Washington Insider - Friday

Congressional Criticism of Infrastructure Plan

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

NAFTA Continues In Focus As Extra Day Added To Talks

Bloomberg is reporting that the next round of NAFTA 2.0 talks will get underway in Mexico February 25, a day earlier than the original schedule, and will run through March 5 with the top trade officials from the three countries set to meet on the final day of the negotiations. This comes as groups engaged with lawmakers on the Hill February 14 for a NAFTA "love fest," an effort organized by the U.S. Chamber of Commerce, American Farm Bureau Federation and more, made contact with the offices of around 280 House members.

The delegation of around 150 representatives from the various groups said pressed NAFTA issues as they worked the Hill. Meanwhile, Mexico's Foreign Ministry is now saying President Enrique Pena Nieto plans to meet with President Donald Trump in coming weeks, a development fostered by discussions between key U.S. officials and Mexican Foreign Minister Luis Videgaray in Washington Wednesday, including Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross. The Mexican ministry said the meeting resulted in an agreement to work to set up the meeting, but no timing or location was given.

House Approves Three-Year Extension of GSP

The Generalized System of Preferences (GSP) would be extended through 2020 and would apply retroactively to reimburse companies for tariffs paid on eligible products after the law expired at the end of 2017. The chamber approved the plan 400 to 2. Under GSP, tariffs are cut or eliminated on thousands of products from developing countries.

The Coalition for GSP, a group representing companies that utilize the programs to bring in products they use in production and manufacturing processes, said the end-of-2017 GSP expiration has had "an immediate negative impact" on their businesses. The measures moves to the Senate where some expect it could be attached to another piece of legislation moving through that chamber.

Washington Insider: Congressional Criticism of Infrastructure Plan

Congresswoman Nita Lowey, D-N.Y. is in her fifteenth term in Congress, and serves as ranking member on the very important House Appropriations Committee. She has been vocal in her support for infrastructure spending. Likely as a result, the Hill is highlighting her views on the administration’s infrastructure proposal, which she calls “insufficient,” the Hill says.

Lowey’s OpEd piece begins by urging her fellow legislators to “join me in my role as ranking member on the House Appropriations Committee in seizing this opportunity to commit meaningful federal funding to rebuild and modernize the nation’s infrastructure,” a strong statement for a minority member.

She further says that “without substantial federal investment, Congress will jeopardize our nation’s economic competitiveness and the safety of the American people.” She sees this as including many needs, but especially those of the “rail system as reflected in a spate of recent fatal accidents at Crozet, Va., and Cayce, S.C., among others.” And, she says that even as federal investigators continue to investigate these incidents, Democrats and Republicans agree that one thing is clear: “We cannot continue the status quo of neglecting our infrastructure.”

However, she sees danger in the president’s plan that would provide just $200 billion—"a fraction of the federal investment experts agree is needed to bring the nation’s roads, bridges, rail, water systems, and electrical systems into a state of good repair.”

She also argues that shifting funding responsibilities to states and localities and hoping the private sector will fill the funding gaps is “neither a serious nor responsible way to build what we need. If states could shoulder the massive costs of an infrastructure revamp, we would all already be driving on smooth highways and over structurally sound bridges,” Lowey says.

She takes pains to raise criticism of the process, especially the likelihood that the greatest determining factor in awarding federal dollars to infrastructure projects would be their ability to secure significant outside funding. Just 5 percent of the formula for funding projects would be based on “how the project will spur economic and social returns on investment.” This would all but guarantee that infrastructure projects of public necessity are put on the backburner to prioritize the needs of private investors, she thinks.

The picture gets even worse when you consider the draconian cuts proposed in the president’s Fiscal Year 2019 budget request, she argues. Amtrak operates on 21,300 miles of track owned by the rail service’s National Network of partners. In fact, the train crashes in Crozet and Cayce occurred on host railroad tracks owned and operated by other entities. “Yet the administration request slashes Amtrak rail subsidies in half, proposing to cut grants for Amtrak’s National Network of partners from $1.159 billion to $538 million in fiscal year 2019, she said.

Lowey called the proposal unacceptable “given the clear need to ensure that these private railroads meet Amtrak’s strict standards to provide for the safety of the traveling public.”

She said that for months, the president promised the American people a plan that would rebuild our roads, bridges, and transit systems and improve them to be the greatest in the world. She argues now that the current infrastructure plan indicates a “profound misunderstanding” of what it will take to make our infrastructure great again.

America's infrastructure is crumbling, she said, and the only way to fix it is to create a dedicated, permanent funding stream to repair, rebuild, and modernize the bones of our great nation.

Lowey is a New York Democrat, so it is unsurprising that she is willing to criticize the current administration. However, because of her important committee assignments and her claim to be part of “strong bipartisan support for revamping America’s infrastructure” her views would be expected to attract more than usual attention—especially since the administration likely will need the bipartisan support she mentions to succeed in developing a successful infrastructure rebuilding plan.

Lowey argues that the President has a unique opportunity to work with Democrats and Republicans “to secure not only a robust federal investment in our railroads, airports and highways but in our nation’s future,” and she argues that the current plan will fall short.

It is clear that infrastructure spending is widely seen as a high priority need, and that there is widespread disagreement regarding how successful the administration’s plan to depend heavily on private spending will turn out to be. However, it also is clear that it will be contentious and involve an important debate that producers should watch closely as it proceeds, Washington Insider believes.

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