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Friday, November 18, 2016

Trump's Infrastructure Plan; Problematic?

Click here for an informative article at Vox by Brad Plumer, entitled "Donald Trump's infrastructure plan wouldn't actually fix America's infrastructure problems."

It's complicated, and I don't profess to understand it entirely. Being a Republican plan, it is apparently top-heavy with tax cuts, rather than the direct borrowing and spending preferred by Democrats. The backbone of the plan depends on "Private-Public Partnerships," PPPs. These involve tax breaks -- sometimes huge ones -- for private investors who shoulder the costs and recoup their investment by charging tolls on roads, for example, or other ways (sometimes direct reimbursement by the states, putting the "savings" in doubt).

Apparently projects that won't generate profit -- upgrading water mains in Flint, Michigan, for instance -- will probably not get done under Trump's plan. Furthermore, investors such as pension plans, with huge amounts to invest, pay no federal taxes, so "tax breaks" are of no use to them.
What Trump has right now is an idiosyncratic proposal for Congress to offer some $137 billion in tax breaks to private investors who want to finance toll roads, toll bridges, or other projects that generate their own revenue streams. But this private financing scheme, experts across the political spectrum say, wouldn’t address many of America’s most pressing infrastructure needs — like repairing existing roads or replacing leaky water mains in poorer communities like Flint. It’s a narrow, inadequate policy.

For instance: “This is unlikely to do much for road and bridge maintenance,” notes Harvard economist Edward Glaeser. “And [economists] have long believed that the highest returns are for fixing existing infrastructure.”
As I say, it's complicated, but well worth the read.

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