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Infrastructure Could Bridge Political Divide

Is it a secret that American politics are contentious, divided and rocky? Yet, one topic has the potential to bring both sides to the table: Infrastructure.

 

The Republicans and Democrats may not agree on the details; after all, infrastructure spending necessitates funding. Conservatives worry about additional taxes or increasing government debt, while liberals oppose legislation that could provide tax breaks to equity investors who would promote investment in infrastructure.

 

Yet, our collective need is top-of-mind: Democrats have recently lamented the lack of infrastructure spending, with left-leaning publications like ThinkProgress calling out specific areas of improvement.1 And they may get their wish, with the help of an unlikely ally — President Donald Trump intends to lead the charge on national infrastructure spending, specifically with his “America’s Infrastructure First” policy. His plan supports investments in roads, bridges, tunnels, airports, railroads, ports and waterways, pipelines, clean water, a modern and reliable electricity grid, telecommunications and security infrastructure. 2

 

We, along with the rest of the nation, must sit back and wait to see what will happen. Will funding reflect a Democrat-centric view, with an increased spending plan? Will it instead reflect Republican planning, finding a way to create infrastructure revenues through crediting strategies? Either way, we’re here to help you; let us review your financial strategy and see if you are positioned to take advantage of whatever opportunities rise from the political ash.

 

Despite the means of infrastructure spending, few disagree that it could improve American lives in ways ranging from roads and bridges to education and health care. Likely, it would generate new jobs in construction, steel manufacturing and other sectors, which in turn could generate new tax revenues to offset increases in government debt. It is also possible that higher public spending could allow for increased revenues and share price performance among America’s corporations. This, in turn, would bode well for investors.3

 

Some in Congress have put forth a recommendation for infrastructure spending to be supplemented by public-private partnerships, advocating for tax credits for private investors who would select which projects they want to fund. Critics have voiced concern that  this could lead to the development of high-return investment-based projects rather than allowing adequate attention for those with greater need.4 Despite this drawback, incoming Transportation Secretary Elaine Chao has indicated support for private investment from equity firms, pension funds and endowments.5

 

Others suggest that engineers might be the best-qualified people to determine where government infrastructure dollars should spent rather than politicians or private investors. This is based on the premise that a focus on repair and maintenance of bridges, dams, levees, airports and roads would produce the highest economic returns for Americans than new infrastructure projects.6

 

Regardless of the hows, whats and whens of infrastructure spending, here’s hoping that our elected officials will be able to find some middle ground on which to build.

 

 

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1 Kevin DeGood. Center for American Progress. Feb. 1, 2017. “A Plan for Rebuilding America and Investing in Workers and Jobs.” https://www.americanprogress.org/issues/economy/reports/2017/02/01/297796/a-plan-for-rebuilding-america-and-investing-in-workers-and-jobs/ . Accessed Feb. 5, 2017.

2 The White House. Feb. 28, 2017. “President Trump is Working to Rebuild our Nation’s Infrastructure.” https://www.whitehouse.gov/the-press-office/2017/02/28/president-trump-working-rebuild-our-nations-infrastructure . Accessed March 3, 2017.

3 Knowledge@Wharton. Dec. 22, 2016. “Inflation, Interest Rates and ‘the Politics of Rage’.” http://knowledge.wharton.upenn.edu/article/inflation-interest-rates-politics-anger/ . Accessed Feb. 5, 2017.

4 Anna Malinovskaya and David Wessel. The Brookings Institute. Jan. 3, 2017. “The Hutchins Center Explains: Public investment.” https://www.brookings.edu/blog/up-front/2017/01/03/the-hutchins-center-explains-public-investment/ . Accessed Feb. 5, 2017.

5 Joan Lowy. Crain’s Detroit Business. Jan. 11, 2017. “Elaine Chao says private investors can help boost transportation.” http://www.crainsdetroit.com/article/20170111/NEWS01/170119948/elaine-chao-says-private-investors-can-help-boost-transportation . Accessed Feb. 5, 2017.

6 Jeffrey Dorfman. Forbes. Dec. 4. 2016. “The Best Infrastructure Spending Plan Will Build No New Infrastructure.” http://www.forbes.com/sites/jeffreydorfman/2016/12/04/the-best-infrastructure-spending-plan-will-build-no-new-infrastructure/#5616ee8741d3 . Accessed Feb. 5, 2017.

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