Elections

Trump picks Chao to take on trillion-dollar transportation fix

Questions remain on where money for the infrastructure needs would come from

President-elect Donald Trump has selected Elaine Chao, who as Secretary of Labor in the George W. Bush administration wa
President-elect Donald Trump has selected Elaine Chao, who as Secretary of Labor in the George W. Bush administration was the first female Asian-American Cabinet leader, as his choice for U.S. Secretary of Transporation. Here, Chao and her husband, U.S. Senate Majority Leader Mitch McConnell, waves to supporters at a 2014 campaign event. (REUTERS/John Sommers II)

WASHINGTON, D.C. — President-elect Donald Trump said Tuesday he plans to nominate former Labor Secretary Elaine Chao to head the Transportation Department as he plans to push for $1 trillion in new infrastructure spending to fix roads, airports, water systems and bridges across the country.

Chao, wife of Republican Senate Majority Leader Mitch McConnell, was labor secretary under President George W. Bush and the first Asian-American woman to hold a Cabinet position.

Chao will take a leading role in Trump’s plans for $1 trillion in infrastructure spending over 10 years — a pitch that has many unknowns.

“The President-elect has outlined a clear vision to transform our country’s infrastructure, accelerate economic growth and productivity, and create good paying jobs across the country,” Chao said in a statement.

She will face a number of big decisions at the agency that regulates vehicles, airplanes, railroads, pipelines, ports and highways — including how to proceed on self-driving cars, the use of drones and fuel efficiency standards.

Chao, who arrived in the United States at age 8 as a Chinese immigrant, is a former deputy transportation secretary.

House Democratic leader Nancy Pelosi said her party wants to work with Chao on transportation needs but “will not allow Republicans to use an infrastructure bill as a Trojan horse” for lower workers’ wages and tax breaks for corporations.

There is little consensus of just where the $1 trillion Trump wants to spend would come from.

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Awareness has grown in recent years that vital pieces that support the U.S. lifestyle — roads, bridges, transit networks, the electrical grid, and water and sewage systems — are near the end of their lives.

The plan Trump presented during the campaign is built around encouraging private investment, but few analysts think that will generate the cash needed.

The plan would give private investors an 82 percent tax credit to pump money into projects — credits that theoretically would reduce their need to profit from the investment.

Trump has said tax dollars lost by granting the credits would be recouped by taxing the wages of people working on the projects and from taxes paid by contractors hired to do the work.

The second part of the plan involves repatriation — the idea of luring home $2.5 trillion stashed overseas by U.S. corporations to avoid taxes.

Trump has proposed reducing the rate companies would pay to bring the money home from 35 to 10 percent. Those companies then could invest slightly more in infrastructure projects, gain the 82 percent tax credit and effectively erase that 10 percent tax.

“We believe that this tax credit-assisted program could help finance up to a trillion dollars’ worth of projects over a 10-year period,” the Trump campaign said in an Oct. 27 white paper.

But none of the longtime transportation analysts interviewed for this article agreed.

“In certain parts of the country, those kinds of private financing work,” said Ed Mortimer, infrastructure director at the U.S. Chamber of Commerce. “In other parts of the country we need to use general funding.”

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Analysts also questioned Trump’s belief that the outlay from tax credits would be recouped in taxes collected from workers and the profits of contractors. With unemployment down to 4.9 percent, many construction workers already are back on the job and most contractors are engaged with post-recession work.

Capitol Hill has been talking for years about the billions in private capital stashed overseas while infrastructure projects go without. But the reality is that investors want a return, and few infrastructure projects promise that.

The most common way to profit is through tolling roads or bridges. But while that could work in urban areas, investors are not flocking to build toll roads and bridges in rural America.

“The only place that people are going to privatize are places where they can make money, and that’s not the vast majority of the system,” said Rep. Peter A. DeFazio of Oregon, the ranking Democrat on the U.S. House Transportation Committee.

Congress for more than a decade hasn’t approved enough money to meet its infrastructure desires. Lawmakers come up with about $60 billion annually — or $40 billion less than what Trump wants each year.

the Washington Post and Reuters contributed to this report.

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