Federal Disruption and Public Works
The first modern Golden Age of federal public works investment involved building the Interstate Highway System starting in 1956, declared finished in 1992. What many consider the second was developed by the Biden administration and authorized by Congress to renew transportation infrastructure and expand clean and resilient power and energy security.
A few weeks of opaque edicts from the Trump Administration now raise doubts about how much of what Congress authorized will be built.
This might be good news if all spending has been wasteful and excessive, and if it helps cut the federal debt. But public works investment has long been a foundation of public benefit and private enterprise. Construction firms serving infrastructure needs of the U.S. government and its population, some for many decades, now face shrinking work prospects—or none if projects and agency owners are terminated.
The U.S. Agency for International Development’s abrupt closure has left billions in construction and other relief funds in limbo and China’s influence growing. From 2013 to 2021, China invested $679 billion in global infrastructure compared to $76 billion by the U.S., a 2024 federal study says. The administration is entitled to review program costs but not by shutdown blitzkrieg. USAID’s fiscal 2023 budget was just 0.7% of the total U.S. budget. The U.S. Education Dept., another target, disburses construction grants to 1,100 public school districts on or near military sites, native American lands, federal housing and other U.S. property. We assume grants end when the department ends.
Of greater concern are changes set for the Dept. of Transportation. Under Joe Biden, funding was based partly on climate change and the health of overburdened communities. Trump now favors economic assessments without “social cost of carbon” measures and with stricter “Buy America” provisions and mandated “compliance or cooperation with federal immigration enforcement.”
Agency chief Sean Duffy says DOT-supported programs should, where possible, favor “user-pay” models and states with marriage and birth rates higher than the U.S. average. That tilts toward Republican-led states, not to those with greatest need based on total population shift.
Our concern also extends to controversial public works finance, such as the California High Speed Rail project or New York City’s vehicle congestion pricing—the city subway’s key funding source. Both are in Trump crosshairs. Will the president or an unelected official he deems trip up ongoing authorized projects? Given what we’ve seen so far, it’s possible.
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One law firm says U.S. contracting officers can pause project work at any time for 90 days, with contractors urged to “take all reasonable steps” to minimize costs while being ready to resume work. Officers can also end contracts for convenience or cause, with companies urged to review legal terms and protections, inform subs of stopped work and document added costs or cost-mitigation actions.
Now is not too soon to prepare.
