Is Donald Trump trolling America?
In the last stretch before Election Day, with everyone breathlessly freaking out over Hillary Clinton's emails and refreshing FiveThirtyEight approximately 17 times per minute, the Republican nominee released a substantive policy proposal. Really.
For months now, Trump has talked a very big game on doing something about the genuinely embarrassing state of American infrastructure. "When I see the crumbling roads and bridges or the dilapidated airports... I know these problems can all be fixed, but not by Hillary Clinton," Trump said in June. "Only by me."
At the end of October, some of his policy advisers finally laid out a paper explaining how. Basically, Trump would provide $137 billion in tax credits to private construction companies willing to take on infrastructure projects. The authors calculate that this money would incentivize those companies to drop $167 billion in initial equity, and then use that cushion to borrow far more on the private financial markets. The end result would be $1 trillion in spending on new infrastructure projects — as it happens, the same amount Bernie Sanders proposed during his run for the Democratic nomination. The key difference is that under Trump, Uncle Sam wouldn't spend $1 trillion directly. The federal government would only be out $137 billion. And even that spending would be offset by increased tax revenue from the new jobs and corporate profits the projects would generate, Team Trump argues.
It's an eyebrow-raising idea. Jordan Weissmann noted at Slate that while public-private partnerships are relatively common in infrastructure projects, simply handing the job over to private industry wholesale is very unusual. Outside experts anticipate the Trump advisers' assumptions about the costs to taxpayers are overly rosy.
But even if they're just the right amount of rosy, there are far more fundamental problems.
For these sorts of projects to be worthwhile to private businesses, they'd need to make their money back over time by charging the people who use those new roads and bridges and ports and utilities. So what Americans would save on the front end, they'd have to pay on the back end anyway, in the form of higher tolls and usage fees.
And where would construction companies build these new pay-to-use infrastructure projects? In communities that can and will pay for them, of course. "Projects without a lucrative revenue stream probably won't get funded," Max Ehrenfreund and Jim Tankersley observed at The Washington Post. "That could well be the case for replacement pipes for a relatively low-income city such as Flint, where residents would not be able to afford steep rate hikes on their water bills." Indeed, under Trump's plan, poorer communities that need the new projects and repairs the most would get the least attention.
Any infrastructure plan that isn't ultimately redistributive — that finances itself entirely from the people that use the infrastructure — isn't going to serve its social purpose. It's also unlikely to serve the broader purpose of reviving the national economy. That companies aren't investing in new jobs and new incomes for working Americans already, despite ultra-low interest rates, is one of the big mysteries economists are trying to solve. The reason economic thinkers like Larry Summers are proposing big government deficits to fund infrastructure is precisely because the aggregate demand isn't already present to drive these efforts; government needs to inject it from outside.
None of which is to say that Hillary Clinton's infrastructure plan is amazing by contrast. She's calling for a mere $275 billion in infrastructure spending — offset by tax reforms — including $25 billion for an infrastructure bank. That latter idea could be characterized as another version of Trump's gambit; trying to goose the private market into doing what the public sector has the monetary and fiscal tools to do itself.
So what should we do? Just have the federal government borrow the $1 trillion to fund infrastructure projects directly. Or send the states no-strings-attached cash grants so they can do the same.
So much for that. What the Republican's infrastructure plan yet again makes embarrassingly clear is that Trump's avowed anti-elitism and concern for working Americans has zero policy substance behind it. Indeed, his advisers have filled in his platform with details that are the exact opposite of populist or pro-worker. Trump's proposals on taxes, health policy, and regulations have all exposed this same truth. Now his infrastructure proposal has too.
If you needed any more proof that the man's supposed populism is nothing but vacuous posturing, well, here you go.