Bumpy Road Ahead for House Infrastructure Plan
The House of Representatives this week is expected to pass a broad $1.5 trillion infrastructure package covering a diverse number of areas, including surface transportation programs, aviation, housing, water infrastructure, and tax policy, as well as containing many aspects of the so-called “Green New Deal” policy agenda advocated by many House members. While transportation policy has traditionally been a bipartisan affair, this bill was not, having been developed to include a large number of Democratic priorities, many of which are unacceptable to Republicans.
At the same time, much of what was included in the more than 2,300-pages of H.R.2, the Moving Forward Act, are provisions that would otherwise garner bipartisan support. For example, provisions in the package affecting the real estate industry include:
- An increase in and extension of the Energy Efficient Commercial Building Deduction (Section 179D), which expires at the end of 2020;
- Expansion of the Low-Income Housing Tax Credit (LIHTC), increasing the state allocation amounts, among other changes;
- The New Markets Tax Credit is made permanent, with an increase in the allocation amounts of the credit;
- The Historic Tax Credit (HTC) percentage is increased from 20 percent to 30 percent through 2024, and then phased down to return to 20 percent in 2027. The period to complete rehabilitation is also extended.
The bill includes major increases in funding authorizations for federally-subsidized housing programs, such as public housing capital expenditures, for example. In addition, the legislation includes a number of provisions intended to incentivize renewable energy, such as expanded credits for purchasers of electric vehicles, which have faced opposition in the Senate.
Importantly, the legislation does not include an increase in the gasoline tax or any other fees that are dedicated for the Highway Trust Fund. Instead, it would transfer $145 billion from general revenues to keep the trust fund solvent.
The debate in the House has reflected the partisan nature of the infrastructure bill, with one Republican lawmaker saying it was a “partisan wish list for my colleagues across the aisle to campaign on” and a Democratic lawmaker responding there was a “lack of a good faith effort on the part of the [Republican] minority to engage in meaningful dialogue on issues such as climate change.”
For their part, Senate Republicans have already signaled strong opposition to the House exercise. Senator John Barrasso (R-WY), chairman of the Senate’s Environment and Public Works Committee and the Republican lead in the Senate on infrastructure issues, criticized the Democratic transportation bill when it advanced out of committee, saying it was a “partisan highway bill to nowhere”. Barrasso has his own bill, S. 2302, America’s Transportation Infrastructure Act of 2019, which is legislation more focused on reauthorizing existing surface transportation programs.
Despite the partisan rhetoric, authorization for the Highway Trust Fund expires Sept. 30 and that will ultimately force the House and Senate to come to an agreement on at least the surface transportation portion of a bill.
The bigger question is whether aspects of the House infrastructure bill are ultimately incorporated into a “Phase IV” economic stimulus bill needed to continue the federal response to the coronavirus epidemic. The unemployment insurance provisions of the Coronavirus Aid, Relief and Economic Security (CARES) Act will expire at the end of July, and the Federal Reserve has repeatedly signaled to lawmakers that the U.S. economy remains vulnerable to a downturn if further action is not taken.
The Trump administration has not provided specific direction to lawmakers as to what it wants in a stimulus bill, with statements from different officials sending confused and often contradictory messages. However, President Donald Trump’s desire to have a big infrastructure program as part of his first-term accomplishments is well known, and ultimately could prove instrumental in convincing some Republicans in the Senate to put aside their concerns with the size or cost of an infrastructure package.
Funny things often happen in a presidential election year. There will be resistance on the Democratic side of the aisle to give Trump anything that looks like a major legislative victory. However, the need for increased transportation and infrastructure funding are areas on which members of both parties strongly agree. How much of H.R.2 is included in a final negotiated package is anybody’s guess, but there will be many elected officials running for reelection this fall who would like to show their constituents tangible legislative achievements, which may be enough to get legislation to the president’s desk.
