But the Democrats’ midterm performance has revived prospects for addressing the nation’s crumbling roads, bridges, highways and transit systems. Odds of a breakthrough remain long. Yet those working on the issue say there is a path forward. And it is widened by the administration’s eagerness to notch a bipartisan win after a bruising election — while jolting a slowing economy heading into the next one.
The biggest roadblock is how to pay for it. Senate Majority Leader Mitch McConnell (R-Ky.), who discussed the issue with House Democratic leader Nancy Pelosi (D-Calif.) after the midterms, said Wednesday that any package would need to be funded:
One big caveat: Republicans love to talk about offsetting the cost of big-spending legislation, but they eagerly got behind the GOP tax overhaul that is expected to add $1 trillion to the deficit and they also embraced a $1.3 billion budget deal last March that was heavily panned for its rampant spending. The deficit grew by $100 billion in October, a 60 percent increase from a year earlier — and it is projected to top $1 trillion a year by 2020.
Advocates of a big infrastructure deal from both business and labor groups say increasing the gas tax provides the simplest solution. Congress hasn’t touched the levy since 1993. And a plan the U.S. Chamber of Commerce rolled out earlier this year to phase in a 25-cent increase would raise $394 billion over ten years, by the group's math. That would provide a significant down payment on the $1 trillion in spending that both President Trump and House Democrats have called for.
“I think it's going to be a challenge in the sense that it’s not something that’s politically easy to get done,” says Ed Mortimer, the chamber’s vice president of transportation and infrastructure. “All these members keep saying they want more infrastructure. If it’s so important to invest in, let’s have a serious discussion about the investments that need to be made.”
Mortimer says the issue will be a top priority for the chamber in the next Congress, and it will press for a “long-term sustainable funding source … One-time budget gimmicks or talk of repealing any part of the tax reform bill are nonstarters.”
It remains to be seen whether Democrats in the House, where a bill is expected to originate, will be willing to embrace a tax increase that lower-income people are likely to feel more acutely.
Rolling back some of the GOP’s tax cuts for businesses and upper-income earners would be an easier sell for the party, forcing Republicans to choose between rebuilding public works and protecting the wealthiest. And Democrats got a taste of how dicey a gas tax can be in June when California Republicans knocked off a Democratic state senator in a recall campaign that focused on his vote for a 12-cents-per-gallon levy. (Then again, as the American Road & Transportation Builders Association points out, 96 percent of state lawmakers who voted for such a tax and then faced primaries this year advanced to the general election.)
For now, House Democratic leaders are looking to the White House, trying to evaluate whether the administration is “willing to play ball,” one top House aide tells me. Trump discussed the issue with Pelosi; and in a potential sign of the Trump team’s seriousness, administration officials have also reached out to Rep. Peter DeFazio (D-Ore.), the likely House Transportation Committee chairman, and Rep. Richard Neal (D-Mass.), the likely Ways and Means Committee chairman, per people close to the process.
Senate Republicans, 21 of whom will be up for reelection in 2020, are no more eager to raise taxes. “This might be the only thing left on the table that can get done,” says Mike Friedberg, a transportation and infrastructure lobbyist at Holland & Knight. “But neither party wants to have an increase in the gas tax going into the presidential election, and they’ve said that.”
Trump himself endorsed the idea in a meeting with lawmakers earlier this year. Whether he will hew to that position is another question.
“If the mutual will is there politically, then the funding will be there. If you can broker a deal in principle, the rest will work itself out,” says Liam Donovan, a Republican strategist who lobbies on infrastructure issues. But he said cooperation could break down as a new set of House Democratic chairmen use their subpoena power to launch probes of the Trump administration. “How do you get there with this political cold war in the background?”
The president made the point in his post-election news conference. He said House Democrats could investigate him, “or we can work together. You can’t do them simultaneously, by the way."
Trump’s stated unwillingness to follow then-President Bill Clinton’s strategy of compartmentalization — boxing off Republican probes so he could devote most of his attention to pushing his agenda amid divided government — bodes badly for an infrastructure breakthrough.
Those rooting for one agree Trump will need to rally support for a package. Otherwise, “Infrastructure Week” will persist as a punchline about what the administration could be accomplishing.
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— Britain's Brexit secretary resigns. The Washington Post's William Booth and Karla Adam: “The minister in charge of helping Britain leave the European Union, Brexit Secretary Dominic Raab, abruptly resigned from Prime Minister Theresa May’s government on Thursday morning, saying he could not support the withdrawal agreement approved by her cabinet the night before. It was a stinging setback for May. Also quitting their posts were two other ministers and a junior minister in the Brexit ministry. The rapid-fire resignations sent shudders through London and E.U. headquarters in Brussels, raising the possibility that May does not have the support she needs to pursue her deal for a softer, slower-moving Brexit, a plan loaded with compromises that few in Britain like. In his resignation letter, Raab wrote, ‘I cannot reconcile the terms of the proposed deal with the promises we made to the country in our manifesto at the last election.’”
— World's economy weakens while America's flourishes. The Wall Street Journal's William Boston and Nina Adam: “Signs are mounting of a slowdown in the global economy, indicating a deceleration in China and trade tensions are beginning to take a broader toll on much of the rest of the world. . . . The raft of weakening data stands in contrast with a U.S. economy that expanded at an annualized rate of 3.5% in the quarter, underpinned by robust consumer and government spending. Though few economists predict a global downturn, the economic data increasingly show that the global economic cycle is entering a mature phase.
"One reason is a slowdown in demand from consumers and companies in China, the world’s second-largest consumer. A months-long slowdown there, driven in part by a crackdown on risky financing and jitters over the trade dispute between Beijing and Washington, is hurting spending on cars, other consumer products and property, according to official data released Wednesday. That is rippling through the world, hurting some of China’s major economic partners.”
The Fed is tracking it. WSJ's Nick Timiraos: "Federal Reserve Chairman Jerome Powell said the central bank was closely monitoring a modest deceleration in global growth, whose strength last year had provided an important tailwind for the U.S. economy. ‘This year has seen a gradual chipping away at that picture. You’ve seen a bit of a slowdown—not a terrible slowdown,’ Mr. Powell said Wednesday evening. ‘You still see solid growth, but you see growing signs of a bit of a slowdown. And it is concerning.’” But it's not concerning enough, he added, to change the Fed's rate-hiking path.
Powell also defended the Fed. NYT's Binyamin Appelbaum writes he "countered [Trump’s] loud and repeated attacks on the Fed without mentioning Mr. Trump by name. Mr. Powell hammered on two simple themes during an hourlong question-and-answer session in front of several hundred people at the Federal Reserve Bank of Dallas. The Fed is doing its job, he said, and the economy is doing really well. 'I’m very happy about the state of the economy now,' Mr. Powell said. 'There’s pretty good reason to think we’re going to continue in a positive vein like that.' He added that the Fed deserved credit for its role in the long and steady expansion. 'Our policy is part of the reason the economy is in such a good place now,' he said."
— Inflation stays muted. Bloomberg News's Sho Chandra: “U.S. inflation showed little sign of breaking out in October despite strength in the economy and wages, likely keeping the Federal Reserve on its path of gradual interest-rate increases. Excluding food and energy, the core consumer-price index rose 2.1 percent from a year earlier, according to a Labor Department report Wednesday, slightly short of the median estimate of economists for a 2.2 percent increase, which was also the gain in September. . . ‘These are pretty steady inflation prints,’ with ‘nothing in here that argues inflation is going to overshoot,’ said Omair Sharif, senior U.S. economist at Societe Generale. Also, there’s little to concern policy makers, so they’ll “continue to stay gradual” with interest-rate hikes, he said.”
— GE goes through rough patch. WSJ's Matt Wirz: “Wall Street has a GE problem. General Electric Co. raised $115 billion of debt on a reputation as one of the U.S.’s safest borrowers. Now, revelations of losses and questions about its accounting have shaken investors’ confidence, driving bond prices sharply lower in recent weeks. The impact is rippling through financial markets as investors scramble to reassess the company’s risk, bearish hedge funds bet prices will fall further and banks move to limit their exposure. . . . Prices of GE’s various bonds have tumbled about 5% to 18% since late October to junk levels, according to MarketAxess, showing that some investors expect further downgrades . . . A slide below investment grade by GE — a name many Americans associate with safe and boring investing — could become a pivotal moment in the U.S. credit market’s nine-year bull run, forcing fund managers to question how well they understand the risk in their investments.”
— Pascrell says new NAFTA needs changes. Bloomberg News's Erik Wasson and Andrew Mayeda: “Trump’s new trade deal with Canada and Mexico needs changes to secure support from Democrats, according to a senior House Democrat in line to play a leading role on trade policy in the new Congress. There needs ‘to be not only changes in the legislation but more enforcement’ if the Trump administration wants votes from Democrats, said New Jersey Representative Bill Pascrell, who is positioned to chair the Ways and Means Trade subcommittee, in an interview on Wednesday.
"Democrats’ concerns wouldn’t require a major rewrite of the deal and likely could be addressed by putting strong ‘enforcement mechanisms,’ especially over labor and environmental rules, in the U.S. law that brings the deal into force, said Pascrell . . . While the lawmaker didn’t outline specific changes his party is seeking to the deal, Democrats have been consistent in pushing for tougher labor provisions.”
— White House reins in Navarro. CNBC's Jacob Pramuk and Eamon Javers: “The White House has deliberately curtailed trade advisor Peter Navarro's public profile amid a clash with top economic advisor Larry Kudlow . . . Despite the tensions, neither official is expected to leave the administration soon . . . [Trump] could also change his mind at any time about Navarro's role. On Tuesday, Kudlow slammed Navarro for his remarks on the White House's ongoing trade negotiations with China. . . . Last week, Navarro said a potential deal with China ‘will be on President Donald J. Trump's terms. Not Wall Street's terms.’ ”
And Trump holds his fire. The Post's David Lynch: "After several months of tough talk and even tougher tariffs, [Trump] may be pulling some punches in his 'America First' global trade offensive. The president has deferred until next year a decision on imposing 25 percent tariffs on imported automobiles and is considered likely to hold off on new trade restraints on Chinese imports when he meets China’s President Xi Jinping later this month at the Group of 20 summit — refraining for now from moves that would mean higher prices for American consumers." One multinational executive tells David that market turmoil and the midterm elections have rattled Trump's trade team.
— China outlines concessions. Bloomberg's Shawn Donnan and co.: "Chinese officials have outlined a series of potential concessions to the Trump administration for the first time since the summer as they continue to try to resolve a trade war, according to three people familiar with the discussions. The commitments for now fall short of the type of major structural reforms that [Trump] has been demanding, two of the people said, cautioning that a long road lies ahead in negotiations. One person said that talks between the world’s two largest economies are continuing and constructive. As a result, one of the people said, it raised doubts over how substantive a deal Trump could make with Chinese counterpart Xi Jinping when the two leaders meet later this month on the sidelines of the Group of 20 summit in Buenos Aires. Most of the document appeared to be a rehash of previous changes already made by Beijing, such as raising equity caps on foreign investment in certain industries."
As it struggles to seal regional trade pact. WSJ's Ben Otto and Jake Maxwell Watts: “China has cast itself as a champion of free trade and multilateralism in the ‘America-first’ era, but the world’s second-largest economy is finding that turning such talk into outcomes is substantially more difficult. At meetings of global leaders in Singapore, negotiators working on a sweeping, 16-nation trade pact backed by Beijing said Wednesday they couldn’t finish the deal this year, citing its size and the complexity of talks among a range of economies. That leaves Beijing without a major deal to its name at a time when a trade fight with the U.S. is beginning to bite and some of its Asian partners are pushing back against Chinese investments they believe come loaded with crippling debt or other burdens.”
— International businesses fear auto tariffs the most. WSJ's Josh Zumbrun: “International companies in the U.S. rate potential tariffs on automobile and auto-parts imports as the most damaging of the Trump administration’s trade actions, a new survey finds, surpassing the tariffs that have been imposed between the U.S. and China, and the global tariffs on steel and aluminum. Companies, even outside the automobile industry, are closely watching as the administration debates whether to impose the auto tariffs, the survey shows. None of the automobile-related tariffs have yet been implemented, but [Trump] has repeatedly threatened to deploy the tariffs to obtain leverage in negotiations with trading partners like the European Union and Japan."
- “Justice Dept. releases legal memo defending Whitaker’s appointment as acting attorney general.” The Post's Devlin Barrett.
- “The legal fight over Matthew Whitaker’s appointment, explained.” The Post's Aaron Blake.
- “Whitaker’s unusual path to Justice Department included owning day-care center, trailer maker and concrete supplier.” The Post's Shawn Boburg and Robert O'Harrow Jr.
- “Republicans face renewed pressure on Mueller protection bill.” The Associated Press's Mary Clare Jalonick.
And two new tweets from Trump this morning panned the Mueller probe:
— How Facebook fought through crisis. NYT's Sheere Frenkel and co.: "When Facebook users learned last spring that the company had compromised their privacy in its rush to expand, allowing access to the personal information of tens of millions of people to a political data firm linked to [Trump], Facebook sought to deflect blame and mask the extent of the problem. And when that failed — as the company’s stock price plummeted and it faced a consumer backlash — Facebook went on the attack. While Mr. Zuckerberg has conducted a public apology tour in the last year, Ms. Sandberg has overseen an aggressive lobbying campaign to combat Facebook’s critics, shift public anger toward rival companies and ward off damaging regulation. Facebook employed a Republican opposition-research firm to discredit activist protesters, in part by linking them to the liberal financier George Soros. It also tapped its business relationships, lobbying a Jewish civil rights group to cast some criticism of the company as anti-Semitic."
In the wake of the Times's blockbuster, Facebook announced Thursday it has cut ties with Definers Public Affairs, a Washington-based firm that helped it trash its competitors and critics, including by alleging the Soros link, the paper reports.
Dark mood at Facebook. WSJ's Deepa Seetharaman: “Facebook Inc.’s difficult year is taking a toll on employee morale, with several key measures of internal sentiment taking a sharp turn for the worse over the past year, according to people familiar with the matter and messages reviewed by The Wall Street Journal. Amid a plunge in the stock price, ongoing leadership turmoil and critical media coverage, just over half of employees said they were optimistic about Facebook’s future, down 32 percentage points from the year earlier, according to the survey, which was taken by nearly 29,000 employees.”
— Koch-backed groups unhappy with business incentives. The Hill's Naomi Jagoda: “Groups backed by wealthy GOP donor Charles Koch on Wednesday criticized cities and states that give out special incentives to corporations, following Amazon's announcement that it was splitting its second headquarters between New York City and Northern Virginia. ‘Americans are fed up with wasteful corporate welfare, yet cities and states are breaking the taxpayer bank to give carveouts to huge corporations,’ officials with Americans for Prosperity and Freedom Partners Chamber of Commerce said in a statement. ‘We need a level playing field where businesses can succeed by creating value for others — not a group of politicians cobbling together massive subsidy packages that almost never deliver the jobs they promise.’” (Amazon.com founder and chief executive Jeffrey P. Bezos owns The Washington Post.)
— McConnell: No shutdown. Bloomberg's Laura Litvan: "Senate Majority Leader Mitch McConnell reiterated that he wants to avoid a partial government shutdown in December, as lawmakers work to complete annual spending bills amid President Donald Trump’s demand to fund a wall at the southern border. 'No, we’re not going to do that,' McConnell of Kentucky told reporters Wednesday when asked about the possibility of a shutdown. Funding is set to end Dec. 7 for some federal agencies including the Department of Homeland Security, the Internal Revenue Service and the National Park Service. Congress already passed full-year funding for many other federal agencies, meaning they would remain open."
— Pelosi faces challenge. The Post's Erica Werner and co.: "Pelosi on Wednesday faced solid opposition from at least 17 Democrats and encountered a significant bloc of undecided women in her bid for speaker, setting the stage for an intense battle over who will ascend to one of the most powerful positions in Washington. After a campaign in which some Democrats prevailed in competitive districts by promising to oppose her, a coalition of incumbents and newly elected members have denied her a smooth path to the speakership. Those ranks could swell as more races are called."
— Waters: Bank deregulation will end. CNBC's Jeff Cox: "Rep. Maxine Waters, poised to take over the powerful House Financial Services Committee when the new Congress convenes in January, laid down the law Wednesday about the future of banking regulation. Speaking ahead of remarks by Randal Quarles, the Federal Reserve's vice chair of oversight for the banking industry, the California Democrat said efforts to loosen the reins on Wall Street financial institutions won't be tolerated should she be committee chair, as expected. 'Make no mistake, come January, in this committee the days of this committee weakening regulations and putting our economy once again at risk of another financial crisis will come to an end,' Waters said. Bank shares moved lower following a CNBC report on the remarks."
Quarles says more relief is coming for community banks. CNBC: "The Federal Reserve isn't finished easing up rules for the nation's smallest financial institutions, according to remarks Wednesday from the central bank's top regulator. Just two weeks after the Fed announced changes to the way banks are classified and the types of capital cushions they'll need, [Quarles] said more changes are coming that will allow community banks relief from the post-financial crisis capital requirements."
— From the New Yorker's Roz Chast:
Pence blasts Myanmar's treatment of Rohingya sitting next to Aung San Suu Kyi:
CMA Awards honors Thousand Oaks shooting victims:
Night Sight: How Google’s Pixel phone can take pictures in the dark.