Q&A on Trump Infrastructure Plan

Posted by on Dec 6, 2016 in Economy | No Comments

By Jim Meads, P.E., President/CEO

With the recent election of President-elect, Donald Trump, comes the promise of his trillion-dollar infrastructure plan. Buzz continues to grow as frustrated lawmakers are hopeful cuts in federal transportation spending could be coming to an end. I sat down with Mr. Matt Reiffer, the American Council of Engineering Companies’ (ACEC) Director of Transportation. The ACEC acts as “the voice of America’s engineering industry,” and Matt is the ACEC’s primary lobbyist on all transportation issues. Matt works at the national level with ACEC in Washington, DC.

The following is a brief Q&A with Matt Reiffer on the Trump infrastructure plan:

Jim Meads: “Matt, I greatly appreciate what ACEC does for member firms like Sain Associates. You all act as our advocate with Congress and help keep us informed from a transportation perspective. I wanted to begin our conversation by talking about the need for increased infrastructure investment. Could you comment on that?”

Matt Reiffer: “Thank you! There’s been no shortage of studies from a wide range of organizations and federal agencies themselves documenting the tremendous [infrastructure] needs that are out there and the funding gaps. One of the challenges we have as an advocacy organization is that the numbers, on a national level, are so big, they’re staggering. It’s sort of hard for the general public to wrap their heads around. When you’re talking about trillions of dollars, it sort of becomes unreal. But over the past year we’ve seen stories on 60 Minutes, a big segment on the Daily Show with John Stewart, and John Oliver’s HBO special all discussing it. So we’re hitting mainstream media and reaching a general audience, and I think there’s [more of] an understanding there among the public at large about what the needs are and that we need to make these investments in our infrastructure.”

JM: “Well hopefully as the general public begins to grasp that they can help us with advocacy efforts, right?”

MR: “Yes. We’ve always had a core, bipartisan group of supporters in Congress who’ve understood and appreciated the value of infrastructure programs. At the national level, there’s going to be a segment, particularly among the fiscal conservatives, that just want to leave [infrastructure] to state and local government, but we believe that’s more or less a shrinking segment. Based on the votes we’ve gotten on the FAST Act, WRDA and other infrastructure bills, it seems that there’s broad bipartisan support in the Congress for making these investments, so that’s good.”

JM: “It may be worth noting then that the gas tax, which provides the main funding for the Highway Trust Fund, hasn’t been increased in 20 years. So there’s a huge funding gap. An article in the ACEC newsletter recently said that ‘more than 200 billion in infrastructure projects were approved on election day,’ and that those projects were approved at a state or local level. Would it be fair to say that with the large gap in funding at the federal level states, counties, and cities are having to spend more money to fill those gaps?”

MR: “Yes, that’s absolutely right. We’ve been able to hold the line at the federal level in order to maintain a consistent level of funding, and with the FAST Act we were even able to get a 10% bump [in funding] over the life of the bill for Federal highway and transit programs. But by and large, the states and localities are really stepping up to the plate with their own funding initiatives: Those seem to be a little easier to tackle politically and in terms of public relations because there are many opportunities to connect the proposed additional revenue back to a defined set of projects or program benefits that the public can hold them accountable to deliver. [At the state or local level] you can be a little more strategic in terms of your outreach and communication, and there’s a better level of understanding about what needs to get done for those investments. ACEC has provided financial support through our Minuteman Fund and our state organizations have been very engaged in many of those efforts. We’ve seen more than a dozen states over the last couple of years undertake pretty robust funding initiatives.”

JM: “Well there’s certainly been a lot of information in the media since Donald Trump was elected about his campaign promises to increase infrastructure investments. Tell us what ACEC and you know about those plans at this juncture.”

MR: “I think the hallmark of the Trump campaign, and now the transition period, was to set very high-level policy statements with very broad parameters and very few details. There’s not a lot of specifics known at this point. The details, on the infrastructure side particularly, are very much still under development. And that’s a positive for us. It gives us an opportunity to provide input and our perspective to the transition team and the folks of the incoming administration. They have been very open to receiving input from ACEC and other organizations, and we submitted a letter to them outlining our priorities and what we think should take place. What’s very clear is that thus far, most of the Tump administration’s focus has been on private sector financing. There was a whitepaper that was written by a couple of economic advisors to the transition team that was a proposal for tax credits that would incentivize additional investment and facilitate public/private partnerships. Trump talked quite a bit during the campaign about bonding, financing, and getting the private sector investing in these projects. The only clear emphasis thus far has been on the financing side.”

JM: “Well that seems to be the bottom line, and as you mentioned, there’s still a lot of work to be done. But how will it be funded? There’s a lot of discussion about private sector investments participating in that.”

MR: “The ACEC message I characterize as being “yes, and.” Yes, private sector financing is an important component, and can certainly play a role. Our recommendation is to use and expand existing tools such as the TIFIA program and Private Activity Bonds. But you have to make a distinction, and we are making a distinction to the Trump team and for lawmakers in Congress, between financing and funding. Less than 10% of projects are really well-suited to a Public Private Partnership (P3) model. Program borrowing has limits, and there’s only so much that you can do in private sector investments. You need to have revenue streams. At the project level, it’s important to remember that this isn’t “free money.” These investors want to get a return, whether it’s at the project level through tolls or some other monetization of an asset. They’ve got to find ways to pay this money back. So, our message is about finding ways to support the core funding program by fixing the Highway Trust Fund. If you get a sustainable, long-term revenue fix for the Highway Trust Fund, then you’ve got robust core funding going out to the state through those existing programs. That’s where you’re going to find the real impact on addressing the infrastructure funding needs.”

JM: “Within the last few days, President-elect Trump’s team has announced that Elaine Chao, former Labor Secretary, has been tapped to be the Transportation Secretary for the Trump administration. Interestingly, she’s also the wife of Senate-Majority leader, Mitch McConnell. Just by reading articles from ACEC, I understand that we have a long history of working with her and a strong working-relationship with her from when she was Labor Secretary under President George W Bush. It would seem like some of the other appointments that have come out would also be favorable towards supporting/implementing an infrastructure program.”

MR: “Well, we do expect it should make for a very fast and efficient confirmation process! But yes – when the Treasury Secretary nomination (Steve Mnuchin) was announced, one of the first things included in that announcement was a statement from [Mnuchin] about how the administration wants to use his role in the Treasury and looking at tax reform as an avenue to promote infrastructure investments. So we’re definitely seeing, like you said, favorable statements not just through the DOT nomination but in other avenues as well.”

JM: “How do you see ACEC working with the transition team in the days ahead toward an infrastructure program?”

MR: “We’ll continue to communicate with them both individually and as part of the coalitions in which we participate. We’ve got a strong team at the Transportation Construction Coalition (TCC), and we also work very closely with the US Chamber, National Association of Manufacturers, and other broader business groups where our common interests in infrastructure are. Our experience with the transition team and others has been that they’re very open to input and want to hear from the experts, which is us, about what programs work and how we can work together to make this successful. They clearly defined a very bold vision and they want to move fairly quickly in the new year, so we’re going to help them find ways to meet their objectives while certainly meeting our own advocacy objectives as well.”

JM: “Great! Well, is there anything else that you’d like to add?”

MR: “I think it is important to note that President-elect Trump has talked a lot about “infrastructure” in a very broad sense. We obviously think of transportation, but beyond roads, bridges, and rail, he’s also talking about ports, potentially broad band, energy distribution, public buildings, water, and so much more. It’s certainly not limited to transportation, and there’s going to be a broad focus in this initiative. In his view infrastructure is not limited to transportation. We’re trying to put together the message that the real solution is going to be a long-term, longer-view, economic development aspect. These benefits will be realized over a number of years, not just putting people to work on projects 6 months in. There are systemic issues we need to find a long view on.”

JM: “Thank you so much, Matt, for your valuable time and input on these issues. We’re certainly looking forward to witnessing the great work that you and the rest of the ACEC will continue to do under this new administration.”

Matt Reiffer serves as the Director of Transportation Programs at the national American Council of Engineering Companies (ACEC) in Washington, D.C. The ACEC Transportation Committee promotes responsible legislation and regulations on transportation infrastructure issues, including highways, railroads, aviation, and mass transit; and develops and recommends Council positions before Congress, the Executive and State agencies. 

Leave a Reply