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The art of the New Deal

Will Donald Trump stamp his name on the project of a lifetime, a plan to upgrade America’s crumbling infrastructure?

Donald Trump’s statements seem focus-group-tested to widen the country’s partisan divide, but when it comes to infrastructure, his gruff assessment is actually middle-of-the-(crumbling)-road. "Our country is falling apart, frankly. Our infrastructure is a disaster," Trump said during a segment on the cable show Morning Joe in December 2015, a statement that would remain a refrain on the campaign trail. According to experts, this was not an example of him being hyperbolic. Many nonpartisan civil engineering groups consider the state of U.S. infrastructure a national crisis, and last year, government hit a 30-year low in national infrastructure spending.

The most recent Infrastructure Report Card from the American Society of Civil Engineers gave grades of Ds and Fs to the country’s roads, bridges, rails, pipes, ports, and power grids. Chris Ward, former executive director of the Port Authority of New York and New Jersey and now senior vice president of AECOM, an American engineering firm with 87,000 employees, says it’s "a crisis, without a doubt."

"The status of our infrastructure is horrendous," he says. "There’s a butcher’s bill of projects that haven’t been funded."

By the first presidential debate last fall, Trump was saying "we’ve become a Third World country" in comparison to China and the Middle East, with their glittering new airports. But within this crisis, he says, lies a massive opportunity. "The only one to fix the infrastructure of our country is me - roads, airports, bridges," he once tweeted. "I know how to build, pols only know how to talk!"

At a time when every aspect of American life seems politicized, infrastructure (outside of the plan to erect a wall on the Mexico-U.S. border) may offer a rare chance for the incoming administration to attract broad bipartisan support. Trump found common ground with Secretary Clinton on the campaign trail on infrastructure spending, and even Senate Minority Leader Chuck Schumer suggested after the election (to much criticism) that he’s open to working with President Trump on the issue.

"Infrastructure and public works is a purple issue," says Scott Myers-Lipton, a sociology professor at San Jose State University and author of Rebuild America: Solving the Economic Crisis Through Civic Works. "Importantly, Ronald Reagan, the father of the modern conservative movement, is on record supporting public works, as his dad got a job via public works, and that a WPA program had transformed a riverfront swamp in his hometown into a beautiful park."

Trump has promised a "trillion-dollar" program to rebuild the country’s ailing infrastructure, claiming that, by rolling back regulations and engaging the private sector, the program will be "deficit-neutral," create "thousands of new jobs," and be a "golden opportunity for accelerated economic growth." To underline that promise, on election night, he told supporters, "We're going to rebuild our infrastructure, which will become, by the way, second to none, and we will put millions of our people to work as we rebuild it."

"With a modest amount of political leadership, everyone can agree on this," says Ward. "It’s about inertia and the will to act. It’s a good start for Trump to get out of this ideological battle and find some common ground."

Can the self-proclaimed "great builder" fashion a massive public works program that reinforces his image, helps deliver on his core campaigns promises, and crosses the aisle? Or, like many predecessors, will he overpromise and underperform, and thereby fail to live up to his claim to "Make America Great Again?"

Any discussion of federal programs for public works invites comparisons with the last time a wealthy New Yorker arrived in D.C. with promises to shake up the system. When Franklin Delano Roosevelt assumed the presidency in 1933, he faced a radically different situation than today—a quarter of the country was out of work due to the Great Depression—and a completely different set of national infrastructure challenges (specifically, we didn’t have enough). His response, an unprecedented series of employment and public works programs known as the New Deal, has been the yardstick by which subsequent presidents’ public works programs have been judged. A Time magazine cover in November 2008 featured a caricature of then-President-elect Obama made to resemble FDR, complete with a cigarette holder.

While Trump’s certainly not pursuing a New New Deal in the traditional Democratic sense—his position on the role of federal government is the polar opposite—FDR’s programs still offer lessons for today. Entering office in a time of great national tension, Roosevelt went on the offensive, prepared to do what it took to prime the economy and get money in the hands of desperate Americans. Public anger over the stock market crash had reached a boil. FDR, who had tapped into America’s desire for a new direction, needed to deliver results, and fast.

"The wealthy were not very popular, not like they are today, because everybody knew they had crashed the economy," says Gray Brechin, an author who helps run The Living New Deal, a nationwide online atlas that chronicles more than 12,000 extant public works projects of that era. "Roosevelt had to act quickly to forestall a revolution. He didn't want to see another Civil War."

Roosevelt had two options: He could focus on economic stimulus and find a way to get money to needy Americans as soon as possible, or prioritize long-term investments, so the end results would make the most of the public dollar and make the biggest difference over time. Roosevelt, an eternal optimist facing down an unprecedented crisis, did both, as Nick Taylor details in his book American Made: The Enduring Legacy of the WPA.

To prime the pump, Roosevelt created jobs programs such as the Civilian Conservation Corp, which employed unemployed, unmarried American men to develop natural resources on government land. From 1933 to 1942, CCC workers planted 3 billion trees and helped create 800 parks across the country. While the work done through these kinds of programs was mundane—"sewers and sidewalks," according to Sandra Opdycke, a professor at Vassar College and author of The WPA: Creating Jobs and Hope in the Great Depression—in aggregate, such projects reshaped the landscape, and restored the dignity of a paycheck to unemployed Americans.

As the Depression lingered, Roosevelt introduced the Works Progress Administration (WPA), a federal agency that directly hired the unemployed to do "shovel-ready" projects such as paving. The WPA helped pave thousands of miles of what were called "farm-to-market" roads, providing access to formerly isolated rural regions.

"Because the CCC and WPA worked in every county in the country, it really helped modernize America," Opdycke says. "Roads were a huge deal. Car ownership had spiraled in the ’20s, but the nation hadn’t caught up, so there was a real need for miles and miles of roads and highways."

It was a program of staggering size, which employed 3.3 million at its peak in late 1938 (the entire General Motors payroll at the time was 170,000) and eventually expanded its mission to train nurses, employ artists to paint murals, and even hire writers to produce guidebooks.

"You've got to think in terms of long-range investment and realize that these things are paying us back in lots of different ways," says Robert Leighninger, author of Long-Range Public Investment: The Forgotten Legacy of the New Deal. "Education, health, and recreation—all the stuff whose value is hard to calculate is important to our national well-being."

To build out the backbone of American infrastructure, his second solution, Roosevelt launched regional agencies such as the Tennessee Valley Authority, established in 1933 to create dams and oversee economic development in a hard-hit part of the South, and asked Interior Secretary Harold Ickes to administer the new Public Works Administration (PWA), an organization that would be responsible for daring engineering feats and massive bridges and dams. Instead of direct hiring, the PWA provided funding to local governments to hire area firms to build big-ticket items. The program spent more than $6 billion on projects such as the Grand Coulee Dam in Washington and the Oregon State Capitol building.

"It was really a quantum leap forward for the entire United States," says Brechin. "By building this vast physical and cultural infrastructure, the New Deal brought the country into the mid 20th century."

Throughout the Depression, Roosevelt wanted everyone to know the government was in motion. But he was acutely sensitive to the perception, and possibility, of graft and corruption. Before the New Deal, most public works were either private jobs (think the railroads spanning the West, early turnpikes, or the Empire State Building, a colossus built in a mere 14 months), or public projects, often tied to the spoils systems of local politicians.

The president feared that bad press and attacks from rival politicians would sink his programs before they had time to make an impact. Conservatives wasted no time needling the program, as Taylor recounts, saying WPA stood for "We Piddle Around." Some early cartoons featured images of the WPA shovel with an armrest that made it a great way to take a quick nap. The term "boondoggle" was even coined in response to some of the early WPA projects that were desperate attempts to provide jobs (supposedly New Yorkers worked as "fire hydrant decorators"). But the program’s administrator, Harry Hopkins, wouldn’t let his work get tarnished. He made payroll and purchase records for the job-creating Civil Works Administration a matter of public record, and hired a staff of 130 investigators to check for fraud, according to American Made: The Enduring Legacy of the WPA.

By the time the country entered World War II in December of 1941, the nation looked significantly different than it had a decade before. College campuses, dams, roadways, theaters, and schools, many decorated with artwork from WPA artists, dotted the landscape. D.C. was reshaped, with thousands of trees planted on the National Mall and a score of new office buildings erected downtown. San Francisco’s park system was reborn, with nearly every park getting attention from a New Deal agency. The Greek motifs found in many New Deal theaters and architectural designs weren’t coincidences: The New Deal built up the idea of the public commons, according to Brechin, symbolizing early democratic ideals.

Those buildings and projects created the infrastructure for modern America. And more than 70 years after the New Deal ended, they’re still playing that role, despite decades of deferred maintenance. In one way, the success of the New Deal makes it difficult to live up to; any significant investment today should, according to many experts, be invested in repair and renovation of decades-old projects. "A trillion dollars would just get the maintenance program started," says Brechin of the nascent Trump proposal. "The American Society of Civil Engineers’ last estimate was $3.5 trillion just to maintain the infrastructure that we have now." But maintenance doesn’t stir the blood of someone who puts their name in extra-large font on the side of a building.

With final details far from formalized, Trump’s plan broadly favors the private sector, and the PWA model. He wants to unleash the power of the market by cutting red tape, eliminating regulations, creating tax incentives, and tapping private funding.

Today, private investment in infrastructure most often comes in the form of what’s known as a public-private partnership, or a P3. The definition is fairly elastic—a public entity, normally a city or state, signs a deal to collaborate with a private firm to build a specific project. These types of arrangements are relatively new in the United States, having only gained traction in the last 15 years. From 2004 to 2015, 40 projects worth $40 billion were completed in the U.S., including the Chicago Skyway (2005) and Midtown Tunnel in Virginia (2015). But many, such as AECOM’s Ward, see these arrangements playing a paramount role in realizing a Trump infrastructure plan.

Proponents argue that if structured correctly, P3s are more efficient, quicker, and cheaper than public sector construction, offering the best of both worlds, government certainty and private ingenuity.

Ignacio Barandiaran, a principal at consulting firm Arup who helps governments set up P3 agreements, believes they’re incredibly useful problem solving tools, if applied to the right projects and especially if done at scale. Canada, for instance, has consistent rules and procedures in each of its 13 provinces (by contrast, most US states either don’t have any, or have inconsistent ones), which has made it a P3 powerhouse: Private investment in infrastructure in Canada is about $1 billion higher than all of the private investment in the United States. Barandiaran believes that if the government gave private investors the same access to tax-exempt debt on public infrastructure that governments tap into, this type of arrangement could take off.

"I don’t see it as a brand new, gee-whiz kind of tool in the toolbox that has suddenly been discovered," he says. "It’s about having the political will to implement the kind of changes needed to use them efficiently, including new funding which can come from a combination of traditional tax sources and user fees." Barandiaran also thinks a few procedural changes could supercharge today’s convoluted approvals processes.

Ward at AECOM agrees. The regulatory process can be a noose around projects, delaying start dates, pushing back groundbreaking, and scaring away investors, he says. Setting strict timetables for approvals doesn’t lower standards. It’s about consistency, not cutting corners.

"Length drives risk, and risk scares away capital," he says.

Solving an engineering issue with more streamlined processes seems relatively straightforward and politically neutral. But as Roosevelt, Hopkins, and Ickes realized, successful public works require a watchful eye on greed and corruption and a strong regulatory framework. The relatively short history of P3s in the U.S. is littered with cautionary tales, from unnecessary toll roads that don’t turn a profit and end up becoming the maintenance problem of local municipalities, to private equity firms fleecing cities by leasing revenue-generating sites and systems and bleeding the city of future revenue. (Ask any Chicagoan about the billion-dollar boondoggle around privatizing downtown parking meters.) Henry Petroski, a Duke professor and infrastructure expert, says the public pays the price no matter what.

"What happens after the private partner ceases to realize revenue on the project, or a tax break dries up?" he says. "If the private partner hasn’t been a conscientious partner, projects may need a lot of maintenance. I won’t call it a white elephant, but these projects can throw a wrench into government planning."

Trump’s anti-regulatory zeal, and his own record as a developer, give observers little confidence that he’ll appoint a modern version of Harold Ickes, who was notorious for his attention to detail and anti-corruption measures (he sent resident engineer inspectors to every PWA construction site to make sure corners weren’t being cut). Just this week, Trump announced the appointments of two big-name New York City developers and long-time friends, Richard LeFrak and Steve Roth, to a "council of builders and engineers" who will oversee his infrastructure plan.

"There’s an erroneous assumption in the Republican party that you should put the money with the locals and not second-guess them, and ever since Ronald Reagan, the philosophy has been the federal government doesn't know what it's doing and can't do things right," says Leighninger. "I think that whole philosophy of keeping federal oversight out of these projects is a problem. The locals will cheat you just as easily as the Feds will, and probably better, because they know the ins and outs better."

There’s also the question of letting market forces shape the public commons, introducing a profit motive into what have historically been cheap or free services provided by the state. Can an infrastructure plan based on private financing attract investment for low-return public goods such as water pipes with the same success that it can fund toll roads? At a time when local governments can borrow at historically low interest rates, some even question the need to involve the private sector at all.

Trump’s populist streak may play a role in the way his infrastructure plan unfolds. His appeal to his voters is that he won’t leave them behind, which suggests that improving employment in rural areas—as he championed on the campaign trail—could be an overriding focus.

"We don’t want Trump to repeat Obama’s approach, the notion that shovel-ready projects is what you need to spend money on because this is a stimulus," says Ward. "It’s about laying the foundation for long-term growth. We’re hopeful Trump doesn’t just jump in and say, ‘let’s do the things we can do today.’ It’s better to take a year to look at what’s in the funding and approval pipeline, and focus on the megaprojects, not laborers building guardrails."

Ward says a perfect example—one any New Yorker should be familiar with—is repairing the Gateway Tunnel connecting New Jersey and New York. It’s not just any megaproject, it’s the megaproject. "If that tunnel fails, this country could go into a recession," says Ward. It’s a $20 billion project that would take 10 to 15 years, i.e. nothing that will impress potential voters in midterm elections. But, along with a handful of other huge projects, it could make a significant difference in the country’s economic output.

It’s also a long-term play, something that, with political polarization and focus on immediate victories, seems increasingly out of the reach of Congress. Trump’s nascent plans, and the eventual Democratic reaction to his proposals, have invited extensive speculation. Brechin believes it’ll be tough for him to "square the circle," and figure out a reasonable way to invest in infrastructure while simultaneously delivering on promises to cut taxes and ramp up military spending.

Nobody—possibly excluding Trump and his advisors—has a concrete idea of where his proposed infrastructure plan goes next. But one thing that all the experts I spoke with agreed upon was that the main thing required for success wasn’t necessarily money, or great dealmaking, but political will.

And increasingly, cities are shouldering that burden of political will. Take the so-called "Trump Bump" in the stock market after November’s election. Many of the stock prices that jumped were for construction and engineering firms. Analysts attributed the rise to the president-elect’s infrastructure promises, but Ward thinks AECOM stock was more responsive to the raft of state and local funding plans that passed. LA passed a $120 billion infrastructure tax, and Seattle voted to apply $52 billion to the Sound transit system.

"Our stock did well not because Trump won, but because states and municipalities were staging their own infrastructure future," he says. "After a lot of talk, people started putting their money where their mouth is."


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