Senate Democrats have announced a $1 trillion infrastructure plan that begins what many hope will be negotiations with Republicans over their own infrastructure proposal toward the passage of a bill later this year.
The Democrats’ plan calls for investment to modernize airports and waterways, rebuild schools and Veterans Administration hospitals, overhaul road and bridge repairs, equip rural communities with high-speed Internet, and invest in main streets across the country. The plan also has provisions for public-private partnerships to help facilitate these investments.
“The two plans are very different,” says Susan Lent, partner and leader of Akin Gump’s infrastructure and transportation practice. “On a macro level, both plans would direct more money toward infrastructure, but the approaches to doing so are different.”
At the moment, the Republican plan is the Trump White House plan. Congressional Republicans have not officially endorsed this plan, and it probably will be altered from the original that was announced Feb. 12.
“The White House plan would spend $200 billion in federal dollars over 10 years and includes incentives that the Administration predicts will leverage over $1 trillion in total spending,” says Lent. “The Senate Democrats’ plan would spend $1 trillion in federal dollars over that same period, increase funding for existing programs and fund new programs. The White House has not explained how it would pay for its plan, whereas the Senate Democrats propose to pay for their plan by repealing some of the tax cuts Congress recently enacted.”
Democrats have proposed five measures to pay for infrastructure improvements:
- Return the top individual tax rate back to 39.6 percent from 37 percent — $139 billion over 10 years
- Restore the individual alternative minimum tax to 2017 — $429 billion over 10 years
- Restore the estate and gift taxes — $83 billion over 10 years
- Close the carried interest loophole — $12 billion over 10 years
- Bring the corporate tax rate to 25 percent — $359 billion that could be put toward infrastructure improvements across the country
“With both parties’ leadership now putting forth infrastructure plans, it’s time to turn this conversation into legislative action,” notes American Society of Civil Engineers president Kristina Swallow in a statement. “Each day that Congress delays passing an infrastructure bill with strong federal investment including a long-term fix to the Highway Trust Fund, every American family loses $9 because of the inconveniences that come from our outdated infrastructure.”
Much of the commentary and prognosticating about the Trump infrastructure plan, and now the Democrats’ response, has predicted a bill could not pass because the Republican plan is too vague on spending particulars and Democrats are asking too much from government coffers. But there is a history of bipartisanship when it comes to developing infrastructure legislation, and relatively few people believed tax policy would pass the Congress and be signed into law.
“Provided the White House and Congress can reach agreement regarding how to pay for infrastructure spending, Democrats and Republicans in Congress could develop a consensus plan for how to distribute funding and what reforms to implement,” says Lent.
The next steps in the legislative process are for congressional committees to develop their own infrastructure bills. These could include some of the White House or Democratic plan recommendations, but the motivation of these committees is to develop legislation that can secure enough votes to pass in both chambers of Congress, which means these bills will look different from the two plans proposed by Senate Democrats and the Trump administration.
Aside from the negotiations over the larger infrastructure bill, more immediate infrastructure needs are a priority for Democrats and Republicans in Congress.
“Keep in mind that Congress is moving forward with legislation to fund the Federal Aviation Administration and airport infrastructure projects and the Army Corps of Engineers and navigation and flood control projects,” Lent adds. “Current law that authorizes these projects expires this year, which means that Congress will prioritize their passage.”
Despite skepticism about the likelihood of an infrastructure bill passing the U.S. Congress and being signed into law by President Trump, similar sentiment was expressed in the run up to tax legislation, and it ultimately became law. The two plans also have enough of what both parties like — private participation and streamlined regulation for Republicans and government-funded projects for Democrats — that it might be enough to form a compromise bill that is enacted.
