- President Donald Trump’s infrastructure plan is widely seen as committing far too few federal dollars – just $US200 billion – to rebuild the country’s outdated infrastructure.
- Trump’s budget also includes “deep cuts to programs in the same agencies that would receive new grant-making authority under his infrastructure proposal,” according to Jacob Leibenluft, senior advisor at the Center for Budget and Policy Priorities.
- Economist Paul Krugman says, “It’s not a plan, it’s a scam.”
President Donald Trump’s latest infrastructure proposal appears to have something in common with his real-estate deals: The plan sounds super-sized, but the funds aren’t necessarily there to back it.
Trump, who made a career out of putting his name on major property deals without providing much upfront cash, says he wants to spur $US1.5 trillion in new infrastructure investment, which most people agree the country desperately needs.
However, a quick look under the hood shows this mighty engine of economic growth has very little horsepower. The president envisions just $US200 billion in federal spending he says will somehow generate another $US1.3 trillion of investment from private firms as well as state and local governments.
In addition, the proposal comes alongside a budget that sharply cuts federal expenditures normally aimed at infrastructure.
That includes “deep cuts to programs in the same agencies that would receive new grant-making authority under his infrastructure proposal,” writes Jacob Leibenluft, senior advisor at the Center for Budget and Policy Priorities, a nonpartisan research group in Washington, in a blog post.
“At its core, the President’s approach is a bait and switch that would cut federal support for infrastructure over the long term.”
Paul Krugman, the Nobel-winning economist and New York Times columnist, describes the plan in scathing terms: “Donald Trump doesn’t give a dam. Or a bridge. Or a road. Or a sewer system. Or any of the other things we talk about when we talk about infrastructure.”
“It’s not a plan, it’s a scam,” he added. “The $US1.5 trillion number is just made up; he’s only proposing federal spending of $US200 billion, which is somehow supposed to magically induce a vastly bigger overall increase in infrastructure investment, mainly paid for either by state and local governments (which are not exactly rolling in cash, but whatever) or by the private sector.”
Reliance on states and municipalities, as well as the private sector, for the bulk of funding carries its own set of perils.
The liberal Economic Policy Institute in Washington said in a statement that “continuing to kick the problem to state and local governments won’t solve anything.”
As for private sector involvement, EPI saysfirms “will not build infrastructure for free, but will expect a return on investment. That means state and local governments will have to pay for the infrastructure with taxes, tolls, or other user fees.
“And if state and local governments predictably dodge the task of financing and funding projects directly, public-private partnerships come with their own set of problems, as natural monopoly characteristics can leave the private partner in a position to hike tolls and degrade service quality.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.