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Growth, Reduced Regulations Will Aid in Crafting Bipartisan Infrastructure Bill

March 18, 2019

The House Ways and Means Committee recently held a hearing focused on improving our nation’s infrastructure.

Spurred by the Tax Cuts and Jobs Act, the American economy continues to surge.  “All this growth translates into a greater need for more roads, modern ports, expanded rail and waterways, more pipelines to carry affordable energy to communities, the latest telecommunications infrastructure into every rural community, and smart technology to increase capacity and lower congestion,” said Rep. Kevin Brady (R-TX), the top Republican on the Committee.

“Stronger growth through better infrastructure is a priority that President Trump and lawmakers on both sides of the aisle share,” Rep. Brady added.

In order to address America’s infrastructure needs, Republicans and panelists agreed that any effort to pull back the pro-growth elements of the GOP Tax Cuts would be a step in the wrong direction.

Tom Donahue, President and CEO of the U.S. Chamber of Commerce told the Committee that the lower tax rates for job creators have led to historic job growth: unemployment remains near a half-century low and wages for low- and middle-income workers continue to accelerate.  With more folks in the labor pool, less people are dependent on the government.

“We need to address infrastructure without taking apart benefits of the economic growth of this country,” Mr. Donahue said.  “The higher the growth rate, the more we’re going to have the resources to take care of the nation’s challenges. . . .  Infrastructure should be right at the top.”

In addition to keeping the tax cuts in place, Marc Scribner, Senior Fellow at the Competitive Enterprise Institute, told the Committee a one-size-fits all approach from D.C., with heavy regulations and excessive red tape, would block private capital from being invested in these needed projects.

Mr. Scribner said, “what works in New Jersey won’t work in rural Montana.”  He added “we should free the states to experiment with these different approaches.”

One idea being floated by Democrats to fund potential infrastructure legislation is to raise the gas tax.  Rep. Adrian Smith (R-NE), lead Republican on the Select Revenue Measures Subcommittee, said raising the gas tax in isolation “would merely get us a more expensive version of the status quo.”

“Our job in this Committee is to figure out how to fund infrastructure,” the Nebraskan added.  “I have concerns about moving forward with increasing a tax without improvements in public policy.”

In addition to keeping taxes low in order to continue growing jobs and paychecks, Congress needs to reevaluate the current regulations in place – especially ones concerning permits.

Rep. Kenny Marchant (R-TX) said Congress should not “neglect the part of revising and streamlining our federal permitting process and our federal regulations.”

Mr. Marchant stressed that modernizing the federal rules for permits is the number one concern he hears from businesses and local governments.

There are two ways to pay for a potential infrastructure bill: either through a “user fee,” such as a toll tax paid by drivers that funds upkeep for that highway; or a “general fee,” which is money taken directly from federal coffers.

Rep. Tom Reed (R-NY) asked what “the downside of decoupling our infrastructure revenue sources . . . from the user fee system to a general revenue bucket of money” would be.

Mr. Scribner said the advantages of a user fee model over a general one include fairness, predictability, and signaling investment.

Mr. Scribner emphasized that “revenue roughly tracks use.  This provides policy makers with an important signal of how much of an infrastructure investment is needed.”

In a letter sent to Chairman Richard Neal (R-MA) from Reps. Brady and Smith, Republicans emphasized that they are hopeful a meaningful infrastructure plan can be sent to the President’s desk this year.

The best way to do so, the lawmakers said, is through streamlining the processes, reducing regulatory burdens, and ultimately empowering state and local governments.

“Any infrastructure plan must include reforms that streamline the approval and permitting processes and reduce wasteful government red tape,” said the two GOP tax writers.  “It’s time for Washington to be responsible stewards over tax dollars levied against American families.”