On the campaign trail, Donald Trump promised to spend twice as much on infrastructure as whatever Hillary Clinton was proposing, which at the time was $275 billion. Doubling down again in a speech after winning the election, Trump now proposes to spend a trillion dollars on infrastructure over the next ten years.
President Obama had proposed to fix infrastructure with an infrastructure bank, though just where the bank would get its money was never clear (actually, it was perfectly clear: the taxpayers). Trump’s alternative plan is for the private sector, not taxpayers, to spend the money, and to encourage them he proposes to offer tax credits for infrastructure projects. He says this would be “revenue neutral” because the taxes paid by people working on the infrastructure would offset the tax breaks. In short, Trump is proposing tax credits in lieu of an infrastructure bank as a form of economic stimulus.
America’s infrastructure needs are not nearly as serious as Trump thinks. Throwing a trillion dollars at infrastructure, no matter how it is funded, guarantees that a lot will be spent on unnecessary things. As Harvard economist Edward Glaeser recently pointed out in an article that should be required reading for Trump’s transition team, just calling something “infrastructure” doesn’t mean it is worth doing or that it will stimulate economic growth.
Infrastructure more or less falls into three categories, and Trump’s one-size-fits-all plan doesn’t work very well for any of them. First is infrastructure that pays for itself, such as the electrical grid. Private companies and public agencies are already taking care of this kind, so if Trump’s plan applied to them, they would get tax credits for spending money they would have spent anyway. That’s not revenue neutral.
The second kind of infrastructure doesn’t pay for itself. Rail transit is a good example, and this tends to be the infrastructure that is in the worst shape. It won’t suddenly become profitable just because someone gets a tax credit, so under Trump’s plan it will continue to crumble.
Although sildenafil tab also block PDE5, their side effects measured against viagrae almost similar with some slight differences. Certain categories have accumulated much knowledge viagra cialis store enabling planning and launching of hits with a practical probability of success. These antioxidants are very powerful and they have the ability to cialis generico canada remove all the toxic materials from liver but also help in treating depression in male. Such tablets buying cialis in spain have been helpful for men dealing with fertility issues usually do not open up and speak up openly about it to people since they find it embarrassing. The third kind of infrastructure consists of facilities that could pay for themselves but don’t because they are government owned and politicians are too afraid of asking users to pay. Local roads fit into this category. Simply creating tax credits doesn’t solve that problem either.
Trump may think that local governments and transportation agencies will jump at the chance to borrow money from private investors to fix infrastructure, and then repay that money out of whatever tax sources they use to fund that infrastructure. But most of those government agencies can already sell tax-free bonds at very low interest rates. It isn’t clear to the Antiplanner how taxable bonds issued by private investors who get tax credits are going to be any more economical.
Most public-private partnerships for projects that have no revenue stream are entered into by the public party to get around some borrowing limitation. If the infrastructure spending is really necessary, it makes more sense to simply raise that borrowing limit than to create a byzantine financial structure that, Trump imagines, will have the same effect.
In short, whether funded by municipal tax-free bonds or taxable private bonds, those bonds will ultimately have to be repaid by taxpayers. We know from long experience that politicians are more likely to ask taxpayers to pay for new projects than maintenance of existing projects, and Trump’s plan will do nothing to change that.
The problem with a top-down solution such as Trump’s proposal is that one size doesn’t fit all. Different kinds of infrastructure have different kinds of needs, and the financial solution will be different for each one. Trump’s plan is more likely to result in new construction of pointless projects than whatever maintenance is needed for existing infrastructure.
Fortunately, a lot of people know this, so there is already criticism of Trump’s plan, including from conservatives in Congress. No doubt Trump’s plans will get refined between now and when he actually takes office. The question is whether Trump will realize that bottom-up solutions work better than ones that are top down.
RINOs got conned into voting for a Democrat.
Trump’s ego is writing checks his body can’t cash. He financed the now defunct Taj Mahal in Atlantic City with junk bonds that couldn’t be repaid leading to the first of his six casino bankruptcies.
Just wait to see what he does with “infrastructure”!
Oh, and the Taj Mahal received tens of millions in taxpayer bailouts and went bankrupt only a year later.
Trump is going to make America bankrupt again!
Unfortunately it is likely that Trump is just going to use his presidency to pass as many taxpayer assets to himself and his wealthy cronies as possible. He can borrow and spend as much as congress will let him and after four or eight years walk away not liable for the debt. This is a common unethical but legal business practice where a firm it taken over, as many assets as possible (including borrowing for whatever credit the firm has) srtipped and moved to a holding company, and the original firm left to go bankrupt. So far Trump’s policies of promising tax cuts to the wealthy, much more spending that will create huge deficits, and his businesses run in a trust by his children, all point to this a being his policy. His cabinet posts of lobbyists for big business reinforces this view. It is likely that as his presidency advances and those who voted for him become disillusioned that he will become involved in military campaigns claiming he is defending America in order to maintain his popularity. I hope I am wrong about this but time will tell.
I agree with the Antiplanner’s comments and hope they will be heeded. There is a chance.
Unfortunately, our commenters are already blaming and accusing Trump for all the wrong things done by Obama and Clinton – especially pay-to-play and giving tax payer monies to cronies (or themselves).
Remember, the wealthy favored Clinton and fought Trump throughout the election process. As soon as the election was over, the Clinton Obama people started re-writing history.
“the wealthy favored Clinton and fought Trump throughout the election process” .
All wealthy people? Or even a majority? I have seen no evidence of this. Who did the Koch brothers support?
Trump stacking his cabinet with former lobbyists and putting his assets into a trust run by his children is hardly something the Democrats made him do. If he really is going to stop giving tax payer money to cronies he needs to put back PayGo that we had in the 1990s. That didn’t allow spending without tax increases, or no tax reduction without spending decreases. All indications are now that he will push an unfunded tax cut for the wealthy, increase spending and borrow the difference. Hardly something he is being forced by Democrats to do. If he is serious he will push to cut spending until we have a balanced budget, then cut taxes. And don’t forget the Republican party’s “contract with America” that included a balanced budget amendment. If Republicans are serious they will push for a balanced budget. Instead I expect we will see corporate welfare, and much higher deficits. Then to maintain his popularity he will involved us in military action claiming he is the best leader to defend the United States.
Two staffers gone from the Trump Tower today.
National security adviser abruptly resigns.
A low-level staffer asked for national security for the Trump kids and is now gone.
Carson thought he could be a president, but now he’s declined a Trump cabinet position saying he doesn’t have enough experience. Riiiight.
Amateur hour.
Maybe Trump is exactly what we needed to expedite the federal government’s bankruptcy and to divide people enough that even liberals are clamoring for secession, as they did in Oregon—for a minute.
Of all the things government does for “stimulus”, doing deferred maintenance or even advance maintenance on infrastructure being highly used has to rate as one of the best.
Wasn’t there a flurry of stories a earlier in the year about Charles Koch supporting Hillary over Trump? I don’t know how that turned out. The bigger news is that Hillary outspent Trump by a factor of two and she still lost, which means that all the hand wringing over Citizens United vs. FEC was all for naught. Apparently it doesn’t matter how much money you spend, an awful candidate will lose.
I’m actually politically left leaning, but I found it funny that I was supportive of Trump. Though that was due to Democrats being back stabbers and supportive of teahadi’s in New York.