Trump Infrastructure Plan: Roads, Broadband, and Funding

Introduction

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 investment represents a more bipartisan and less controversial approach to stimulus: it employs workers across a variety of economic classes, involves both private industry and government, and yields dividends by improving transportation for businesses and travel for taxpayers alike. Nevertheless, the transportation stimulus package released by the Trump Administration proved quite controversial.

The Trump Administration's infrastructure stimulus package includes a mix of traditional and uniquely 21st-century goals, spanning investments in roads and bridges, energy-related projects, broadband coverage expansion, and rehabilitation of veterans' 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 Administration also claimed that ending net neutrality would stimulate investment in broadband by new companies and generate greater competition (Zanona, 2017).

Expanding rural broadband was seen as a critical component of winning rural Republican support for the stimulus plan. Consistent with the Trump Administration's broader philosophy, the emphasis was placed on working with private enterprise rather than expanding the government's role in providing broadband to underserved areas. Although a Republican administration, it still faced resistance among many fiscal conservatives in Congress who were reluctant to support such a large spending package.

Unconventional Approaches: Rural Broadband Expansion

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 built his electoral strategy around a base of rural Americans struggling in the contemporary economy. Many of these Americans live in underserved rural areas. The information economy of the modern era depends upon fast Internet access: searching for jobs, pursuing an education, and working from home are all critically linked to being online. Yet according to a 2016 report by the Federal Communications Commission, approximately 39% of rural Americans lacked access to high-speed internet service ("Trump Pushes," 2018). The predominance of Republican representation in rural areas made this an unusual combined rallying point for Democrats, Republicans, and the Administration alike, despite the usual Republican resistance to government intervention in the economy.

Expanding broadband to rural areas was expected to benefit large businesses as well as lower-income consumers — traditionally part of the Democratic base. Broadband and technology firms stood to profit most directly from the expansion. In addition, firms across all industries would benefit from having rural customers with greater online purchasing power. However, while Microsoft had begun developing projects in some areas to expand access, overall private-sector investment in the initiative was described as subdued (Ota, 2018).

An estimated $40 billion subsidy would be required to connect all underserved residents, and even then, questions remained about whether adequate speeds for business teleconferencing and data analysis could be achieved. This figure fell short of the amount projected in the budget for broadband expansion (Ota, 2018). Democrats argued that direct federal investment remained necessary, as many companies did not consider it cost-effective to focus on remote areas where the potential customer base is small — making urban markets a far more attractive commercial target.

Traditional Transportation Investment

The Trump Administration's infrastructure plan also included more traditional projects, such as investing in roads and bridges. However, several of the proposals for financing these projects met with significant opposition. Among the most contentious was a provision reducing federal cost-sharing for projects to no more than 20% of total costs, compared to the customary 80% (Bobic, 2018). Contrary to the populist image cultivated by the Trump organization, this shift would require state and local governments to contribute far more of their own revenues. Given the revenue shortfalls many states were already experiencing, the gap would likely be filled by raising tolls or state taxes. Tolls in particular are considered regressive taxes, since both wealthy and low-income users pay the same amount, effectively shifting the financial burden disproportionately onto ordinary citizens. One Democrat, borrowing one of the president's own catchphrases, called the proposal a "fake" infrastructure plan, given the lack of clarity around how major portions of the bill would be financed. In response, Democrats offered a $1 trillion counterproposal consisting entirely of federal subsidies (Bobic, 2018), though such a bill was considered unlikely to pass Congress.

The Trump Administration also framed its approach as one of empowering states and rural communities by granting them greater discretion over fund allocation. For example, half of the new federal money — $100 billion — would be distributed as incentives to local government entities, and $20 billion would be allocated to so-called "projects of national significance" that could "lift the American spirit" (De Pillis, 2018, par. 11). An additional $50 billion would be directed to rural areas in the form of block grants. States would administer these grants, but they would be required to spend them in rural areas — a provision widely interpreted as reflecting President Trump's awareness of his core supporters' geographic concentration. Block grants could be applied to a broad range of traditional transportation projects, as well as broadband expansion, sanitation improvements, and energy administration (De Pillis, 2018).

This broad mandate gave considerable latitude in selecting projects for investment and was used to justify shifting the cost burden to cash-strapped states. While greater flexibility in fund allocation may have been welcome, administering and allocating financing for numerous projects also carries its own costs in time and money.

Conclusion

The Trump Administration has been extremely controversial in many of its approaches to federal spending. Some aspects of its infrastructure proposal — particularly the expansion of broadband access to rural areas — were more likely to attract Democratic support than others. On the other hand, the shift of financial, regulatory, and supervisory burdens to the states for proposed transportation projects, along with plans to cut major programs such as Amtrak, were expected to meet substantial opposition. These tensions posed serious obstacles to the bill's passage and left the long-term viability of the infrastructure stimulus plan very much in question.

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

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