news, united states

What's the impact of Trump's $1.5 trillion infrastructure plan?

By OMX | March 28, 2018

President Donald Trump will visit Northeast Ohio tomorrow and present his proposed $1.5 trillion infrastructure plan. The 10-year program involves $200 billion in federal tax dollars. The remaining $1.3 trillion will consist of state and local tax dollars and private investment. The plan also involves in new regulatory and administrative policies aimed at increasing efficiency and speed delivery.

Senior administration officials acknowledged Congress isn’t likely to consider the entire plan in one sweeping piece of legislation, but they are hopeful beginning pieces can be passed by the end of the year.

White House administration officials acknowledged that it is unlikely that the plan will be passed in one single piece of legislature. House Speaker Paul Ryan said earlier this month that the plan could be divided into six separate bills.

The Council of Economic Advisers (CEA) released a report on "The Economic Benefits and Impacts of Expanded Infrastructure Investment." From the report:

CEA assesses the likely impacts of the program across three key domains: GDP growth, time needed for project completion, and labor market opportunities for infrastructure workers.

  • CEA estimates that a 10-year, $1.5 trillion program of infrastructure investment could add between 0.1 and 0.2 percentage point to average annual real growth in gross domestic product (GDP). We further argue that getting the greatest possible impact from the program will require using our existing assets more efficiently, for example by using congestion pricing to allocate scarce capacity to its best uses.
  • CEA notes that the average time needed to complete final Environmental Impact Statements (EIS) reached 5.1 years for EIS completed in 2016, up from 4.7 years from two years earlier. CEA also finds that the average time needed to approve pipeline permit applications submitted to the Federal Energy Regulatory Commission (FERC) has risen over time and estimates that the median days needed for approval of pipeline project applications submitted in 2015 was 472 days. Speeding up the time needed to complete infrastructure projects is valuable because it accelerates the receipt of project benefits. CEA notes that the full Federal environmental and permitting process includes many components, of which compliance with the National Environmental Policy Act (NEPA) is only one element. Contingent on the projected impacts of a project, both the lead Federal agency and other agencies may have to issue permits to satisfy Federal laws, and each of those determinations would also be subject to a NEPA determination by that agency. Overall, the entire process can include many studies and procedures that occur prior to the initiation of one agency’s NEPA process and continue after that agency’s NEPA process has concluded.
  • Expanded infrastructure investment would also have direct implications for American workers. The President’s plan would likely result in the employment of 290,000 to 414,000 additional infrastructure workers, on average, over a 10-year window, although these employment gains may be offset by losses elsewhere in the economy. Infrastructure jobs are particularly lucrative for, and disproportionately employ, workers with a high school degree or less. Infrastructure workers with a high school degree or less earn 14 percent more in median hourly wages than non-infrastructure occupations, while a subset of these workers, in skilled trades, obtain an even higher median hourly earnings premium of 32 percent.

 

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