$1 trillion in infrastructure construction could define the next American presidency
The irony of a real estate developer becoming president in a country with so much failing infrastructure is that he often neglected to capitalize on his signature strength during the campaign.
Yes, Donald Trump is good at entertaining reality TV spectacles and cultivating a grand image of himself. But his most tangible contributions to society thus far are tall buildings adorned with the Trump name.
So why did Trump not routinely emphasize that he would build, build, build all over America?
Indeed, he threatened, rhetorically, to erect a massive wall between here and Mexico. But that always seemed more a political stunt more than genuine policy proposal. Now we hear that much of it will end up a fence. Regardless, the project will require the cooperation of Congress and at least a dozen federal agencies and departments.
“I’m very good at this,” Trump just bragged to 60 Minutes. “It’s called construction.”
While he may have somewhat missed the mark on highlighting a serious and branded pre-election plan to repair, replace, and renew the aging infrastructure that plagues this great country, perhaps now the president-elect is heading in the right direction.
Walls are definitely a part of the effort, but even more important are trains and subways, fiber optics and digital bandwidth expansion. Infrastructure building is a politically viable way to highlight national unity, and is consistent with Trump’s broader approach of using fiscal policy to promote higher GDP.
Late last Tuesday night, Trump’s victory speech confirmed the goal of spending $1 trillion over the next decade: "We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. 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."
The U.S. stock market appears to have reacted favorably to Trump’s election last week, with the Dow Jones Industrial Average rising 5.4 percent to a new high on the backs of construction firms and banks -- both of which would be integral to the new emphasis on infrastructure.
The general consensus is that a tax-and-spend package including jobs-generating infrastructure programs would be welcomed with bipartisan fanfare. This includes Republican governors happy to receive federal funding for local projects, and Democratic legislators eager for the government to invest in communities.
‘America’s Infrastructure First’
The bulk of the Trump plan would rely on tax breaks that incentivize private financing, which could result in shortfalls to adequate funding of big capital projects. If all goes according to the policy outline, the plan would be revenue neutral, using future taxes to help offset the initial tax credits. However, experts say funds will also need to come from an increase on tolls or the federal gas tax. Partisan bickering may also erupt around public transportation, bike-share programs, and the role of “big government.”
Plenty of local ballot measures across the country on Tuesday also affirmed the widespread appetite for enhanced urban mass transit. Airports, ports, and water systems are among the most severely lacking, but the sad reality that 60,000 bridges are “structurally deficient” and the U.S. ranks 12th on the Global Competitiveness Index in terms of infrastructure.
But it’s unclear how true fiscal conservatives and debt hawks will react, let alone the different activist constituencies opposed to controversial pipelines that involve more stakeholders than simply upgrading the electric grid. And Congressional scrutiny might be hard to overcome, unless the Trump administration truly prioritizes the issue.
In Trump’s platform was a promise announced in August to double what his opponent had promised her administration would spend on infrastructure development. The Republican candidate’s pledge was considered a wise gesture normally associated with the political left.
Liberal economists such as Lawrence Summers have often touted the idea of an infrastructure fund sustained by government bonds sold to ordinary people and investors. Meanwhile, Republicans had largely opposed the issuance of Build America Bonds as parts of President Barack Obama’s 2008 stimulus program.
Trump supporters had criticized the infrastructure vision offered by Hillary Clinton, who was vanquished by Trump in the historic November 8 presidential election.
While her supporters thought she clearly articulated how to fix our nation and create jobs, naysayers pointed to the bureaucratic impossibility of public financing through a national infrastructure bank, in addition to the increased tax burden on businesses which would help finance the half-billion-dollar effort. Bernie Sanders had called for about the same total infrastructure investment as Trump -- around $1 trillion over 5 years.
Optimists see a reason to believe fresh infrastructure spending will reduce road congestion, promote green-energy investment, and decrease unemployment. But it’s highly unlikely that any new effort will satisfy the American Society of Civil Engineers’ ambitious call for $3.6 trillion in new infrastructure spending by 2020.
Last year, a bipartisan agreement on funding for bridges, roads, and rail lines set aside $305 billion over 5 years, short of the $478 billion that Obama had wanted.
Time will tell whether Trump can successfully put America on the right track and “transform America’s crumbling infrastructure into a golden opportunity for accelerated economic growth.”