Trump’s last chance to be the deal-maker in chief

One of Donald Trump’s favorite stories to tell during the 2016 campaign was about an ice skating rink.

In 1986, the repair of Central Park’s famed Wollman Rink was years behind schedule and millions of dollars over budget. Trump said he approached New York City Mayor Ed Koch with an offer to take over the project and a promise to have the rink ready to open by the holiday season. According to Trump, he got the job done by bridging differences between unions, contractors and government officials. Trump told the American people he’d bring the same deal-making approach to the presidency and to rebuilding America’s decrepit infrastructure.

Two years in, Trump still hasn’t delivered on his promise to “build gleaming new roads, bridges, highways, railways, and waterways across our land.” But now, with an incoming Democratic-controlled House that shares the same goal, he has one final chance to prove he can do it.{mosads}

Consider New York City, where Trump was born and raised. The underground tunnel linking the City with New Jersey – which carries 820,000 passengers per day – was built before World War I. And, a promising effort to repair these tunnels was cancelled in 2009 by Trump ally and then New Jersey Governor Chris Christie. 

Parts of New York City’s water infrastructure are 150 years old.

NYC’s water system is both a testament to American ingenuity (this ancient infrastructure is still working) and an indictment of political leaders who are coasting on the investment and achievements of generations long gone.

The American Society of Civil Engineers (ASCE) gives American infrastructure a D-plus grade and suggests there is now a gap of $2 trillion between the amount America needs to repair its infrastructure in the next decade and the amount we are currently willing to spend. If we don’t fill the gap, it will cost 2.5 million jobs and cost every American family $3,400 by 2025.

Our broken down infrastructure is costing us money, and even worse, lives, as evidenced by the recent spate of fatal train derailments, bridge collapses and the calamitous Flint, Michigan, water crisis, which is probably indicative of similar problems elsewhere.

At the root of this crisis is government’s almost criminal neglect of a line item familiar to anyone who has ever run a business.

It’s called maintenance capex (short for capital expenditures for maintenance).

Maintenance capex entails the unexciting but essential investments that keep an asset in working condition, like painting a ship or replacing the conveyor belt on an assembly line. It isn’t sexy — and when a company’s finances are tight, it is one of the most tempting areas to cut because the cost of deferral does not show up immediately. That is until your ship turns into a rusting hulk or the assembly line completely breaks down. Then the bill comes due, and it is usually much more expensive than if you had just paid a little each year to maintain the asset.

In recent years, American politicians have funded lots of shiny new infrastructure — the kind you can put your name on and have a ribbon cutting in front of — while ignoring the basic upkeep that keeps the water clean and running, electricity flowing, and bridges from falling into the river. But no politician ever got to cut a ribbon for repainting a bridge.

The private sector is a critical partner in many infrastructure projects but will only fund projects where they can expect a regular income stream and a reasonable economic return.

Many infrastructure repair projects don’t meet this standard, which means government has to pay for it or build it. So a 2019 infrastructure grand bargain would require Republicans moving the Democrats’ way and agreeing to significant public investment that is actually paid for.

President Trump has suggested he’d be open to increasing the federal gas tax, which hasn’t been raised since 1993. A one percentage point increase in the corporate income tax would generate $100 billion over 10 years. Wherever Congress finds the money, the infrastructure investment will pay off for decades to come.

If Republicans are willing to support real public investment to fix old infrastructure, then maybe Democrats can agree to a more flexible and market-based approach to building new infrastructure, including more innovative financing mechanisms — such as Build America Bonds, Private Activity Bonds and measures that enable more institutional (e.g. pension funds) investment.{mossecondads}

Because state and local regulatory hurdles are often the primary barrier to building new infrastructure, federal infrastructure funding could be made more contingent upon localities streamlining their permitting and regulatory processes. Congress should consider reforming the budgeting process (e.g. creating a capital budget), so the economic return of infrastructure investments is considered along with the cost for budget scoring purposes. And perhaps we could update federal labor requirements for infrastructure projects, which are still largely guided by a law passed in 1931.

When there is urgency and political will to get moving on an infrastructure project, America can still do great things. Witness the project to elevate the Bayonne Bridge to create space for bigger ships. This project was completed six months ahead of schedule thanks to a commitment by federal, state and local officials to collaborate and cut through the red tape.

There is an infrastructure deal to be had here, and America needs it in the worst way. President Trump once said, “deals are my art form.” Here’s his chance to prove it — or not.

Andrew Tisch is the co-chairman of Loews Corporation and a cofounder of the national political reform group No Labels