Trump's opportunity for infrastructure could win him points

Trump's opportunity for infrastructure could win him points
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With the 2020 elections looming, President TrumpDonald TrumpWhite House denies pausing military aid package to Ukraine Poll: 30 percent of GOP voters believe Trump will 'likely' be reinstated this year Black Secret Service agent told Trump it was offensive to hold rally in Tulsa on Juneteenth: report MORE is facing the prospect of no major legislation being enacted in the next year before he faces the voters. Congressional Democrats are determined to investigate, subpoena and harangue Trump and have little interest in giving him legislative accomplishments.

However, if the president plays his cards correctly, a smart offer on infrastructure could just be something that congressional Democrats would be hard-pressed to refuse.


In his campaign, candidate Trump proposed the creation of a $1 trillion infrastructure fund, leveraging $200 billion in federal funding, to pay for transportation, water and communications projects in an effort to spur the U.S. economy. Those efforts went nowhere in Congress amid bipartisan concern over the type of projects which would be eligible and the lack of federal dollars to fund existing transportation commitments in the states.

Indeed, the most important source of transportation funding, the federal Highway Trust Fund (HTF) allocates nearly $60 billion each year. The HTF is supported by an 18.3 cent per gallon federal gas tax, last raised in 1993.

Today, in an era of fuel efficient cars, the gas tax doesn’t produce enough revenue to meet existing needs with thousands of critical road and bridge projects backlogged for funding. Moreover, electric vehicle owners don’t pay fuel taxes and with forecasts projecting millions of electric vehicles in coming years, gas taxes aren’t a long-term solution.

Meanwhile, neither the Trump administration nor Congress have been able to muster the political fortitude to level with the public regarding infrastructure finance. Raising gas taxes — likely 10-15 cents per gallon — is a political non-starter for most elected officials in Washington.

The HTF is projected to be $120 billion in the red and annually requires almost $20 billion in deficit funding to meet current obligations. With over 50,000 deficient bridges and crumbling road and transit infrastructure across the nation, an alternative funding structure is badly needed.

At the same time, the issue of climate change has risen to the fore. Both green advocates and free market economists propose a carbon tax, refundable each month to every household in America, as an efficient way to bring price discipline reflecting the true cost of fossil fuel use and its impact on the climate.

Unfortunately, the refund program creates winners and losers as it doesn’t mirror fossil fuel use per household. The rural truck driver or suburban commuter will invariably use more fuel each month than the urban subway or bus rider and there is no administrative mechanism to fairly address such disparities.

However, a modest carbon tax imposed at the producer level — together with a repeal of the existing federal gas tax — would provide a reliable revenue source to fulfill HTF obligations, fund major new infrastructure projects and lower federal deficits.

According to the Congressional Budget Office, a carbon fee of $25 per metric ton would generate billions each year. At this level, the carbon levy, combined with repeal of federal gas taxes, would not hamper economic growth and would provide a steady stream of revenue to reduce road congestion and transportation sector CO2 emissions.

While climate activists and many Democrats pursue unrealistic notions such as the “Green New Deal”, a variant of the carbon tax they propose could form the basis of an infrastructure plan which the administration and a majority in Congress could support.

With an assured revenue source for road, bridge and transit infrastructure, the Trump administration would fulfill a 2016 campaign promise, while at the same time lower deficits and create new revenues to pay for major projects and also harden climate-impacted infrastructure across the nation. Additionally, it could also establish innovative financing structures to attract sovereign wealth and pension funds to invest in revenue generating infrastructure projects, as is commonly done abroad.

Trump has fashioned himself as a builder, but so far he has done little to deserve that reputation as president. He still has time to get this done if he seizes the opportunity in front of him.

John J. Faso is a former Republican member of congress from New York State.