Infrastructure – A Path Forward

Rob Chamberlin

Leveraging the successful tactics used in passing tax reform.

Republicans are still congratulating themselves on passage of an historic tax reform in the New Year. No matter the still undetermined long-term effects, as the most comprehensive tax overhaul since 1986, it is a significant accomplishment and, along with a new Supreme Court justice and a host of confirmed judges, one they will continue to try and build upon in 2018. Infrastructure legislation appears to be the next opportunity for accomplishment this year. In order to successfully enact an infrastructure bill, a comprehensive funding deal will need to be reached to clear the decks for an infrastructure package. Despite the current environment, I believe that a funding deal will be reached in the first quarter of 2018; however, Republicans will be hard-pressed to take a victory lap on that, as it is widely believed that funding the government is a governing responsibility and not a significant legislative achievement.

Republicans will need to continue to put some wins on the board as we close in on mid-term elections. In order to be successful on infrastructure, they could learn from looking at how tax reform actually got enacted. In the end, the House and the Senate, with continual support from the White House, worked out the parameters of a bill that could get the requisite number of votes and pass both chambers, while staying generally within the confines of accepted conservative tax theory. They did this in a relatively public manner utilizing the committee process to ensure wider buy-in from the caucus. The White House remained flexible on a number of details and largely focused on the high-level policies of the bill, and was able to claim a resounding victory with its passage and signing last year.

It’s important to remember that the tax bill only required 50 votes in the Senate. Infrastructure, however, will require 60 votes to pass in the Senate, which means nine Democrats must vote with all the Republican members. This makes passing an infrastructure package more difficult, in some ways, than tax reform; the currently narrower 51-49 margin this year – due to the Alabama Senate race outcome –  adds to the challenge. By current reports, the Trump administration appears to be prepared to roll out a proposal that may raise concerns from Republicans as to its passability in current form. That means it’s unlikely to get all 51 Republican votes in the Senate and may need even broader buy-in from the Democrats. That’s where the administration might take a play from tax reform. While there was no bipartisanship in the tax reform debate, the president allowed Congress the ability to shape a bill that could pass.

If Congress and the administration utilize the tax reform model to continue to advance legislative priorities, prospects for an infrastructure reform bill could increase significantly. Retiring House Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA) has already framed the debate as needing bipartisanship to succeed. Most inside the Beltway agree. To date, the president has indicated support to that principle, having been quoted as saying infrastructure will be bipartisan; however, by all reports, the White House has had little direct engagement with Congress in a bipartisan fashion on the topic. Infrastructure, no matter whether referring to traditional roads, bridges or transit, or even broadband technology, as Senate Commerce Committee Chairman John Thune (R-SD) and others have indicated should be included, has been generally a bipartisan policy issue. Thus, a bill could be crafted to get bipartisan support and give a win for the White House heading into the mid-term elections later this year. However, like tax reform, it will require cooperation and flexibility between Congress and the administration. Congress has to pass a bill that fits within what the president rolls out in order for him to claim victory. The president will need to allow Congress the ability to legislate to 60 votes. That is, to negotiate a package that will get the needed votes like the tax reform model. To see congressional success and enactment by the Trump administration, I expect the committees of jurisdiction (T&I, Energy and Commerce, Senate Commerce, Environment and Public Works, and Banking to an extent) to do some give and take with the administration in the near-term to ensure they retain the ability to shape a package that will get enough votes to pass.

The current administration proposal, as reported, envisions splitting $200 billion into four pots of money dedicated to specific programs or constituencies: rural infrastructure, existing credit programs, “transformative” projects, and state and local governments that come to the table with cash to pitch in. There will be problems getting all Republicans to support that, much less 60 votes in the Senate. It has also been reported that the balance of the $1 trillion would come from financing and funding leveraged from non-federal entities. To achieve success, the White House must have some flexibility on this and perhaps skinny some of it down by being less proscriptive and more high level. This should allow the committees and members some freedom to get 60 votes in the Senate and a majority in the House. Too much control at the state and local level won’t fly. Senators and representatives will want some ability to deal directly with issues in their states. If the Republicans take on the Highway Trust Fund solvency issue, I also expect a run at raising the gas tax to fund some of the package, which will get some support. I think it stands a better chance than in the past, but still faces strong headwinds. In order to succeed, it will need to be coupled with some larger form of a highway package in addition to the existing infrastructure framework. That may be a bridge too far this year.

What does this mean for the regulated community? Opportunity. There is a six-month window to get this done and the clock starts now. It’s time to engage in a bipartisan manner to support and shape an infrastructure passage that all sides can support, that will repair and maintain our existing infrastructure and deploy new projects that look to the future of our changing infrastructure needs.

In sum, I have some optimism that Congress and the White House can get an infrastructure bill passed if they take some lessons from the success of the tax bill as they try to reach a comprehensive funding deal. By working together within the confines of established principles, and by showing flexibility and a willingness to not have it all, we can build off a strong finish to 2017 and come into the 2018 mid-terms with growing record of legislative accomplishments. The level of cooperation and flexibility will directly correlate to whether Republicans want to pass a bill or use the failure to do so as a talking point against the Democrats.