We already ARE spending lots of money on infrastructure. Why the need for another trillon? What happened to the money that was spent and allocated?
Posted on 11/30/2016 8:38:38 AM PST by SeekAndFind
Stephen Moore, a Trump economic advisor and a man I know and respect, recently told congressional Republicans that, since Donald Trump won the election, it is their duty to deliver on his agenda — even if his policies are bad ideas. Umm, no. Bad ideas are bad ideas, even when voters choose them. Otherwise, we all should have gone along with every bad idea that President Obama proposed over the last eight years.
Moore was talking, in particular, about Trump’s plan to spend $1 trillion or more on infrastructure projects. But, like many of Trump’s ideas, the infrastructure proposal is less an actual plan than a vague notion. As Trump’s chief strategist Steve Bannon put it, “We’re just going to throw it up against the wall and see if it sticks.” Harkening back to FDR, Bannon calls Trump’s plans “as exciting as the 1930s.” That’s not exactly reassuring.
Supporters of an infrastructure program, at a time of an almost $20 trillion national debt, justify it on two grounds. First, they correctly note that the federal government can currently borrow relatively cheaply with interest rates so low — primarily because other investment options, like the euro, are such bad bets. The U.S. may be deep in debt, but we are still the fastest horse in the glue factory.
And yet even with low rates, we still paid $284 billion in interest payments in 2016. That’s $284 billion that contributes nothing to economic growth or to advance the legitimate functions of government. Borrowing more for infrastructure spending would simply increase our interest payments.
Second, Trump and other infrastructure advocates see it as good-old-fashioned Keynesian stimulus. If, however, we have learned anything in recent economic history, it’s that Keynes isn’t all that he’s cracked up to be.
Infrastructure spending is not likely to deliver the bang for the buck that Trump supporters expect in terms of either job creation or economic growth. Recall that infrastructure spending under President Obama’s 2009 stimulus bill resulted in just 200,000 permanent jobs at a cost to taxpayers of $4.2 million per job. And studies show that, while infrastructure spending may provide a short-term boost to GDP, it can actually reduce economic growth over the long-term by diverting resources and creativity to less innovative and productive uses.
This is not to say that there aren’t infrastructure projects that legitimately need to be undertaken. But the federal government is unlikely to know or care what they are. Indeed, Congress tends to ignore useful projects like road and bridge maintenance, in favor of more grandiose efforts that can serve as reelection fodder. Why fill potholes when you get yourself photographed cutting the ribbon in front of something majestic?
Trump’s proposal appears to provide tax credits and other incentives for the private sector to undertake such projects. While that idea is undoubtedly sounder than direct government management, there is a danger that the credits will end up as a crony-capitalist reward for Trump’s friends or others with clout in Washington. In other cases, the credits may simply subsidize projects that would have been undertaken even without taxpayer support.
Democrats, of course, are allergic to even a hint of private-sector involvement. They want Congress to get back to their preferred role of picking winners and losers — and dispensing pork-barrel largess. One can almost hear Chuck Schumer and Senate Democrats salivating at the prospect of cutting deals to spend all that money.
In his famous “Speech to the Electors of Bristol,” Edmund Burke told his constituents that an elected representative owes them “his judgement; and he betrays, instead of serving you, if he sacrifices it to your opinion.”
Republicans in Congress were justly criticized for being supine in the face of the Obama administration. That doesn’t mean they should be equally pusillanimous when dealing with a President Trump. They should support him when his proposals make sense — and oppose him when they don’t.
One place they should start is by saying “No” to this unaffordable and wasteful infrastructure boondoggle.
— Michael Tanner is a senior fellow at the Cato Institute and the author of Going for Broke: Deficits, Debt, and the Entitlement Crisis. Y
To National Review...Trump is elected...Just stop with the BS....
Thank God we have a printed, totally unbacked currency and a Central Bank that monetizes government debt and suppresses interest rates to zero - or Washington would actually need to make hard decisions....
But they won’t.
>>Michael Tanner is a senior fellow at the Cato Institute
In other words, anything that creates a good paying job or helps the working class in any way is “BAD, bad I say!” We can borrow money for a million boondoggles, but we can’t fix a bridge or expand a highway.
Michael Tanner, and the entire collection of gadfly scribes from the NR, have lost all intellectual authority when it comes to a critique of the Trump administration.
Shouldn’t we rebuild Syria first? sarc
“To National Review...Trump is elected...Just stop with the BS....”
Yeah, Tell Dana Loesch to take her “super beets” and stuff them!
There's nothing wrong with taking on debt to finance long-term capital expenditures like infrastructure. In fact, marrying the term of payment for a major project to the useful life of that project might even be preferable to a pay-as-you-go scenario.
The root of this country's fiscal problems is that we have been taking on debt to finance short-term operating expenditures. This is the equivalent of borrowing money to pay for groceries -- or, even worse, running up $5,000 in credit card debt for a trip to Disney World -- and paying it off over ten years. Nobody with even a rudimentary understanding of finance or economics would tell you that this is a good idea. In fact, it's a recipe for disaster.
Cato is also bad alt-right, it just supports the master race of corrupt businessmen.
If Trump’s infrastructure spending is offset 100% by real spending cuts, I’m all for it. Otherwise, it’s another big-government, borrow and spend, porkulis boondoggle.
Actually, not short term operating expenses: consumption subsidies and corrupt tax breaks. Welfare (otherwise known as vote and donation buying), both personal and corporate.
This is the way Federal transportation dollars have been allocated for years. Federal transportation funding is generally used for capital projects, while regular maintenance is left to the jurisdictions that own the infrastructure (states, counties, municipalities).
The Southern Wall is the ultimate in infrastructure spending. Do it!
I understand Mr. Tanner’s reluctance on this topic, we just saw an administration waste trillions without much to show for it.
I suspect that Trump is going to try and take a different approach to solve legitimate infrastructure problems. Whatever you think of him, he knows construction. We shall see.
This article assumes that Trump will fund the infrastructure improvements in the same manner as Obama did using stimulus money and/or passed pork.
Why does he assume Trump will do things the same way? when it didn’t work? Trump will figure out how to semi privatize (or some other solution) this so that it actually gets done underbudget and on time.
This author assumes that Trump will operate in the same manner as his failed predecessors. This is unlikely and one wonders why the author of the piece is so negative.
Trump will come up with an effective plan to fix our bridges, etc. based upon his own assessment of the situation.
Whatever you call it, the point is that we're borrowing money and then using it to finance something that has a (very) short-term benefit.
RE: Michael Tanner, and the entire collection of gadfly scribes from the NR, have lost all intellectual authority when it comes to a critique of the Trump administration.
I would rather read your refutations of Michael Tanner’s actual arguments instead of attacking the man himself.
“Congress tends to ignore useful projects like road and bridge maintenance, in favor of more grandiose efforts that can serve as reelection fodder.”
That’s a good point.
I wish the author had made that the focus of the article: Congress’ desire to divert spending to wasteful, but politically helpful, efforts.
Instead of a general attack at Trump.
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