find more money.”
Transportation for America wants to see legislation that prioritizes road maintenance over new construction, roadway safety over vehicle speeds and transportation systems that put a premium on providing people with smoother connections to jobs and services.
Goldstein said the highway and transit reauthorization bill passed by the House this year did a good job of addressing these priorities.
Biden’s infrastructure platform in many ways resembles other plans his party has backed in recent years. It includes an emphasis on transitioning the nation’s vehicle fleet to electric power and other clean fuels, along with major upgrades to freight and passenger railroads and improvements to bus and rail transit in cities. The platform also calls for new investment in roads and drinking water systems, as well as broadband.
Eno’s Davis noted that the incoming administration is likely to be “much, much more friendly to mass transit” than the current one. He also said that by pinning a large part of his transportation program on the conversion to electric vehicles, Biden could face skepticism from urbanists and others on the left who see problems with cars beyond just tailpipe emissions—like traffic and how cars enable sprawling land-use, rather than more dense communities.
Goldstein said he’s pleased to see Biden’s team talking about issues like equity and climate change in the context of infrastructure, which is in line with his group’s efforts. “We’re excited,” Goldstein said. “But we also understand the realities of legislating,” he added. “It’s hard to do a lot of big things for any president and any Congress.”
Before he left office, Shuster put forward a draft infrastructure bill of his own that called for phasing-in a gas tax increase of 15 cents per gallon over three years, along with a slate of other proposals related to transportation and water programs.
Asked about why his fellow Republicans haven’t been able to get behind bills like this, he said a knee jerk reaction among members of his party tends to be “you can’t raise the gas tax.”
At the same time, many in the party, especially lawmakers who represent rural districts, bristle at the notion of city transit systems getting gas tax dollars that would otherwise go to roads. One of Shuster’s counter-arguments here is that investing in better transit does help roads, because it means fewer people are driving on them—resulting in reduced wear-and-tear and less traffic.
Shuster said at one point he approached big city mayors about the possibility of imposing some kind of federal transit fare tax that would be collected by the federal government, and then returned to the communities where it was paid to help those places cover mass transit costs. He said the mayors he spoke to were generally okay with the idea because the money would be directed to their cities and they wouldn’t have to take the political heat for a tax hike.
The former congressman said he thinks, eventually, a vehicle-miles-traveled charge will provide a solution to the problem of declining gas tax revenues. But he also pointed out that there are civil liberties concerns raised by people on both the right and left when it comes to the government tracking how much Americans are driving their vehicles in order to collect the tax.
Highway Trust Fund dollars are divided between highways and mass transit, with 80% of collections from three gas tax increases enacted since 1982 going to highways and 20% to transit. Some people think this arrangement—which stems from a nearly 40-year-old political bargain—should be revisited and question whether it makes sense as more trust fund revenue comes from sources other than fuel taxes.
Eno’s Davis explained that over the past decade the U.S. has dumped billions of dollars from the bond market into the trust fund. “If you’re spending money that you borrowed,” he said, “then there’s no reason why highways should be entitled to 80% of that.”
“We need to either make the trust fund solvent again based on actual user taxes, or just get rid of it as a concept and fund everything out of general revenues,” he added. “And if you actually fund everything out of general revenues, then there’s every reason in the world to prioritize mass transit over highways and give them a much bigger share of the pie.”