Senate Dems' infrastructure plan would create bond program, but is it a non-starter?
WASHINGTON – Senate Democrats on Wednesday unveiled their own $1 trillion infrastructure plan, which would create a new direct-pay bond program for infrastructure projects and eliminate tax barriers for projects that benefit the public.
The 10-year plan, which Democrats said would be paid for by rolling back some of recently enacted tax law changes that “benefited only wealthy individuals and corporations,” would also create an Infrastructure Financing Authority (IFA) and reinstate and expand the qualified zone academy bond (QZAB) program. It does not provide details of the bond-related provisions.
The plan also would provide $140 billion to ensure the Highway Trust Fund remains solvent over the 10 years.
One long-time observer who did not want to be identified said that the plan is a “non-starter” unless the Republicans lose their majority status after the mid-term elections in November.
“There’s no way the majority party is going to roll back a tax bill they just enacted, the source said, adding that if the Democrats take over Congress, it’s a different story.
Sen. John Barrasso, R-Wyo., chair of the Environment and Public Works Committee, scoffed at the plan, saying it just shows that Democrats just want to raise taxes.
In proposing the plan, Democrats heaped criticism on the president’s infrastructure plan, which would provide $200 billion that would be used to leverage $1.5 trillion over 10 years.
Senate Minority Leader Chuck Schumer, D-N.Y., said Trump’s plan was “poorly thought out” and “rob[s] Peter to pay Paul” because it would be paid for by cutting transportation and other infrastructure-related programs in the fiscal year 2018 budget.
Schumer said it would lead to “Trump tolls across the country.”
Sen. Ron Wyden, D-Ore., who called the Trump plan “budgetary flim flam,” said the Democrats actually sat down with the “congressional scorekeepers” and figured out which tax cuts would pay for their plan.
Sen. Bill Nelson, D-Fla., said that this is what happens when the Republicans enact a tax bill without the Democrats.
Schumer said the more people that learn about the new tax law, the more they don’t like it and realize that it benefits mostly the wealthy and corporations.
The Senate Democrats’ plan proposes to take the corporate tax rate back to 25% from the 21% rate enacted by the Republicans, which was a huge drop from the prior 35% tax rate. The plan would restore the top individual tax rate to 39.6% for income above $600,000 for couples and $500,000 for individuals. That’s a drop from the 37% rate the Republicans enacted.
The plan would restore both the alternative minimum tax and the estate tax to their 2017 levels or parameters. It would also close the carried interest loophole, which the Democrats said Trump and administration officials claimed they wanted to do, but did not do it.
The plan would provide $140 billion to repair the nation’s roads and bridges. This would allow federal-aid highways and federal- and tribal-owned lands programs to continue to grow at levels under the most recent transportation law – the Fixing America’s Surface Transportation (FAST) Act.
The Democrats pledged to address the infrastructure needs in Puerto Rico and other territories. About $40 billion of these funds would be used for a new Bridge Investment Program that would provide competitive grants to projects that rehabilitate, improve or replace bridges of all sizes.
The plan will provide $10 billion to expand the popular Transportation Investment Generating Economic Recovery (TIGER) grant program, which Trump has proposed to eliminate.
The plan also would provide $115 billion to modernize the nation’s water and sewer programs, including $46 billion each to the Drinking Water and Clean Water State Revolving Fund programs.
The Democrats want to provide $115 billion to repair and improve public transportation, including $25 billion to construct new transit lines and expand overcrowded ones under the Capital Investment Grants program.
Another $50 billion would be used to modernize rail infrastructure, with $20 billion of that going to Amtrak and $10 billion going to a federal-state partnership program to reduce the repair backlog for publicly owned and Amtrak infrastructure.
The plan would provide $40 billion for a “Vital Infrastructure Program (VIP) that would focus on megaprojects -- critical, large, complex transportation infrastructure projects. Another $30 billion would be used to revitalize Main Street and promote innovative transportation.
In addition, $62 billion would be used for neighborhood revitalization, lead remediation, and affordable housing. The plan would strengthen the low-income housing tax credit program and boost funding for Community Development Block Grants and Choice Neighborhoods.
Another $50 billion would to go toward rebuilding the nation’s schools. This would include reauthorization and expansion of the QZAB program to help public schools located in economically distressed and high-poverty communities. QZABs historically have been used to help schools renovate and repair buildings, invest in equipment and train teachers.
The plan calls for $30 billion to modernize the nation’s ports and waterways. The Democrats would make it easier for port projects to access existing federal assistance in the Transportation Infrastructure Finance and Innovation act (TIFIA) program and the Railroad Rehabilitation and Improvement Financing (RRIF) program.
Another $40 billion would be used for airports and airspace and would provide funding increases for the Airport Improvement Program.
In addition, $25 billion would be used to build more resilient communities to withstand hurricanes, flooding, tornadoes and wildfires. The plan would create a Resilient Communities Revolving Loan Fund.
The plan would provide $80 billion to bring innovation to the nation’s energy grid and $40 billion to provide universal high-speed Internet.
In addition, $15 billion would be used to address the construction backlog for the nation’s public lands, another $10 billion would be provided for tribal infrastructure, and $10 billion more would go toward reducing the Veterans Affairs’ construction backlog.
The plan would provide $20 billion for innovative financing tools, including the creation of an IFA to help finance the most important and economically viable infrastructure projects nationwide. The IFA would incentivize private investment and maintain strong rural protections. It would initially be funded by the federal government, but would become self-sustaining over time.
The plan also would enhance Buy America requirements for all infrastructure projects.