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Title: Beware Trump’s Infrastructure Plan
Source: New Republic
URL Source: https://newrepublic.com/article/138 ... ald-trumps-infrastructure-plan
Published: Nov 11, 2016
Author: David Dayen
Post Date: 2016-11-11 09:27:32 by Willie Green
Keywords: None
Views: 1444
Comments: 8

We don’t know much about Donald Trump’s plans for this new toy he’s inherited called the world’s only superpower. But we know that he likes to put his name on things, which is why his prioritizing of an infrastructure program makes a lot of sense. He can barnstorm the country at ribbon-cutting ceremonies to show the tangible results of his presidency—in five block letters.

An infrastructure program even has a whiff of bipartisanship. Practically all of the Democratic Party, from Bernie Sanders to Larry Summers, has been clamoring for it for years as a way to break out of our economic “secular stagnation” and take advantage of low interest rates. House Minority Leader Nancy Pelosi, among others, vowed to work with Trump quickly on infrastructure.

So what’s the catch? Well, the details of Trump’s infrastructure plan are in keeping with the other thing he likes to do: license his name to private operators. Only his name in this case would be the U.S. government’s public assets, passed off in a privatization fire sale. In fact, the outsider Trump that rode a populist wave to the Oval Office would be engaging in a plan that reeks of the worst of neoliberalism.

In theory, infrastructure sounds great. The American Society for Civil Engineers has identified trillions of dollars worth of pressing projects in America: repairing bridges and airports, dams and levees, seaports and waterways, mass transit and freight rail. Add to that corroded water pipes, an aging electrical grid, and insufficient broadband access. We’re going to need to upgrade it all at some point; deferring maintenance just costs more later.

An infrastructure boom would generate good-paying middle- and high-skill construction and engineering jobs. The projects have a high “bang for the buck,” returning more money to the economy than what’s put into them. Businesses invest in communities where it is easier and safer for their workers to commute and live. More roads without traffic jams and new electric grids that don’t leak energy even have climate benefits.

During the campaign Trump spoke often about America’s broken infrastructure as an example of how “we don’t win anymore.” In August he vowed to double rival Hillary Clinton’s proposed $275 billion investment; eventually he committed to a 10-year, $1 trillion plan. “We’ll get a fund, we’ll make a phenomenal deal with the low interest rates and rebuild our infrastructure,” Trump said, intimating that investors would be able to buy infrastructure bonds (which is actually an old Obama administration stimulus strategy known as “Build America Bonds”).

Another funding scheme has interest from leaders of both parties. Under this plan, Congress would impose a “repatriation fee” on the $2.5 trillion corporations have stashed overseas, to avoid the 35 percent corporate tax rate. A reduced 10 percent tax on this money—which Trump formally called for in his campaign—would yield $250 billion. Trump’s pal, corporate raider Carl Icahn, is one of the country’s biggest promoters of this idea.

That gets you part of the way to full funding. And maybe Trump just doesn’t pay for the rest, borrowing at those low rates and growing the deficit. Liberals have cheered themselves with the prospect of a return to Keynesian spending, which the GOP abandoned during and after the Great Recession.

But that’s not likely. Trump’s “Contract with the American Voter” (get to know this document) stresses that his American Energy and Infrastructure Act “leverages public-private partnerships, and private investments through tax incentives, to spur $1 trillion in infrastructure investment over ten years. It is revenue neutral.”

What do “public-private partnerships” and “tax incentives” mean here? This report from Peter Navarro, set to be one of Trump’s leading economists, lays out the blueprint. The government would sell $1 trillion in revenue-producing bonds, needing only to supply an equity cushion to ensure everyone gets paid. Navarro estimates around $140 billion in government funding when all is said and done, which you could easily get through repatriation.

Investors would get a tax credit to entice them to buy bonds, and Navarro claims that the tax revenue from new jobs created by the projects makes up for that cost. He also wants to contract out these projects, building in a 10 percent profit margin for the private contractor. Navarro claims that construction costs are higher when built by the government, and the private sector is more efficient.

Does this sound familiar? It’s the common justification for privatization, and it’s been a disaster virtually everywhere it’s been tried. First of all, this specifically ties infrastructure—designed for the common good—to a grab for profits. Private operators will only undertake projects if they promise a revenue stream. You may end up with another bridge in New York City or another road in Los Angeles, which can be monetized. But someplace that actually needs infrastructure investment is more dicey without user fees.

So the only way to entice private-sector actors into rebuilding Flint, Michigan’s water system, for example, is to give them a cut of the profits in perpetuity. That’s what Chicago did when it sold off 36,000 parking meters to a Wall Street-led investor group. Users now pay exorbitant fees to park in Chicago, and city government is helpless to alter the rates.

You also end up with contractors skimping on costs to maximize profits. A shiny new toll road between Austin and San Antonio, Texas, done through a public-private partnership is falling apart after only a couple years, and improper drainage is leading residents of Lockhart, a city along the route, to complain of flooding. The contractor refuses to make the fixes; instead the company is walking away with outsized profits.

Under this scheme, private investors and contractors hold power over project selection. Trump—a.k.a. the government—would just be the name on a privately owned bridge or seaport or electrical grid. The notion of an inherent public benefit to infrastructure improvements, the entire point of the enterprise, is totally eliminated.

There’s another unseemly aspect inherent in the bill’s title: the part about “American Energy.” How many of these projects will be things like the Keystone XL pipeline, or coal exporting facilities, or refineries? And what does that mean for carbon emissions?

So the stock market may love this idea. But it’s designed to funnel money to big investors and contractors by essentially letting them purchase public assets. This could impoverish the people these projects are supposed to help, allow corporations to choose investment destinations, and further climate disasters. And given the likelihood of profit-gouging, there’s no guarantee it even has a net benefit for workers and communities over time.

There will be opportunities for Democrats to shape this legislation. It’s not high on Speaker Paul Ryan’s agenda, and Democrats have been musing about infrastructure for a while. They may think it’s wise to offer an olive branch to Trump on this issue because they think they can fix this scheme, with Trump getting an early victory to his liking in the exchange. But it’s a dangerous game.


Poster Comment:

Well THAT certainly sounds like Trump...
Bringing back the same old, lame infrustructure privatization scams...
The rich keep getting richer and the poor get poorer..

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#1. To: Willie Green (#0)

Infrastructure projects mean blue collar JOBS. Trump is aiming at the border because illegals take American blue collar JOBS. Trump is aiming at free trade and tariffs, because imbalanced "free" trade destroys American industrial JOBS. Trump supports universal, subsidized health insurance, not a return to pre-Obamacare. Trump is not a traditional Republican. Trump's base is the blue collar. And unlike Reagan, Trump did not use the blue collar votes to impose deregulation, free trade and social conservatism, the CENTERPIECE of Trump's focus is neither trade nor social conservatism - it is BLUE COLLAR JOBS.

Infrastructure, Wall building, military expansion, deportation and tariffs all create blue collar JOBS. Trump is going to bring working America, and perhaps some of the non-government unions, into the Republican Party - IF the Republican party obeys him and focuses, as he is, on blue collar America.

If the Republican Party resists him, Trump will make alliances with Democrat labor forces and representatives to get his agenda through anyway. And then TRUMP will win re-election, but the REPUBLICANS will lose Congress.

Republicans stand at the Rubicon. Trump broke traditional Republicans in the primary, and he broke the Democrats in the general. He saved the GOP majority, but that will only remain if they follow HIM. If the Republicans think they won on THEIR traditional philosophy, they are out of their minds.

Vicomte13  posted on  2016-11-11   10:10:37 ET  Reply   Trace   Private Reply  


#2. To: Willie Green (#0)

"Practically all of the Democratic Party, from Bernie Sanders to Larry Summers, has been clamoring for it for years as a way to break out of our economic “secular stagnation” and take advantage of low interest rates."

I seem to recall that Obama was given $800 billion in the American Recovery and Reinvestment Act. What happened to that?

misterwhite  posted on  2016-11-11   12:31:06 ET  Reply   Trace   Private Reply  


#3. To: misterwhite (#2)

Only $100 billion was for infrastructure... the bulk of the rest went to tax credits to help stimulate consumer spending, education, job training and crap like that..

The trouble was, steenking Jorge Arbusto outsourced so many goddam jobs that any increased consumer spending instantly hemorrhaged out of our domestic economy as the Trade Deficit... helping to support jobs in Mexico, India & China... It lost the "multiplier effect" It never had the chance to cascade through a domestic supply chain and create jobs here at home... And that's why the recovery has been so slow...

And it's also why I despise George Bastard Bush so much... and Dickhead Cheney... and all their goddam Free Traitor Oil Lobby cronies

Willie Green  posted on  2016-11-11   13:53:57 ET  Reply   Trace   Private Reply  


#4. To: misterwhite (#2)

I seem to recall that Obama was given $800 billion in the American Recovery and Reinvestment Act. What happened to that?

uuuuuh....we didn't recover and only the wealthy got to reinvest?

civilwarbuff  posted on  2016-11-11   14:53:05 ET  Reply   Trace   Private Reply  


#5. To: Willie Green (#0)

We don’t know much about Donald Trump’s plans for this new toy he’s inherited called the world’s only superpower. But we know that he likes to put his name on things, which is why his prioritizing of an infrastructure program makes a lot of sense. He can barnstorm the country at ribbon-cutting ceremonies to show the tangible results of his presidency—in five block letters.

I recommend going straight into Flint, Michigan and replacing the damn water pipes. For all I care, he could use the Army Corps of Engineers to get it done. If he had his face engraved on every pipe, that would be ok too. In the 21st century, there is no excuse for a city to be left with a contaminated water supply.

nolu chan  posted on  2016-11-11   17:11:44 ET  Reply   Trace   Private Reply  


#6. To: Willie Green (#3)

"Only $100 billion was for infrastructure..."

Oh yeah. Now I remember. They used all that money to build an off-ramp on Hwy 23 in Georgia.

misterwhite  posted on  2016-11-12   10:25:29 ET  Reply   Trace   Private Reply  


#7. To: misterwhite (#6)

They used all that money to build an off-ramp on Hwy 23 in Georgia.

With a cost plus contract.

Roscoe  posted on  2016-11-12   11:00:47 ET  Reply   Trace   Private Reply  


#8. To: Roscoe (#7)

"With a cost plus contract."

Good thing they did since they went over budget ... and they're still not finished. Something about an endangered cricket.

misterwhite  posted on  2016-11-12   11:23:59 ET  Reply   Trace   Private Reply  


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