Is the US Infrastructure Bill going on the back-burner?

Earlier this month, the United States of America (USA) White House press secretary, Sarah Huckabee Sanders, was embroiled in an exchange with a member of the Press Corps on the subject of the President’s proposed Infrastructure Bill, which was announced on 13-Feb-2018 and which could amount to USD1.5 trillion in transport sector investment.


Summary:

  • There are concerns in USA that potential for an Infrastructure Bill which could amount to USD1.5 trillion in transport sector investment will not see the light of day in 2018;
  • A February-2018 statement from President Trump had opened the door to greater participation by the private sector in the airports business;
  • Despite this statement The US government has increasingly been forced to deal with foreign policy matters;
  • The proposed bill would break new ground in the relationship between US airports and the private sector.

The Media representative asked the Press Secretary if she could confirm that there would be an Infrastructure Bill by the end of this year, or ever, citing concerns voiced on Capitol Hill (Congress) and by business people that any kind of bill will “see the light of day”, even a USD20 billion state contribution for “transformative projects” and the FAA reauthorisation.

Ms Sanders replied, “I don’t know that there will be one by the end of this year.  Certainly, the administration… secured some funding for infrastructure projects.  We also laid out priorities that we wanted to see in an infrastructure legislation package.  We’re going to continue to look at ways to improve the nation’s infrastructure.  But in terms of a specific piece of legislation, I’m not aware that that will happen by the end of the year.”

This fairly vague exchange opens up a can of worms. President Trump is an individual who prides himself on his business and negotiating skills and, separately, he had surprised many with his February statement, which opened the door to greater participation by the private sector in the airports business.

At the same time, in adhering to principles such as “Make America Great Again” (MAGA), of which such participation might reasonably be expected to form a crucial part, given the dated infrastructure at some US airports that he himself has commented on, foreign policy has to take a back-seat.

But foreign policy has forced itself centre-stage with the spat with North Korea suddenly becoming one of opportunity to bring the Korean War to an end, to de-nuclearise that country, to wrong-foot China and Russia and, oh, to win a Nobel Peace Prize.

Such a volte-face was then compounded by the decision to withdraw from the Iranian Nuclear Weapons Deal that was largely crafted by his predecessor. This leaves President Trump in a position where he is in a better position to help aid/finance North Korea’s entry into the global community, which will certainly be a demand made as a quid pro quo for de-nuclearisation.

There are many key decisions to be made in the following weeks, months and even years and the domestic economy, which is performing at its best level for years, looks as if it may be sidelined in the immediate future while those decisions are made.  President Trump’s isolationist economic policies, so reminiscent of those of President Andrew Jackson, and which arguably won him the election, may well play a part in his re-election gambit. But the emphasis is clearly shifting in the direction of foreign policy decisions that would establish President Trump on the world stage, bestowing upon him the gravitas many deny him now.

Just to recap the provisions of the Infrastructure Bill proposal as far as they might impact on airports:

  • The FAA’s budget looks likely not to be increased, including that of the Airport Improvement Programme.
  • There is no sign of an elimination of the federal cap on local Passenger Facility Charges.
  • An Infrastructure Incentives Programme could be introduced to spur additional dedicated funds from States, localities, and the private sector, on a matching funds basis.
  • The Airport Privatisation Pilot Programme could be extended, potentially to include any U.S. commercial airport.
  • There is a proposal to limit FAA oversight of non-aviation development activities at airports, which could act as a further spur to private sector investment activities.
  • The future of tax-exempt and private activity bonds remains unclear though there is the possibility of a positive change. The issue is subject to a pending House bill.
  • The power of airlines to veto a lease or P3 deal may be reduced or eliminated
  • The White House is recommending changing the Airport Improvement Plan (AIP) to allow incentive payments for accelerated construction.
  • Surprisingly, the two main Washington airports were earmarked for potential disposal, possibly to private interests.

Further information on this subject can be found in the CAPA – Centre for Aviation report ‘President Trump’s new infrastructure plan: potential for aviation and private airport financing‘, while further insights will be available in the soon-to-be-published Airport Privatisation and Finance Review 2018, which includes a special feature on the USA.