Global Insight

Trump’s first 100 days

12 May 2017

As the milestone of President Trump’s first 100 days passes, it’s still unclear how radical infrastructure transformation will be achieved.

While many within the industry have paid tribute to Trump for focusing Congress on reversing the trajectory of decades of underinvestment, a strategy to achieve this change has yet to be realized. We are still very much in the speculation stage; the only certainty appears to be the level of investment – $1 trillion dollars over ten years.

It is because of this that so many were surprised in March when Trump’s budget outlined plans to slash, and in some cases cease funding across a range of infrastructure accounts. Director of The Office of Management and Budget, Mick Mulvaney, insisted that the cuts to infrastructure programs were intentional, adding that the administration plans to use those funds for ‘more efficient’ programs in the President’s infrastructure investment program.

The budget proposed to reduce the Department of Transportation spending by $2.4 billion (13%), ultimately ending the popular TIGER grant program and federal funding for Amtrak’s long-distance service. It also proposed a radical shift in transit funding, which would no longer come from federal sources, but rather the local communities which benefit from the infrastructure. Yet the recently passed 2017 Omnibus Appropriations Bill discarded the proposed cuts, giving the Department of Transportation $18.5 billion discretionary appropriations.

Despite Trump’s insistence that a significant infrastructure measure is “coming and it’s coming fast”, a proposal has still not been drafted, and it will then need to be brought before Congress. While he recently told CBS News that the plan is “largely completed”, and should be filed over the next few weeks, Mulvaney conceded that it is likely to be fall before any formal plan to be voted on will be seen.

At this stage there is still a lot of uncertainty about how Trump will address the infrastructure deficit. Bud Wright, Executive Director of the American Association of State Highway and Transportation says “Some of the signals that we have heard would suggest that, certainly, we’re not going to see $1 trillion of new (federal) funding as a part of the budget. There seems to be a strong emphasis on process reform and attracting private capital for infrastructure investment.” 

What we can gather from what Trump and his administration have outlined in the last 100 days is that the infrastructure strategy to come will:

  • Create tax incentives to spur private investment/P3’s
  • Include major regulatory reforms to shorten the environmental review process
  • Encompass a broad spectrum of infrastructure development; transportation, water, energy, broadband, housing, veterans hospitals have all been mentioned  

Currently the Senate and House of Committees are drafting components of legislation for their respective Infrastructure Bills. What is also becoming clear is that many support direct funding, as well as incentive-based packages. This is because traditional infrastructure programs, such as the Highway Trust Fund and water infrastructure programs, may not necessarily attract private investment/fall into the 3P’s category.

However, tax reform appears to be the likely vehicle for transformational infrastructure change. There are concerns that comprehensive tax reform is incredibly difficult to get passed – it will certainly generate much debate and take time. If the infrastructure funding strategy is tied in with this reform, we should expect to see further delays. As infrastructure has the full support of Congress, there are also concerns that it will become a vehicle for other policies to be tied to, in an effort to push them through. For example, healthcare has been suggested, and this could further hamper progress.

The next 100 days look set to perhaps be more significant for the construction industry than the first 100, as these plans unfold.