Paul Krugman: I was right — Trump’s trillion-dollar infrastructure plan is a sham
Last November, New York Times columnist Paul Krugman predicted that the Trump administration’s “trillion-dollar infrastructure plan” would never come to fruition.
Trump boasted in December of last year that the massive infrastructure project would be one of his top goals for his first 100 days in office.
“We will build new roads, tunnels, bridges, railroads, airports, schools and hospitals,” the then-president elect told an audience in Cincinnati.
Krugman examined the available details of Trump’s infrastructure plan and deemed it to be “basically fraudulent.”
“(I)t would enrich a few well-connected people at taxpayers’ expense while doing very little to cure our investment shortfall,” the Nobel Prize-winning economist said.
The U.S. does need to spend money to shore up its crumbling infrastructure, Krugman said, and the smart way to do that would be for the federal government to borrow money at the uniquely low interest rates that it gets on loans, then spend that money on projects that would add jobs to the economy.
“But that’s not what the Trump team is proposing,” Krugman said in November. “Instead, it’s calling for huge tax credits: billions of dollars in checks written to private companies that invest in approved projects, which they would end up owning. For example, imagine a private consortium building a toll road for $1 billion. Under the Trump plan, the consortium might borrow $800 million while putting up $200 million in equity — but it would get a tax credit of 82 percent of that sum, so that its actual outlays would only be $36 million. And any future revenue from tolls would go to the people who put up that $36 million.”
“(I)t’s hard to see any reason for this scheme unless the inevitable corruption is a feature, not a bug,” he concluded.
Congressional Republicans have been reluctant to sign on to the plan.
“What I hope we will clearly avoid, and I’m confident we will, is a trillion-dollar stimulus,” said Senate Majority Leader Mitch McConnell (R-KY) last year.
Now it appears that the project has been forestalled indefinitely. Axios said that Republicans are counting on Democrats anxious for re-election in 2018 to sign on to a reconfigured infrastructure plan next year because it could bring funds to their districts.
Axios for its part praised Trump administration officials who “wanted to flood the Capitol zone with their massive asks” for “learning the rhythms of Washington” and accepting that executing the plan in the first 100 days was a pipe dream.