President Donald Trump this week will attempt to kick off a push for one of his most popular policy proposals, but he may be drowned out by the “most hyped event of the year on Capitol Hill” and other self-inflicted wounds.
Trump began a push to fulfil a pledge to improve the nation’s infrastructure with a proposal to reform and privatize the US air traffic control system.
The week will also feature a rally in Ohio on Wednesday to make a case for his the $US1 trillion infrastructure proposal.
But Trump might be drowned out by the controversies swirling inside and around his White House. Former FBI Director James Comey will deliver much-anticipated congressional testimony Thursday, and Trump made headlines Monday by potentially undermining his administration’s case for his travel ban.
Bipartisan popularity in theory — doubtful to succeed in reality
The concept of more spending to improve infrastructure has broad popularity among members of both parties and seems like potentially fertile ground for Trump to get a policy win, given the complications surrounding proposals on healthcare and tax reform.
Both Trump and Democratic rival Hillary Clinton debuted large infrastructure investment proposals during the campaign. Talking about fixing America’s roads and bridges is among the most universal refrains for politicians of both parities.
But significant differences have arisen in the funding and implementation of the proposed investment in infrastructure.
“Infrastructure is an incredibly broad term — much like tax reform,” Chris Krueger, an analyst at Cowen Washington Research Group, wrote on Monday. “At its most basic, just about everyone from Bernie Sanders to Rand Paul is in favour of both. BUT, they have not just different definitions, they have different languages.”
On one hand, Democrats want to fund infrastructure spending almost entirely from the federal budget, using debt to finance the investment directly. Democrats argue with low interest rates (for now) and the sagging state of US infrastructure, now is the time for a large-scale investment.
Senate Minority Leader Chuck Schumer rolled out a proposal in January to that effect, saying it went along with the ideas from Trump’s campaign. Since that announcement, Schumer said no one from the White House has contacted Democrats to follow up on the idea.
But the White House will push for a public-private cooperation that would allow private firms to take ownership stakes in some of the projects. Krueger called it a “combination of public-private partnerships, bonding, and financial alchemy.”
During the campaign, Trump called for a total of $US1 trillion in investment, with a bulk of it coming from private firms that will be given an ownership stake in the final products. The Trump plan is expected to use tax credits structures to incentivise private capital and push for revenue-generating projects like toll roads, key differences from a Democratic proposal.
Other issues like worker-pay protections on the projects, favorability to environmentally friendly projects, and the federal gasoline tax are likely to cause divides between the parties as well.
Given those differences, it’s perhaps no surprise that Schumer came out against the rough outline of the Trump proposals in a statement on Monday.
“The entire focus of the President’s infrastructure ‘proposal’ is on privatization, which sounds like a nice word but when you scratch beneath the surface it means much less construction and far fewer jobs, particularly in rural areas,” Schumer said. “It means Trump tolls from one end of America to the other, and huge profits for financiers who, when they put up the money want to be repaid by the average driver, worker and citizen.”
Issac Boltansky and Lukas Davaz, analysts at the political research firm Compass Point, said Monday they still see a path to more modest infrastructure reform that could make its way to Trump’s desk. But Greg Valliere, chief global strategist at Horizon Investments, was less convinced that any sort of package — especially anything bipartisan — could get through Congress, given the investigations into ties between Russia and the Trump campaign, the looming Comey testimony, and a deeply partisan fight over healthcare.
“The infrastructure photo ops may be enough to change the subject early this week, perhaps with a handful of Democrats endorsing the concept, which could have moved through Congress had Trump made this his first major bill,” Greg Valliere, chief investment strategist at Horizon Investments wrote on Monday.
“Now, unfortunately, the idea of a bipartisan approach to anything has evaporated; his agenda may not be dead but it has stalled,” Valliere added.
And with Comey’s testimony set to grab Capitol Hill on Thursday, it’s likely any policy push might see attention diverted.
“He surely knows that infrastructure reform will have only a 48-hour shelf life, not long enough to obscure the coming Comey circus,” Valliere said.
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