If Republicans can ever manage to land on an Obamacare replacement that they can agree on, they’ll turn to the next of Trump’s campaign promises: to “fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals,” as he said on Election Night.
But Trump’s plan, which claims to wring $1 trillion in infrastructure spending out of an initial $167 billion government investment, fails at two points: It’s biased against some of the most vital types of infrastructure projects in the United States, and it abandons projects that would most benefit his own voters.
First, their method: Trump’s plan uses that $167 billion to seed projects and provide tax breaks to the private contractors and investors who complete them. Their plan assumes that every project will be attached to a revenue stream that will provide a reliable return. Contractors and investors will receive sizable tax breaks for working on these infrastructure projects, but the Administration says that the taxes they collect as a result of those projects will cover them.
This sounds great for contractors and investors. It isn’t great for a country in desperate need of infrastructure investment, especially in the blue-collar areas Trump won by the strongest margins.
At the core of this proposal is the idea to tie every infrastructure project to a revenue stream. That idea immediately prioritizes certain types of projects over others, perhaps by design. It incentivizes projects with an obvious revenue stream like oil pipelines, airports and railroads. It encourages toll-friendly projects like bridges, canals and tunnels. It does not, however, mean much for projects like the replacement of lead-poisoned pipes, dams without generating capability, levees, dredging waterways or public roads.
These less-profitable projects could only be made profitable in one of two ways: tapping local or state revenue streams to pay investors, or charging additional tolls/surcharges on users. Both options would leave taxpayers with the bill, something the Trump Administration claims to abhor. And unlike the federal government, states cannot take on the debt that comes with many of these projects. Many states are also struggling with a rapidly-approaching pension crisis and a short menu of bitter financial options to handle it. Some states, like Trump in a former life, have already declared bankruptcy.
In short, relying on state finances to tackle infrastructure needs is not a viable solution. Even emergencies could be hard to finance; repairs to California’s Oroville Dam are estimated to cost $4.7 million per day.
Effectively, Trump’s plan ensures that a lot of projects will never be built.
We’ve seen this before with American freight rail. As the industry has consolidated and chased intermodal and unit train traffic, carriers often abandon service on lines that aren’t profitable (or aren’t profitable enough), even if shippers still rely on freight rail service.Around the country, state and local governments have stepped in to contract operators and fund shortlines that offer last-mile service between major railroads and local industry.
It’s happened with passenger rail, too, although with a different outcome: throughout the 20th century, railroads abandoned passenger rail lines by the dozen as the automobile grew in popularity. Under the Rail Passenger Service Act, Amtrak stepped in to fill a minority of routes in 1971; Trump’s proposed budget would eliminate Amtrak service in 23 states.
In a cruel irony, President Trump’s infrastructure plan also stands to benefit urban and suburban areas the most, the wealthiest and most vibrant of which are located in blue states. His plan charges market forces to determine the value of infrastructure projects, not states or governments. But it’s not just that investors will inherently favor high-value projects; those projects, whose values are assessed in usage and tolls, are disproportionately located far from Trump’s own voters. Not even Donald Trump can escape American demographics. Americans have been moving to cities and suburbs for years, and as long as they have the greatest ability to pay the revenues that support Trump’s plan, infrastructure dollars will follow them.