The Trump administration is hoping to use this week to roll out its infrastructure plan, which at the moment is a “plan” in the same sense that the White House has a health-care plan and a tax plan. That is to say, officials have produced a vague outline that won’t take up more than a few pages of bullet points.
But what’s there is more than disturbing enough.
When President Trump was running for the White House last year, his advocacy of a large investment in infrastructure was often cited as evidence that he wasn’t a traditional Republican. After all, would some doctrinaire conservative propose spending a trillion dollars of taxpayer money on government projects to shore up our roads, bridges and water systems?
But there was a bait-and-switch going on, one that becomes more evident as we get closer to seeing the details.
Trump has said many times that he should be able to get Democrats to join with him to pass infrastructure spending, because it’s something they support. And the problem is enormous and getting worse: The American Society of Civil Engineers estimates that we need to invest an additional $2 trillion over the next 10 years in order to get our infrastructure to a reasonable level. Leaving these needs unmet imposes a constant stream of costs on businesses, governments and individuals. When roads are in disrepair, cars and trucks wear out more quickly and require more repairs, deliveries are slower, more gas is used, and goods and services cost consumers more. The ASCE says that failing to make the required investments would mean $3.9 trillion in lowered GDP over that decade and 2.5 million fewer jobs. The longer we wait, the worse the problems get and the more it costs to fix them.
The problem with what the Trump administration proposes is that while the number $1 trillion gets mentioned a lot, that’s not actually what it wants to spend. The budget proposal the White House released called for $200 billion in new infrastructure spending, but Democrats noticed that it simultaneously made over $200 billion in cuts to existing spending. For the most part, the administration wants to pass costs on to state and local governments and hope that private investors come up with the rest of the money. As the Associated Press describes it, “According to Trump’s budget proposal, the funding would come from $200 billion in tax breaks over nine years that would then — in theory — leverage $1 trillion worth of construction.”
That’s the biggest problem of all. Not long ago the Center on Budget and Policy Priorities succinctly described the approach Trump wants to take:
Rather than public investment — with the government allocating the money and directing it to where it’s most needed — the Trump plan relies entirely on private projects through which investors (e.g., private contractors) would own the projects, get huge federal tax credits equal to a stunning 82 percent of their equity investment, and make profits from the tolls or fees they would charge to consumers.
That might save some money in the very short run, but it means that consumers keep paying, basically forever. In the traditional approach, government spends the money to build, say, a bridge, and then it’s built and it belongs to the taxpayers. There are maintenance costs, but that’s it. In the Trump approach, the government gives almost as much money in tax breaks as it would have spent building the bridge, but it belongs to the developer, who charges tolls that everyone who uses the bridge has to keep paying.
The other big problem with this method is that which projects get built is determined by where private developers think they can continue to make profits, not where the need is greatest. But there are lots of necessary infrastructure projects that might not be profit centers. (If you want to see how liberal Democrats would handle the infrastructure challenge, the Progressive Caucus has a plan to devote $2 trillion in public spending to it.)
That’s not the only problem with the administration’s proposal. Officials haven’t said how they plan to pay for it by offsetting the tax breaks, which could be a serious bone of contention. And they’re also pushing for broad changes to the air traffic control system, which is an issue that doesn’t fall as neatly on partisan lines and so might be able to get some Democratic support.
But the broader infrastructure plan faces the same basic problem in passing Congress that the administration faces when it comes to taxes and health care. There are some Republicans who are uneasy about some parts of it, but anything the administration does to satisfy them makes the prospect of getting any Democratic votes highly unlikely. And if no Democrats join in the effort, it can’t overcome a filibuster in the Senate, even if Republicans can hold all their members and pass it through the House.
Democrats don’t like the idea of trying to fund infrastructure only through tax breaks, but that’s not their only objection. Will there be “prevailing wage” guarantees that ensure that the people working on these projects are paid adequately? What about environmental protections? Is an infrastructure plan going to be a Trojan horse to attack those protections? It would be more appealing to many Republicans if it were, but it would harden Democrats’ resolve against it.
But the biggest hurdle is the basic structure of the plan: having taxpayers give a huge amount of money to private developers, so that those developers can then turn around and charge people even more to use the systems that get built. If Trump thinks Democrats are going to go for that, he’s fooling himself.