Traffic makes its way along Interstate 80 on July 1, 2015 in San Francisco, California. AAA is projecting that nearly 42 million Americans will travel 50 miles or more over the Fourth of July weekend, the largest number since 2007.
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Trump’s infrastructure plan comes with an important catch

On Election Night, a jubilant Donald Trump, basking in his unexpected victory, talked about all of the amazing things he’ll do as president – though one point in particular stood out.

“We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” the president-elect vowed. “We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.”

As Trump rhetoric goes, that didn’t sound so bad. On contrary, it’s pretty easy to imagine President Obama, Hillary Clinton, or any number of other Democratic leaders saying the same thing. House Minority Leader Nancy Pelosi (D-Calif.) issued a statement yesterday saying, “As President-elect Trump indicated last night, investing in infrastructure is an important priority of his. We can work together to quickly pass a robust infrastructure jobs bill.”

Sounds great, right? We’re moving forward with an area of bipartisan agreement! Democratic leaders have already found an important issue on which they’re eager to work with the new GOP administration!

There is, however, a catch. When most policymakers talk about massive investments in infrastructure, there’s no real ambiguity: they’re talking about spending federal funds to improve things like highways, airports, ports, and rail. There’s all kinds of room for debate about how big the investments will be and how we’ll pay for them, but the basic construct is simple.

With Trump, however, the rhetoric comes with fine print. Slate’s Jordan Weissmann recently reported on the Republican’s plan to privatize new infrastructure development.
Under Trump’s plan … the federal government would offer tax credits to private investors interested in funding large infrastructure projects, who would put down some of their own money up front, then borrow the rest on the private bond markets. They would eventually earn their profits on the back end from usage fees, such as highway and bridge tolls (if they built a highway or bridge) or higher water rates (if they fixed up some water mains). So instead of paying for their new roads at tax time, Americans would pay for them during their daily commute. And of course, all these private developers would earn a nice return at the end of the day.

The federal government already offers credit programs designed to help states and cities team up with private-sector investors to finance new infrastructure. Trump’s plan is unusual because, as written, it seems to be targeted at fully private projects, which are less common.
There are some real drawbacks to an infrastructure plan like this one.

The first is that’s probably a more expensive route, because it costs more for private businesses, which pay higher interest rates and need to make a profit, to borrow than for governments to do the same. As a Washington Post report added last week, the plan “would likely impose substantial costs in the form of tolls and fees on the people using the new infrastructure.”

Which leads us to the second and related problem: “new construction would only occur in communities where it is urgently needed if private investors were convinced users could afford to pay,” the Post explained.

In other words, areas with lower-income residents would be the least likely to see the benefits, because private investors would seek bigger returns elsewhere.

So, sure, it was nice to hear Trump talk about infrastructure in his victory speech, but as Americans will notice over the next four years, it’s best not to take his rhetoric at face value.



Donald Trump, Infrastructure and Nancy Pelosi

Trump's infrastructure plan comes with an important catch