Trump's Infrastructure Plan Is to Spend Less on Infrastructure
When he finally unveiled his infrastructure plan on Monday, President Donald Trump offered cities and states negative $40 billion. Most media accounts have described it as a $1.5 trillion deal, but the plan’s proposed $200 billion spending must be weighed against the $240 billion in cuts to infrastructure laid out in Trump’s proposed budget, which was also released Monday, including $178 billion in cuts to transportation spending alone.
President Trump tried to sell this “deal” of taking away federal money for infrastructure by stressing how unimportant the issue is to him. “What was very important to me was the military,” Trump said during the announcement Monday. “What was very important to me was the tax cuts. And what was very important to me was regulation. This is of great importance, but it’s not nearly in that category.”
The halfhearted approach to infrastructure definitely shows. In fact, this is one area Democrats feared Trump would force them to make a hard choice between good policy and partisanship. But that dilemma never materialized, because it turns out that the Trump administration and Republicans in Congress don’t care enough about it to construct anything but a shell game.
Let’s explain what a good infrastructure policy might look like—something that Democrats would have to seriously consider. While interest rates have risen, they still remain low enough over the long term to make borrowing to rebuild our woefully outdated highways, mass transit, airports, energy grid, and broadband lines more than worthwhile. The long-term gains from such investments are incredibly strong, with a high “bang for the buck.” We blew the opportunity to get started on this while unemployment was relatively high, combining job creation with long-term improvements. But it’s still a good idea. And I’m told that the president likes to put his name on construction projects, so it would even appeal to his vanity.
Yet these initiatives cost money. And while Republicans clearly have no problem spending money when there isn’t a Democrat in the White House, they prefer to spend it on the right kind of people, like the obscenely rich or corporate donors. Creating tangible benefits for the country doesn’t help out any of those people, unless you cut private investors in on the deal.
No investor would put money into infrastructure without expecting a return. They get that now through the municipal-bond market, by earning interest on government borrowing. And investors already seem pretty happy with it—the bond market has grown tenfold since 1981. Trump wants to increase that investment through tax cuts, but private investors enjoy large tax breaks from municipal bonds. It’s unclear why they would move off something already working for them. Indeed, bankers have been thoroughly uninterested in the concept thus far.
Trump thinks he’ll lure in more infrastructure investment by encouraging public-private partnerships, giving investors more control over what gets built and how much revenue they can enjoy from it after the fact. As I’ve written at The Nation, this amounts to a private tax, giving the illusion of budget savings but leaked out over time in the form of tolls and fees. Either users are gouged to use the service, or all taxpayers will be when cities are forced to pay off companies after returns don’t pan out. The plan even wants to give states “flexibility to toll existing Interstates” that have already been built with public dollars, essentially selling off our common assets for pennies.
Public-private partnerships lead to infrastructure getting built only where it can earn a return. Rebuilding schools or removing lead from homes don’t have a revenue piece, so they just won’t happen, and the inability for poor communities to pay tolls contributes to leaving entire regions behind. Public-private partnership companies that want to drive profits can skimp on labor and materials costs, making the projects less robust and functional. And every dollar that goes to investors in windfall profit could have been used to build more infrastructure if the public retained control. “This scheme is an affront to the human right to water, a disaster for vulnerable communities, and a boondoggle for taxpayers,” said Wenonah Hauter of Food & Water Watch in an e-mail.
Even this guy named Donald Trump has criticized these partnerships privately to lawmakers, but that didn’t stop whoever wrote the infrastructure plan from sneaking incentives for this into the final product.
In addition to public-private partnerships, the administration supports fully privatizing Reagan and Dulles airports in Washington, the Tennessee Valley Authority, the Bonneville Power Administration, the Baltimore Washington parkways, the Washington Aqueduct, and the air-traffic-control system, among other public assets. The theory is that the private sector can “better manage” these projects, but history screams otherwise, particularly with the recent collapse of one of the largest privatization firms in the world, Carillion. Such bankruptcies are startlingly common, and they stick local government with the bill.
Trump’s infrastructure plan devotes $20 billion to a loan program that would underwrite these private financings. A larger portion, $100 billion, goes to broad-based funding that cities can access only if they put up four times as much themselves. Currently infrastructure spending is done in the opposite fashion, with the feds typically putting in 80 percent of the costs, down to a 50-50 split for mass transit. The result of such a high burden on states that cannot deficit spend and have trouble raising money for infrastructure would likely be fewer projects, which isn’t really the idea.
There’s also $50 billion in block grants for rural infrastructure, $20 billion for the vague-sounding “projects of national significance,” and $10 billion for capital financing for government buildings. But again, the offsets make this virtually meaningless. “Robbing other federal priorities—including important transportation programs—to pay for infrastructure will only add to our growing problems,” said Larry Willis, president of the Transportation Trades Department of the AFL-CIO in a statement.
None of this is actually going to happen because Republicans aren’t moved by making government work for citizens. Democrats managed to wrangle $20 billion for infrastructure out of last week’s bipartisan budget agreement, which again is at least $20 billion more than this plan devotes.
But the real agenda for this plan has nothing to do with spending money and everything to do with removing protections on labor and the environment. Trump’s only real excitement on infrastructure comes when he talks about getting permitting and approval down to one or two years. The plan would not take into account the effects of climate change, potentially building in areas that won’t be habitable. It quietly exempts numerous projects from Buy American laws and the Davis-Bacon prevailing-wage law, ensuring cheaper labor and materials.
Much of this deregulation is already in the works at the agency level. Trump can talk of plans going nowhere, while behind the scenes enriching the developers doing the construction. That’s far more important than the proposed negative investment in rebuilding America.