The Complex Process of Building Infrastructure.

Author:Thomas, Michael
Position:Federal Focus
 
FREE EXCERPT

With the new tax policy passed and signed into law, the president and Republicans in Congress have turned their attention to an ambitious infrastructure commitment. The president promised a $1 trillion investment during his campaign, and that number has now been raised to $1.5 trillion. GOP lawmakers are eyeing a bipartisan effort to support America's increasing infrastructure needs, and the president is dependent on Congress to provide legislative text to support his plan. Bipartisan agreement will be a complex process, as both parties are looking toward looming mid-term elections, with polls showing opportunities and challenges for each side in the battle to control Congress.

Building infrastructure has long been a major part of U.S. domestic policy; the construction of dams, harbors, roadways, and bridges is tied to the development of the economy because of the processes inherent to building infrastructure, and the productivity that can result for the private and public sectors. The administration has kicked off the budget process with an emphasis on rebuilding infrastructure, releasing a long-awaited infrastructure proposal alongside it. For now, the policy debate on rebuilding American infrastructure will center on how Congress and all other interested parties react to the president's budget and proposal.

THE PROPOSAL

On February 12, 2018, the White House issued a proposal for how it would like to address infrastructure improvement across the country. The proposal addresses five main programs and describes how $200 billion from the federal government will be used to simultaneously inject infrastructure projects with needed cash and attract additional funding from the private sector. The first three programs are structured like grants, while the other two will be used to help with financing.

Funding versus Financing. The distinction between funding from the federal government and financing assistance from the government is an important one. Funds come from grants, and bonds provide financing. Financing help from the federal government means that qualifying entities could borrow money under conditions to pay for projects that offer a public good or service.

Grants do not need to be paid back like loans. Generally, the federal government distributes two kinds of grants. Categorical grants are allocated by fairly specific parameters, and organizations applying for them likely have a certain kind of project in mind. These grants are usually...

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