Trump’s proposed infrastructure plan could be a game changer for America, but challenges exist that may hinder the plan from becoming as transformative as was originally envisioned. The infrastructure plan will encourage the development of advanced technology, like broadband internet, in rural communities throughout the U.S. But higher taxes to help cover the costs of the projects, increased home building and remodeling costs due to a shortage of construction workers, and swarms of new residents invading quiet suburban communities could make the plan a double-edged sword.
Ideas Behind the Plan
Decades of neglect have caused roads, schools, public transportation, airports, ports, and rural communities to slowly decay. To address the issue, President Trump hopes to spur $1.5 trillion in infrastructure spending for the next ten years. The plan would contribute $200 billion in federal dollars and encourage state and local governments and the private sector to contribute the remaining $1.3 trillion. The federal dollars will be used to spur investment in projects with cities, states, and corporations bidding to tap the funds and match the rest with their monies.
The plan will harness the creativity and on-the-ground knowledge of states, cities, and communities to guide the development of infrastructure. It specifically eschews a top-down approach to development and encourages a decentralized approach to infrastructure revitalization. The incentives program creates grants for which cities and states would compete for federal dollars. Cities/states submit infrastructure plans, and if approved, the cities/states would match the federal dollars to enact the plan.
Rural Investment
President Trump’s plan sets aside $50 billion for rural community investments to improve the movement of freight and increase access to safe transportation and health options for residents and businesses. The plan would fund Internet infrastructure, water and power revitalization, and transportation projects.
Wrinkles in the Plan
One major issue unaddressed by the plan is the effect of the Tax Cuts and Jobs Act which, among many provisions, no longer exempts the interest generated from municipal bonds from federal tax. Cities heavily rely on municipal bonds to fund infrastructure projects. Additionally, tax reform eliminated the deduction on local and state taxes which further erodes a common method to raise funds for infrastructure projects. The infrastructure plan does not address the effect these two provisions will have on the ability of states and cities to raise matching funds.
