- President Donald Trump focused, in part, on his massive infrastructure plan during the State of the Union.
- The plan will attempt to goose $US1.5 trillion in investments from state and local governments and private investors, with $US200 billion in federal grants.
- There are many questions about the plan that remain unanswered, including how it will be funded.
President Donald Trump used part of his State of the Union speech on Tuesday to detail parts of a forthcoming$US1.5 trillion infrastructure plan , but key questions and caveats remain in regards to the package.
“I am calling on the Congress to produce a bill that generates at least $US1.5 trillion for the new infrastructure investment we need, ” Trump said in the speech. “Every Federal dollar should be leveraged by partnering with State and local governments and, where appropriate, tapping into private sector investment — to permanently fix the infrastructure deficit.”
The exact details of the plan so far are vague. For one thing, no one was sure of the actual size of the plan until Tuesday with Trump suggested the final investment goal would be anywhere from $US1 trillion to $US1.8 trillion.
Despite the headline investment number, the infrastructure package will include only $US200 billion in direct federal investment. Trump expects the other $US1.3 trillion to come from a combination of local, state, and private investment, incentivized by the federal seed money.
Here’s how that $US200 billion will be split up, according to a leaked draft of the plan from Axios:
- $US100 billion (50% of the total federal investment) in grants on “infrastructure incentives” designed to encourage investment from state governments, local governments, and private companies on “core infrastructure.” Each state could only receive up to 10% of the total, and federal grants couldn’t make up more than 20% of the total spent on a project.
- $US20 billion (10% of federal investment) on the “Transformative Projects Program.” The program would give federal money to swing-for-the-fences type projects that can’t get money from private markets due to the “uniqueness of the program.” Included in the possible programs that could receive money are “commercial space” ventures.
- $US50 billion (25% of federal investment) on rural infrastructure. This is to ensure that projects in rural areas, which usually have lower returns on investment, do not get left behind.
- $US14 billion (7.05% of federal investment) to grow existing federal credit programs for infrastructure.
- $US10 billion (5% of federal investment) towards a “Federal Capital Financing Fund” that would assist federal agencies in purchasing land for new projects or indicatives.
Another key question is how the Trump administration will come up with the $US200 billion. Many Republicans would likely balk at adding more to the federal deficit, so administration officials suggested previously that the investment would be financed through cuts to other programs.
Trump’s 2018 budget proposal included cuts to Amtrak, infrastructure investment grants, and the Army Corps of Engineers’ civil works programs.
Therefore, some opponents suggest that the plan is not new investment at all, but simply shifting around existing funding.
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