House Republicans have begun plotting their to-do list for the start of the Trump administration, and as you might expect, it is quite ambitious. Obamacare repeal is an early action item, of course. So are major tax cuts, which could happen by this spring. GOP members are also tallying up a list of regulations they'd like to mulch, which they can do with the help of a 1996 law that lets Congress easily reverse rules created in the past 60 days.
You know what conservatives aren't really talking about, though? Donald Trump's purported trillion-dollar infrastructure plan. Republican lawmakers who've been pressed say they are still waiting to hear how the president-elect will fund his proposal. Stephen Moore, a Trump adviser, is pushing the idea of covering the cost with the windfall from a one-time, 10 percent tax on corporate profits currently held overseas. But some members of Congress are cold on that plan. “Look, we don't have the details," House Transportation Chairman Bill Shuster told Politico. "We're working very closely with his transition team and hopefully with the new department head to figure out how we're going to pay for it. It's got to be fiscally responsible.”
This game of wait-and-see is a subtle rebuke to Trump's brain trust. Shortly before Election Day, the president-elect's economic team posted a white paper arguing that the United States could spur $1 trillion in infrastructure spending for free—yes, free—by giving out about $137 billion in tax credits to private investors interested in developing roads, bridges, and the like. They claimed the program would cost Washington nothing at the end of the day, since the construction binge would create new jobs and tax revenue. In other words, the proposal would act as a Keynesian fiscal stimulus. It was the sort of argument Republicans have derided throughout the entire Obama administration and, apparently, GOP pols still aren't buying it.
If Congress insists that Trump pay for the full cost of his plan, it may have to shrink. While the tax on overseas profits would probably cover its full cost—the Tax Policy Center thinks such a “deemed repatriation” would raise almost $150 billion over ten years—some Republicans would like to use that money to cover the cost of tax cuts. And while Trump could try to free up cash by slashing the budget elsewhere, Congress to spend those savings on his pet project—which much of the GOP might not be too fond of anyway.*
Trump's infrastructure proposal is barely sketched out as of now, and when read literally, what's on the page doesn't make a whole lot of sense (it's not even clear exactly what the administration would count as “infrastructure”). But its core proposal—using tax credits to subsidize public-private partnerships of some sort—might not be very appealing to the rural and small-state politicians who help form the backbone of the GOP. After all, infrastructure investors generally tend to be interested in big, new, and profitable projects in major population centers. Think of new toll roads in heavy commuter zones or light rail projects. Private financing makes a whole lot less sense for fixing dilapidated highways in farm country, since that's not going to earn anybody much of a return. And it's unclear why senators from Iowa or Kansas would want to fund an infrastructure bill that doesn't spruce up their states.
Perhaps that's why Steve Mnuchin, currently considered the front-runner to become Trump's treasury secretary, has suggested Trump might try to create an infrastructure bank, a more modest idea that (wait for it) Trump's campaign attacked when Hillary Clinton proposed it. At the time, Trump's trillion-dollar promise made a nice talking point. But come next year, his administration will have to take what it can get.
Correction Nov. 21, 2016: This post originally stated that Stephen Moore is arguing that Congress should raise money for Trump’s infrastructure plan through a repatriation tax holiday, which encourages corporations to bring back profits held abroad by temporarily lowering the tax rate they must pay on them. As I noted in the piece, a repatriation holiday would be unlikely to raise all the money Trump needs for his infrastructure plan. However, Trump’s tax proposal, which Moore consulted on, actually calls for a “deemed repatriation,” which is essentially a one-time tax on all corporate profits currently stored overseas. The Tax Policy Center estimates that would generate about $147.8 billion over a decade, enough to cover Trump’s tax credits for infrastructure investors.