President elect’s infrastructure plan calls for increase in P3s

President-elect Donald Trump has promised to make a $1 trillion in infrastructure investments a top priority for him as president. He reaffirmed that pledge in his Nov. 9 victory speech and signs point to public-private partnerships (P3/PPP) as a significant component to his infrastructure plan.

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it,” said Trump.

Some of the infrastructure policies laid out by Trump include:

  • a deficit-neutral plan for new infrastructure investments;
  • supporting investment in transportation, clean water, a modern and reliable electricity grid, telecommunications, security infrastructure, and other pressing domestic infrastructure needs;
  • offering maximum flexibility to the states;
  • creating thousands of new jobs in construction, steel manufacturing and other sectors;
  • leveraging new revenues and working with financing authorities, P3s and other prudent funding opportunities;
  • implementing a bold, visionary plan for a cost-effective system of roads, bridges, tunnels, airports, railroads, ports and waterways and pipelines in the tradition of President Dwight D. Eisenhower;
  • linking increases in spending to reforms that streamline permitting and approvals; and
  • linking increased investments with positive reforms to infrastructure programs that reduce waste and cut costs.

An initial move by the president-elect to see those policies through was to name Martin Whitmer to his transition team to oversee transportation and infrastructure. Whitmer is the chairman of a Washington law firm which lobbies for the Association of American Railroads and the National Asphalt Pavement Association. He was previously deputy chief of staff at the U.S. Department of Transportation.

Just prior to the election, Trump economic advisors Wilber Ross and Peter Navarro released a report detailing his infrastructure plan. The plan calls for spending $1 trillion over ten years with much funding provided by private contractors. These contractors would be incentivized to invest in infrastructure projects through federal tax credits and usage fees, such as tolls. The plan would add nothing to the national debt. Investors would receive an 82 percent tax credit on equity invested in infrastructure paired with federally subsidized loans at a 5-to-1 leverage ratio.

Experts are divided on the practicality of the plan with some calling it a step in the right direction and others offering criticisms. Some economists said the tax cuts would indeed add to the deficit in the long run. Others pointed to projects that would not be appropriate for usage fees. Critics have also said that congress has not been as interested in infrastructure as Trump seems to be and he might face some resistance in getting legislation passed to support his plan.

With or without the support of the president-elect or congress, P3s have been gaining momentum in recent years. The National Law Review recently published an article detailing three factors spurring the popularity of the model. The need to repair aging infrastructure in the U.S. has continued to grow. Public funds for improvements have been diminishing. Lastly, P3s success stories in the U.S. and abroad have become widely known.

Trump’s focus on infrastructure, and the use of P3s to meet infrastructure needs, can only serve to increase awareness of critically needed improvements.


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