Transportation Stimulus Plan 2018

Abstract
One of the major components of President Trump’s campaign platform was a promise to make a massive investment in infrastructure spending in the United States. The Trump Administration has recently released a detailed proposal to honor its promises. The proposal contains measures such expanding expenditures on roads and bridges as well as offering greater broadband access to rural residents. The bill has attempted to strike a balance between offering more services and jobs to President Trump’s core supporters in so-called red states while also honoring the Republican commitment to smaller government.
White House Stimulus Plan
Historically, investing in transportation has been used by both Democratic and Republican administrations to stimulate a flagging economy or to ensure that a healthy economy continues to thrive. Unlike making major investments in social programs or defense, transportation and infrastructure is a more bipartisan and less controversial approach to stimulus, since it both employs workers from a variety of economic classes, involves private industry as well as government, and will yield dividends by improving both transportation for businesses as well as travel for taxpayers. However, the most recent transportation stimulus package released by the Trump Administration is still likely to be quite controversial.
The Trump Administration’s transportation stimulus package includes a mix of traditional as well as uniquely 21st century goals, spanning from investing in or improving roads and bridges; energy-related investments; improving broadband coverage; and rehabilitating veteran’s hospitals (Zanona 2017). “The goal is to use $200 billion in federal funding to create $1 trillion worth of overall infrastructure investment over 10 years, with a focus on public-private partnerships and permit reform” (Zanona 2017, par.7). The Trump Administration also claims ending net neutrality will stimulate interest in investment in broadband by new companies and generate more competition (Zanona 2017).
Expanding rural broadband is seen as a critical component of getting rural Republicans on board with the stimulus plan, and the emphasis, as consistent with the Trump Administration’s philosophy, will be focused upon working with private enterprise, rather than expanding the role of government to provide broadband to underserved areas. Although the Trump Administration is a Republican administration, there is still resistance among many Republican fiscal conservatives to supporting such a massive investment package, and the Trump Administration is struggling to find a way to make it palatable to Republicans in Congress.
Unconventional Approaches to Transportation Stimulus
Although transportation is often thought of solely in terms of bridges and roads, it encompasses a far wider range of elements, particularly in today’s information age. Donald Trump planned his election strategy around a base of rural Americans who were struggling in the current economy. Many of these Americans live in underserved rural areas of the nation. The information economy of the modern era is dependent upon fast Internet access. Being able to search jobs, pursue an education, even work from home are all critically interlinked to being online. But according to a 2016 report by the Federal Communications Commission, “about 39% of rural Americans lack access to high- speed internet service” (“Trump Pushes,” 2018). The predominance of Republican representation in rural areas has made this an unusual combined rallying point for Democrats, Republicans and the Administration, despite the usual Republican resistance to any form of government intervention in the economy.
On the other hand, expanding broadband to rural areas is likely to be very advantageous to large businesses as well as lower-income consumers (traditionally part of the Democratic base). It will enrich broadband and technology firms which can capitalize upon the expansion, first and foremost. Secondly, it will be helpful for firms in all industries to have rural customers with greater access to broadband to purchase goods and services online. But while Microsoft has begun to develop projects in some areas to expand access, overall calls for private investment have been described as subdued (Ota 2018).
An estimated $40 billion subsidy would be required to connect all underserved residents and even then there are questions if it would be possible to offer adequate speeds for business teleconferencing and data analysis and such an amount falls short of the amount currently projected in the budget to be allocated to broadband expansion (Ota 2018). Democrats state that direct federal investment is still needed, given that many companies still do not believe it is cost-effective to focus on remote areas, given the number of new customers which they will be able to solicit is very limited and thus it is more cost-effective to focus on urban areas.
Transportation Investment
The Trump Administration’s infrastructure plan also includes more traditional projects, such as investing in transportation infrastructure like roads and bridges. But a number of the proposals to support the costs of such projects have met with opposition, including reducing federal cost-sharing for projects to no more than 20% of the costs, versus the usual 80% (Bobic 2018). Contrary to the populist image crafted by the Trump organization, this would require state and local governments to invest more of their own revenues in such projects. Given the shortfall of revenue many states are experiencing already, the gap would likely be filled in by raising tolls or state taxes. Tolls in particular are considered regressive taxes, given that both rich and poor users pay the same amount of money and this shifts the burden to private citizens in a direct fashion to pay for the administration’s promised expansion of such facilities. In fact, using one of the President’s favorite catchphrases to describe news he disagreed with as fake news, one democrat called the proposal a fake, rather than a real infrastructure plan, given that it is unclear how major parts of the bill will be financed. In response to the president’s proposal, Democrats offered a $1 trillion counterproposal solely consisting of federal subsidies (Bobic 2018). Such a bill is unlikely to pass in Congress. The Administration also states that it plans for upcoming tax reform to help support at least some of the cost of the stimulus.
The Trump Administration, furthermore, has tried to frame the approach as one of empowering states and rural areas to have greater discretion in terms of how they allocate funds. For example, “half of the new federal money, $100 billion, would be parceled out as incentives to local government entities” and $20 billion would be allocated to so-called “projects of national significance” that can “lift the American spirit” (De Pillis, 2018, par.11). An additional $50 billion will be allocated to rural areas in the form of block grants. States will administer them but they must be used in rural areas, again in likely testimony to President Trump’s awareness of his supporters’ location. Block grants can be spent on a wide variety of traditional transportation projects as well as broadband and improving sanitation and energy administration (De Pillis 2018).
This very broad justification gives considerable latitude to the selection of projects earmarked for investment and is used as justification for shifting the cost burden to cash-strapped state. But while greater leeway in allocation may be welcome on one hand, on the other hand, administering and allocating the financing of projects likewise costs both time and money.

Other Components of the Plan
As well as encouraging rural areas to take over the responsibility for administering funding of transportation-related activities, the Trump Administration has also stated that it will attempt to remove some of the red tape to moving federal permits for transportation by consolidating agency reviews for projects (De Pillis 2018). In the long term, this will hopefully result in cost reductions in federal government administration in terms of personnel. The stated goal is to limit the approval process’ duration to two years, versus the current five or ten (De Pillis 2018). Critics, however, allege that there are necessary safety approval processes to review as part of the approval process, as well as determining if major proposals are being conducted in as cost-effective a manner as possible.
Paying for the Stimulus Plan
As the recent sharp downturn in the stock market indicates that uncertain economic waters may be ahead, questions of how to pay for the transportation stimulus plan remain rife. Democrats have suggested that increasing the federal gas tax might be a way to finance investment. Environmentalist groups have long supported raising the federal gas tax to discourage overconsumption of the nonrenewable fossil fuel through buying more fuel efficient cars and making use of different modes of transportation. Instead, the White House, which has largely frowned upon the prospect of aggressively investing in green energy, has instead said that it will cut other federal transportation expenditures such as Amtrak or the Highway Trust Fund (Bobic 2018).
Conclusion
The Trump Administration has been extremely controversial in many of its approaches to a variety of federal spending-related issues. Some aspects of its proposal, such as a decision to expand broadband access to rural areas, are more likely to garner Democratic support than are others. On the other hand, the shift in the cost, regulatory, and supervisory burden to the states for its proposed transportation projects and attempts to cut major transportation projects such as Amtrak are likely to meet with substantial opposition and could impede passage of the stimulus bill.



References
Bobic, I. (2018). Trump’s new infrastructure plan is kind of underwhelming. The Huffington
Post. Retrieved from: https://www.huffingtonpost.com/entry/trump-infrastructure- plan_us_5a81190ee4b08dfc930576fa
De Pillis, L. (2018).Trump unveils infrastructure plan. CNN. Retrieved from:
http://money.cnn.com/2018/02/11/news/economy/trump-infrastructure-plan- details/index.html
Ota, A. (2018). Rural areas feeling left behind in race to expand broadband. Roll Call.
Retrieved from: https://www.rollcall.com/news/politics/rural-areas-feeling-left-behind- race-expand-broadband
Trump pushes to expand high-speed internet in rural America. (2018). Reuters. Retrieved from:
https://www.reuters.com/article/usa-trump/trump-pushes-to-expand-high-speed-internet- in-rural-america-idUSL1N1P30ZT
Zanona, M. (2017). Trump infrastructure plan could be stretched too thin. The Hill. Retrieved
from: http://thehill.com/policy/transportation/348446-trump-infrastructure-package- could-be-stretched-too-thin