Unless an infrastructure bill gets through Congress by this summer, President Donald Trump will not be able to follow through this year on his promise to generate more than $1 trillion to fix the nation's crumbling roads, bridges and railroads, according to a person familiar with the administration's plans
"The thinking is that if something isn't on the president's desk by July it's not going to happen," this person said. "That's … Probably not much of a surprise or controversial or even creative in its thinking. They're going to leave in August and they're not going to come back, so it obviously needs to get there by July."
Given that 2018 is a midterm election year, lawmakers are slated to spend most of the fall in their home districts campaigning in the run-up to November. And for the moment, they are caught up in divisive debates over spending and immigration. Bloomberg News reported Feb. 6 that the White House would release its plan Feb. 12.
Still, the uncertainty created by the political environment adds to the difficulty of assembling such a complex piece of legislation from a blueprint to a bill that can get through both chambers of Congress. As a result, businesses that might actually perform the infrastructure work are likely to wait before they make any material decisions.
"I think we're going to need to see the legislative process advance before too many business decisions are made," said Mike Parker, U.S. Infrastructure Advisory Leader at EY. "Even if a bill does advance through that process, surely there will be some adjustments and tweaks along the way. It will be important to understand what those are."
Businesses will need to prepare for new projects while paying special attention to labor conditions, given that many parts of the country have growing economies as the country nears full employment, he added. The scope and kinds of equipment and materials needed for any projects established because of an infrastructure plan are also important for businesses to consider as they would ramp up to start work.
In addition, builders will need a full view of the pipeline of projects that may make it into an infrastructure package so they can plan efficiently and ramp up their capacity while maintaining efficient pricing. This transparency would help them avoid cyclical downturns since companies could plan their spending relative to the amount of work required while avoiding a sharp falloff if they do invest, according to Parker.
Counting the money
Funding estimates for an infrastructure package — which was initially valued at $1 trillion by members of President Donald Trump's Cabinet — have fluctuated since the administration began talking about a plan in the spring of 2017.
Trump increased the estimate of the total infrastructure package to $1.7 trillion in an Oval Office session with reporters before his first State of the Union address. During the speech, he promised Congress an infrastructure package that would total at least $1.5 trillion.
"I am asking both parties to come together to give us safe, fast, reliable, and modern infrastructure that our economy needs and our people deserve," Trump said Jan. 30. "Every federal dollar should be leveraged by partnering with state and local governments and, where appropriate, tapping into private sector investment — to permanently fix the infrastructure deficit."
At its core, the plan would appropriate $200 billion of federal seed money to encourage billions of dollars of state and local government investment and private sector investment, according to a person familiar with the administration's plans.
"It's the same amount of federal investment," the person said when asked about the changing dollar amount for total investment. "That $200 billion is going to spur all sorts of new revenue streams to create other investment."
The changing figures, the analyst said, is just a function of the administration doing the necessary math to quantify how much external investment they can project, given the scope of the plan.
"There are a couple of different types of projects, and quite often, we see that there are projects that have social and economic merit that maybe are suboptimal if they have to … charge too much for the service," Parker said. "They could be economically viable, but their social benefit or their benefit for mobility for the overall infrastructure network or transportation system would be diminished, in fact, if they charged the most that the market would bear."
For projects like these — Parker cited interstates and rural broadband connectivity as examples — federal subsidies can help push the project to completion or act as incentives to bring local investors and stakeholders to the table to ensure that excessive fees or tolls are not needed to make the project economically viable.
"The exact percentage of federal support that is required is going to depend on the project and the situation," Parker noted.
