OUR THOUGHTS ON:

2017 Infrastructure Plan - What Can the Construction Industry Expect?

Construction|Government|Tax Reform|Transportation & Logistics

By Joe Bruce

Following the 2016 election results, many construction industry company executives were trying to remember President Trump’s campaign promises related to his infrastructure plan.  What can I expect?  Trump’s promises included a $1 trillion infrastructure package that focuses on investments in transportation, the electrical grid, telecommunications, security infrastructure, airports and pipelines.  While there is no doubt concerning the needs to maintain, repair and upgrade our highways, waterways, airports, rail system and bridges, the real questions revolve around how much to fund, and how to fund.

President Trump’s plan relies heavily on private financing and tax cuts provided to private sector investors to finance those projects, which has come under heavy fire by economists skeptical of the plan’s proposed funding mechanisms.  Additionally, Trump believes overall project costs will be decreased through employing more incentive-based contracting and through reductions in regulations and “red tape” (such as pipeline permitting and greenlighting stalled coal and shale projects).  In a January 9 Brookings Institution conference, former Treasury Secretary Lawrence Summers advocated for a large increase in infrastructure spending and was critical of Trump’s proposed funding mechanisms.  Instead, Summer views user fees and direct funding as the most likely ways to finance these projects.  GOP leaders have already acknowledged that Trump’s infrastructure plan is on the agenda; however, repealing and replacing Obamacare, overhauling the tax code and easing regulations are higher priorities on the agenda.  Democratic leadership has the infrastructure plan high on their agenda and believes the primary funding mechanism to be significant, direct spending. 

With control of both the House and Senate, and Trump in the White House, Republicans have voiced strong opposition and would likely defeat any large stimulus plan resembling Obama’s $832 billion package in 2009, which included $48 billion of federal money for transportation infrastructure.  Additionally, given the current priority of any infrastructure plan on the GOP agenda, it’s unlikely to see a large infrastructure package pushed through in the first 100 days of the new presidency, and accordingly, reducing potential impact of any such plan for 2017.  Contractors continue to be optimistic though, as a January 2017 Associated General Contractors of America (AGC) survey indicated that 73% of construction firms plan to expand their payrolls in 2017.  With the new administration taking control in the next few days, we’ll see how this key issue is addressed and moves forward.   

Contact us if you have questions and visit our Construction Industry Group page to learn about the services that we offer the industry.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

comments