A real infrastructure plan requires real revenue

President Donald Trump (left) gestures while delivering a State of the Union address to a joint session of Congress at the U.S. Capitol in Washington on Jan. 30, 2018. MUST CREDIT: Bloomberg photo by Al Drago.
President Donald Trump at the State of the Union address on Jan. 30.

One surprising aspect of President Trump’s State of the Union address was the short shrift he gave infrastructure, supposedly a large item on the White House agenda this year.

“Tonight, I’m calling on Congress to produce a bill that generates at least $1.5 trillion for the new infrastructure investment that our country so desperately needs,” he said. “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.”

That, it hardly needs be said, stops far short of a plan. Or even guidance about what the White House would accept in a congressionally crafted plan.


The biggest question, of course, pertains to resources. The White House hopes to use a limited infusion of federal dollars — perhaps as little as $200 billion — to leverage the rest of the $1.5 trillion from state and local governments and the private sector. Trump reportedly wants the $200 billion federal stake to come from cuts elsewhere in the budget. That’s hugely unrealistic, particularly at a time when Congress not only can’t pass a budget, but is even having trouble moving forward with short-term stopgap funding via periodic congressional resolutions.

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“You know the old saying: A vision without funding is a hallucination,” notes US Senator Edward J. Markey. “There is no meaningful revenue stream. . . . He is proposing magic money.”

Second, the notion that you can leverage other dollars at an overall ratio of 6.5 to 1 is highly unrealistic. Federal infrastructure aid for projects usually comes in at roughly an 80 percent federal, 20 state match. But the president is talking about lowering the federal share to 20 percent. That’s not likely to catalyze a big state infrastructure

Further, generating anywhere near $1.5 trillion in total spending would require an excessive reliance on private-sector dollars. Yes, there is some potential for public-private partnerships in infrastructure construction. Still, the large leveraging needed here would tilt project selection toward those that can impose tolls or user fees. That, obviously, is not the best way to prioritize spending. Given all that, it’s hard to imagine any such program putting a significant dent in this country’s infrastructure deficit or making American infrastructure “second to none,” as Trump has previously called for.

Some on the right realize that a meaningful infrastructure program will require more dedicated revenue. That’s why the conservative US Chamber of Commerce is advocating a 25 cent increase in the federal gas levy, currently 18.4 cents per gallon; in total, the increased levy would raise an additional $394 billion over a decade, at a cost of about $9 a month for the average motorist. Still, though there’s political precedent there for conservatives — Ronald Reagan OK’d a gas tax increase for infrastructure improvements back in 1982 — it’s hard to imagine House Republicans going along with that, absent an energetic push from the


For their part, Democrats would like to close tax loopholes and reclaim some of the revenue lost to Trump’s recently enacted tax cut to support a $1 trillion infrastructure plan. That doesn’t seem likely to happen either.

Bottom line: The president can talk all he likes about infrastructure, but new revenue is where the rubber meets the road. If he wants a robust program, he’ll have to embrace significant new revenues. You can’t do an effective infrastructure program on the cheap.