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Tue May 23, 2017, 08:59 PM

There's a brazen bait-and-switch on infrastructure in the Trump budget that's gone largely unnoticed

Trump Infrastructure Plan: Far Less Than the Claimed $1 Trillion in New Projects

President-elect Trump’s infrastructure plan, which claims that it would deliver up to $1 trillion in new infrastructure investment, almost surely would deliver far less — and it would not deliver many of the most important needed projects for roads and bridges, public transit, schools and public housing, water facilities, and so on, nor deliver them in the struggling communities in which they’re most needed. That’s because Trump’s plan would mainly be a tax-cut windfall to private developers to bankroll for-profit projects they likely would have undertaken anyway.

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.

The Plan Would Not Directly Fund New Public Infrastructure, and Much of the Cost Would be a Windfall Tax Break to Investors

Trump’s infrastructure plan is targeted toward private, for-profit projects. The scheme offers a tax credit to private investors covering 82 percent of their equity investment costs.[2] Investors would cover the remaining 18 percent but would receive all the profits, effectively privately owning and operating the projects and charging the public to use them.[3]


CHART from CBPP RA Emily Horton (trying to find a link to this):

Jacob Leibenluft‏ @jleibenluft on Twitter:

Trump admin has made a big deal about their big $200 bn infra initiative that they claim will support $1 trillion - w/ no details to date

But they snuck in a major permanent cut in Highway Trust Fund spending beginning in 2021

Combine the two, and you see a bump up in spending in the near-term - but over time, we'd actually be spending less each year

And if you extend beyond this chart past the end of the next decade, it's just cuts as far as the eye can see

Even worse: upfront investment may be thru ineffective tax breaks, even as direct funding for projects is cut <<< see link above

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Reply There's a brazen bait-and-switch on infrastructure in the Trump budget that's gone largely unnoticed (Original post)
CousinIT May 2017 OP
CousinIT May 2017 #1

Response to CousinIT (Original post)

Tue May 23, 2017, 09:16 PM

1. The further down into the article you read, the worse it is....

The Plan Would Ignore the Most Pressing Public Infrastructure Needs

In subsidizing for-profit, private developments, the plan wouldn’t address the need for infrastructure investments that don’t produce a commercial return or where charging ongoing fees for the use of the asset is prohibited, infeasible, or undesirable, even though these constitute some of the nation’s most important infrastructure needs. For instance, tolls are currently prohibited on much of the interstate highway system, and it seems implausible that investors could generate a stream of tolls or fees for filling in potholes. Similarly, the plan wouldn’t help public schools that need adequate heating and cooling or other basic repairs. Such investments in the health and education of children and communities deliver long-term societal benefits, including greater long-term economic capacity, but probably couldn’t be financed under the Trump plan, because the plan would essentially support only private investments in profit-producing projects. As Larry Summers recently noted:

Many of the highest return infrastructure investments — such as improving roads, repairing 60,000 structurally deficient bridges, upgrading schools or modernizing the air traffic control system — do not generate a commercial return and so are excluded from his plan. Nor can the non-taxable pension funds, endowments, and sovereign wealth funds that are the most promising sources of capital for infrastructure take advantage of the program.[5]

The plan also has no mechanism to ensure that infrastructure projects flow to communities already underserved by infrastructure investment — to towns that have lost a major employer, rural communities lacking easy access to amenities, and low-income communities that lack basic necessities such as clean water.[6] Instead, the investments likely would flow much more heavily to higher-income, more developed communities where investors are more assured of ongoing income streams.

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