House Democrats Seek to Move Previously Planned $760 Billion Infrastructure Bill As Next Response to Coronavirus
April 1, 2020|Jeff Davis
House Democratic leaders announced at a press conference today that they hope to include their $760 billion, five-year infrastructure framework they unveiled in late January as part of the next coronavirus response legislation when Congress reconvenes in late April, or whenever it is. (See ETW’s analysis of that proposal here.)
That framework included a $434 billion surface transportation reauthorization bill for highways, mass transit, and highway and motor carrier safety, and a $55 billion intercity passenger rail development authorization, as well as tens of billions of dollars for other transportation and infrastructure needs.
Speaker Nancy Pelosi (D-CA) said “we must invest in smarter, safer infrastructure that is built to last.”
But how do you make a plan that was written pre-coronavirus relevant to coronavirus response? Change the emphasis.
In the January 29 rollout, the transportation infrastructure was discussed first. This time, transportation was last. At the start of today’s press conference, House Majority Whip Jim Clyburn (D-SC) emphasized how stay-at-home orders have made the great divide between those with reliable broadband internet and those without it as a fundamental quality-of-life issue (work-at-home, telemedicine, long-distance schooling), and the Democratic framework includes $86 billion for broadband development. Clyburn also discussed the only new addition to the previous $760 billion plan, which is $10 billion to build community health centers within commuting distance of every American.
Both those are clearly relevant to the immediate coronavirus crisis at hand and any similar pandemics in the future.
Then House Energy and Commerce Committee chairman Frank Pallone (D-NJ) spoke about how the need for constant hand-washing and other sanitary measures, and the stay-at-home orders has drawn attention to the need for all Americans to have easy access to clean drinking water, so he emphasized the $25.4 billion in the bill for new and upgraded drinking water systems and the $1.5 billion for a LIHEAP-style program to assist the poor by subsidizing their utility bills.
Again, there is a clear through-line to the coronavirus.
The hardest job was left for House Transportation and Infrastructure chairman Peter DeFazio (D-OR). He had to explain why the next response to coronavirus – a virus which has caused the demand for the use of airport and Amtrak infrastructure to drop to zero and the demand for the use of highway and mass transit infrastructure to drop drastically – should be to spend over $500 billion building more highway, transit, airport and Amtrak infrastructure between 2021 and 2025.
DeFazio did his best, trying to shift the emphasis from mitigation of coronavirus damage (the focus of the just-signed bill) to recovery from the economic calamity that the coronavirus is in the process of causing, which will be the focus of legislation to be considered when Congress returns. DeFazio noted that we are already in a recession, which may actually turn out to be an economic depression, and that the way that the U.S. dug out from the Great Depression was through public works and the World War II economic retooling. DeFazio said “we need to agree on recovery like we agreed on mitigation.”
The Democratic conference call was set in motion by President Trump’s surprise tweet on the morning of March 31, which indicated his support for a large infrastructure package as part of “phase 4” of coronavirus response (the $2+ trillion bill signed into law on March 27 was phase 3):
However, this should be viewed in context with another tweet, sent by the same person, just five hours later:
Politicians like to say that “infrastructure is not a bipartisan issue.” This is true, in the sense that the idea that “some level of government should be spending a lot of money on some kind of infrastructure” is truly bipartisan. But when you start assigning funding responsibility for specific modes of infrastructure to specific levels of government, or start setting priorities between kinds of infrastructure, things often get partisan quickly.
To the extent that the House Democratic bill incorporates Green New Deal principles, it is likely to meet resistance from Republicans in Congress and likely from the President as well. During today’s press conference, DeFazio spoke extensively about using federal dollars to provide charging stations for electric vehicles nationwide, drastically reducing carbon emissions from cement and concrete manufacture, and massive investment in rail. (He also criticized Senate Majority Leader Mitch McConnell (R-KY) for belittling the greenhouse gas reduction provisions for airlines that DeFazio had tried and failed to get included in the phase 3 coronavirus bill, an attitude which McConnell doubled down on this afternoon.)
Indeed, it seems likely that DeFazio’s bill may go too far for Republicans, but still won’t go far enough for progressive and climate-change activists, who are demanding a wholesale reordering of federal transportation priorities. Kevin DeGood at the Center for American Progress tweeted the same sentence over and over today: “Any infrastructure package must reduce per capita VMT.”
And there is zero likelihood that a cornerstone of the Democratic proposal – a 269 percent increase in federal funding for Amtrak and intercity passenger rail – will get bipartisan acceptance. The proposal gives mass transit gets a 55 percent increase and highways a 22 percent increase, all compared to the Congressional Budget Office 2020-plus-inflation five-year baseline. (Ed. Note: This is only a personal view, not an Eno Center for Transportation view, but the minute that Joe Biden became the presumptive Democratic nominee, I gave up much hope for a major infrastructure bill getting enacted before the 2020 elections, because if you are a Democratic member of Congress for whom Amtrak funding is a top priority, why on earth would you negotiate a deal with Donald Trump and Mitch McConnell in 2020, when you could wait for 2021 and maybe have “Amtrak Joe” Biden as POTUS, and possibly have a Democratic Senate as well? Would locking in Trump-McConnell transportation priorities for five years be worth it, even at a much higher spending levels across-the-board?)
Pelosi also talked about how the next legislation would also have to include significantly more federal aid to state and local governments, who are seeing their tax bases wither. In this context, infrastructure spending actually makes more sense than it does in the context of counter-cyclical economic stimulus (because, in the modern age where infrastructure is built by skilled labor using expensive equipment, infrastructure spending is a much less effective stimulus than it was when infrastructure was built by unskilled laborers with shovels). But increasing funding for ongoing federal-aid infrastructure programs is an effective, if back-handed, way to ease the financial burden on state and local governments.
How do we know this? Because that’s how the 2009 ARRA stimulus worked. All that extra highway money wasn’t as effective at increasing overall spending as it was at temporarily lifting some of the spending burden from state governments and giving it to the federal government, as the following table shows (the Highway Trust Fund money in the table required a state matching share of up to 20 percent, but the ARRA money didn’t require the states to put up any matching money at all, so every dollar of ARRA money displacing a dollar of regular HTF money saved the states up to 20 cents):
But back to Trump’s initial tweet. The news there was threefold: the $2 trillion nominal target, the “With interest rates for the United States being at ZERO” preamble (a clear indication that he is thinking about borrowing money to pay for this instead of raising taxes), and putting it in the context of phase 4 of the coronavirus response.
Regarding the $2 trillion total, Speaker Pelosi pointed out that the House has been using five-year numbers and the President ten-year numbers. Once the House’s five-year, $770 billion total is extended five more years (with annual inflation increases), that puts you in the ballpark of $1.6 trillion, and the Speaker said that the eventual inclusion of education and housing components would get the final total in the same $2 trillion ballpark over ten years that the President is tweeting about.
And DeFazio pointed out that the holdup on reauthorizing Highway Trust Fund programs is about lack of funding – once the $70 billion general fund bailout of the Trust Fund from December 2015 runs out, current law highway excise tax rates will be, on average, over $20 billion per year short of fully funding current highway and transit funding policies, and no one has been willing to go first on increasing those excise tax rates (or reducing spending levels from the Trust Fund).
But, as Trump said, interest rates are near zero, and recessions mean not having to pay for the things you were intending to do anyway. DeFazio said he expected that once the President made a funding strategy clear (and in the context of Trump’s tweet, this clearly means no funding strategy at all, just more deficit spending), he expected McConnell and House Minority Leader Kevin McCarthy (R-CA) to go along, despite their open skepticism towards including infrastructure in the next coronavirus response bill.