Worley Blog

THAT WAS THE WEEK THAT WAS

Posted on: February 21st, 2020 by Clifford F. Lynch

 

To say the last week was eventful would be an understatement. The first major event was Sunday’s Super Bowl LIV when the Kansas City Chiefs took home the Lamar Hunt Trophy after a fifty-year drought. The next day – the one of the long-awaited Iowa Caucuses – turned into a semi-fiasco when it took almost three days to get the results. And finally, on February 5, as most expected, the House of Representatives’ impeachment of President Trump died in the Senate.

Sandwiched in the middle of all this was the February 4 presidential State of the Union (SOTU) address. We had hoped that an announcement of progress on infrastructure improvement would be included in the President’s remarks, but it was not to be (unless Nancy Pelosi tore up that part). By now, most of us are aware of our deteriorating infrastructure and the billions of dollars it would take to bring highways and bridges up to acceptable standards. But still, we have not seen a firm plan for generating the necessary funds. Many industry organizations and experts, including the U.S. Chamber of Commerce, feel that the federal fuel tax should be increased. The fuel tax is the primary source of revenue for the Highway Trust Fund, but the $.184 per gallon tax on gasoline and the $.244 on diesel fuel have not been increased since 1993. Whenever an increase has been considered it has sparked a political firestorm that Congress was reluctant to walk into.

When Donald Trump was running for president, one of the major issues he identified was the horrible condition of the nation’s infrastructure. If elected, he said, he would deal with the problem swiftly and effectively. So, when his first STOU address was delivered, we were expecting to hear about his plans for improving the infrastructure. Instead, he simply restated what he had said before, “I will be asking Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States – financed through public and private capital – creating millions of new jobs. Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our beautiful land.” He devoted only 139 words out of a 5006-word address to this critical issue.

For two years, we waited for something to happen, and rumors prior to the 2019 SOTU address suggested this time, a plan would be presented. What was presented was far from a plan, however. We got 69 words out of 5540. President Trump stated, “Both parties should be able to unite for a great rebuilding of America’s crumbling infrastructure. I know that Congress is eager to pass an infrastructure bill – and I am eager to work with you on legislation to deliver new and important infrastructure investment, including investments in the cutting-edge industries of the future.”

Not surprisingly, last week there were 0 words out of 5250 – no mention at all of infrastructure. The president and Congress have been so preoccupied with impeachment’ they have accomplished little else of value. Two things of interest to supply chain managers were confirmed, however. The US – Mexico – Canada – Agreement (USMCA) was signed into law, replacing the North American Free Trade Agreement (NAFTA). This will clarify finally, the trade relationships among the US, Mexico, and Canada.

President Trump also signed a “phase one” trade agreement with China. According to the White House, the new agreement deals with intellectual property theft and forced technology transfers. It also outlines a $200 million increase in Chinese purchase of US manufactured goods. This was an important accomplishment. This is not the time to be in a trade war with an economy this big.

There was one non-impeachment activity in Congress last week. The Drive Safe Act, first introduced in 2018, was reintroduced last year, and was considered in a Senate truck safety hearing last week. This bill would include a provision allowing under age-21 truck drivers to haul freight across state lines. Safety advocates, small truckers, and owner operators are strongly opposed. We no doubt, will hear much more about this before it becomes law, if ever.

The major issue continues to be highway and bridge infrastructure. While we should not expect anything to happen before the election, hopefully, we will see some activity by 2021.