On President Trump’s Infrastructure Proposal

Marc Stier |

The president has put forward a “plan” for infrastructure spending that identifies no new source of funding, that makes unbelievable assumptions about how much state and private spending can be leveraged by a limited amount of new federal spending and that proposes an end-around of environmental regulations in the guise of streamlining those regulations.

In response to deep and long ignored needs in Pennsylvania and throughout the country for upgrading our roads, bridges, transit systems, airports and water and sewer works – needs that should be met by new investments that could create tens of thousands good jobs – the president has offered a glittering fantasy with little of the substance necessary to meet those needs.

The basic problem with the president’s approach is that he offers a new means of financing infrastructure projects – public private partnerships – when it is funding, not financing, that is the barrier to infrastructure development. The traditional method of financing infrastructure, generating the upfront money to things like build roads and bridges through issuing government bonds, works well, and there is no reason to think it will not continue to do so. What we are lacking is not a mechanism to finance infrastructure, but a mechanism to fund it, that is to pay back the bonds through some mix of government funding and user fees. Again, this mixture works well and should be used as is appropriate, with the benefits that flow to the public – such as the lower prices for goods and faster economic growth generated by reducing the costs of transportation – paid for by public funding and benefits that flow to private individuals – such as the profits of trucking companies and the producers of goods – paid for by user fees.

Public funding at federal, state, and local levels has been shrinking. And the Trump plan, which only adds $200 billion in new federal funding, is at best a very modest increase in the short term. But because the president’s budget also calls for deep cuts to federal funding for existing infrastructure programs – for public transit, Amtrak, and the TIGER program, which has supported innovative local infrastructure projects over the last eight years – it is not clear whether total federal funding will increase at all.

In addition, it appears that the president’s program calls for state and local governments to pick up 80% of the cost of infrastructure projects rather than 20%, as in the past. It is very hard to imagine states that have tenuously balanced budgets, like Pennsylvania, being able to contribute enough to generate the $1 trillion in new infrastructure spending the president hopes to generate.

While the president touts his private-public approach as a way to reduce the cost of infrastructure projects because it bypasses the requirement that contractors pay the prevailing wage to their workforce, the most likely result of this approach will be to reduce wages for working people, while increasing profits for contractors.

Finally, the president’s proposal to speed up government approval of infrastructure spending is not merely a way to make the approval process faster but appears to set artificial deadlines as way to approve projects without the necessary environmental safeguards.

This proposal is a public relations scheme, not a serious response to our infrastructure needs. If it accomplishes anything, it will, like the tax cut and health care plans, mainly shift income and wealth from working people and the middle class to the president’s friends in big business.