Sunday, October 17, 2021

Infrastructure divides Senate and White House

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So who wins and who loses in a battle over funding infrastructure? As part of our TImes review series, the authors examine which politicians are fighting to get the maximum benefit from legislation that could also ensure victory.

Opinion appears divided on a proposal that would allocate $1.3tn (£934bn) of federal spending, with liberals backing the idea, conservative Republicans against it, and the Senate and House minority leaders criticizing it.

In the lead-up to the New Year’s recess Congress has started working on legislation to bolster US infrastructure, but the bill has yet to generate enough bipartisan support to get passed. Lawmakers are still in a close battle for a majority of votes between supporters of an $822bn plan and opponents, including the Democrats and some of their Republican colleagues, who argue that using federal funds to help states or localities build infrastructure makes more sense.

How might a new infrastructure bill affect Americans’ spending habits?

“There’s a lot of talk about a new infrastructure bill, and a lot of Democrats are talking about an infrastructure bill right now. And when they’re talking about an infrastructure bill that’s divided between states and localities and federal dollars, it sounds promising,” said Jon Kamen, associate professor at Cornell University’s School of Hotel Administration and expert on trade policy.

Here are the three most likely outcomes of the debate and how they would affect American transportation.

The bill is passed

Almost no one thinks the new legislation will pass without at least some Republican support, which is not surprising given that Republicans control both the White House and the House of Representatives. Even if the bill doesn’t get enough Republican votes, it’s likely they’ll either use a procedural maneuver to pass it through with a majority vote or rely on Democratic votes to overcome any procedural hurdles.

“There’s no guarantee that the infrastructure bill will get anything remotely like the most radical version of it, but it’s a possibility,” Kamen said.

Here’s what it could look like:

Passes with a majority vote

Leadership would have to resolve how to divide the funds between states and localities. After negotiation, the bill would establish some modest funding for transportation, infrastructure and water infrastructure. Lawmakers could also consider spending for more transformative projects, such as building a smart grid to better distribute power and improve the energy supply for hurricane relief, such as levees and evacuation routes.

The bill is passed

According to a poll conducted by the university’s Robert Frank Institute for Tax and Economic Policy, the public thinks the federal government should spend at least as much on infrastructure as it does now. A January 2017 poll found that 56% supported an increase in the federal gas tax and 46% supported a new tax on pollution-emitting businesses, that would earn some of its revenue from selling carbon emission allowances to the public.

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The bill is passed with some support from Democrats

The deal would use funds to reduce uncertainty about state fiscal systems. However, Democrats and Republicans alike would lose as much as $20bn in annual funding that used to go to small projects such as street lights and sewage treatment plants, according to analysis by the libertarian thinktank the Cato Institute.

“As much as you’re promising big infrastructure, that’s still going to be tax policy,” said Gary Lynch, former US policy officer for the World Bank. Lynch is author of a 2010 policy brief that argued infrastructure should primarily be localised but not treated as a federal responsibility, so it can encourage best practices to be developed by the private sector.

Lynch said that much infrastructure in the US is a mess because funding has been distributed too strictly, leaving it to these city and state governments to figure out how to best use funds on what they call their local infrastructure.

The bill is voted down

Several Republicans – including four senators from energy-rich states – voted against the past transportation bill in 2009 because of concerns that too much federal funding for the American Highway Trust Fund could hurt private investment in toll roads, according to The Washington Post.

“I think that in the future, what we’ll probably see, and what we see now with public-private partnerships, a lot of private dollars being used to try to revive public transportation in America,” said Zachary Picha, policy analyst at the Henry J Hyde Policy Institute for Infrastructure Policy.

But Lynch said even with funding distributed properly, that might not make it attractive for a state to build its own. Instead, they

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