Should We Pay the Rich to Build Infrastructure, Then Pay Them to Use It?

Dave Johnson

Dave Johnson Fellow, Campaign for America's Future

It’s starting to look like President Trump’s promised $1-trillion plan to rebuild the nation’s infrastructure will be as bad for us as his health care plan turned out to be.

Infrastructure Report Card

The American Society of Civil Engineers (ASCE) has issued their 2017 Infrastructure Report Card. We didn’t do so well. Our “grade” is a miserable D+. Why? Go outside and look around at our out-of-date and crumbling roads, bridges, dams, airports, water systems, and electrical grid.

President Obama was able to address a bit of the problem in the 2009 “stimulus.” This passed because Democrats had supermajority control of the Senate at the time. But then they lost enough seats that Republicans could block things, and block they did. Republicans filibustered everything after that.

Now, after blocking infrastructure projects for seven of the last eight years, Republicans are suddenly talking about how we need to fix our infrastructure. What does this mean?

Trump’s “Plan”

Trump’s promise to revamp infrastructure has, shall we say, “evolved.” Early in the campaign, candidate Trump just said “believe me”: he would take care of fixing everything. In his campaign announcement speech he said,

[We need to] rebuild the country’s infrastructure. Nobody can do that like me. Believe me. It will be done on time, on budget, way below cost, way below what anyone ever thought.

I look at the roads being built all over the country, and I say I can build those things for one-third. What they do is unbelievable, how bad.

By August, his promises had evolved into details – well, one detail: to “double” whatever Hillary Clinton would invest in infrastructure.

Her number is a fraction of what we’re talking about. We need much more money to rebuild our infrastructure. I would say at least double her numbers, and you’re going to really need a lot more than that.

Then, his promises morphed into a plan to sell “infrastructure bonds” to cover the costs. In other words, do things the way they are always done: borrow money to build infrastructure, then pay it back from the resulting economic gains.

By October, the plan had evolved into a $1 trillion promise. Except, it wasn’t, really.

A tax credit would be offered to private companies to finance projects, while the companies would also have to take equity investments in the projects. According to Yahoo Finance, $167 billion of the $1 trillion investment would be equity investment, while the rest would be debt raised by private partners.

Additionally, all projects built under the plan would be required to generate cash flow, like toll roads or airports that produce tax revenue instead of free parks or highways without tolls. The equity investment partners would also take the revenue, essentially privatizing much of the new infrastructure and making riskier investments more palatable.

Note this key point in Trump’s “evolved” plan: “privatizing much of the new infrastructure.”

Trump’s Plan: Pay Rich People To Build It, Then Pay Them To Let Us Use It

Privatizing infrastructure means We the People won’t own it, a few rich people will. We’ll then have to pay them to let us use our own roads, dams and bridges.

Trump’s plan fundamentally alters the relationship between the people of this country and the government. Since our founding, we have been a country “of, by and for the people,” building and maintaining infrastructure that We the People all can use.

Trump’s plan is to have We the People pay businesses, through tax breaks, to build infrastructure that they then own. Then they make us pay again through tolls and fees to use the infrastructure we just paid to build, if we want to use it.

Nice work, if you’re rich enough to get it.

There isn’t even any real reason to think this plan will actually do the job of improving our infrastructure. The tax credits are likely to go to projects the private corporations were already planning to do, anyway.

Grover Norquist summed up the private corporate priorities in a Washington Times report on Trump’s plan,

Grover Norquist, founder and president of Americans for Tax Reform, described the infrastructure program being drafted at the White House as part of the biggest reduction of regulations envisioned since President Ronald Reagan, potentially clearing the way for massive private investment.

‘We’ve had an eight-year war on infrastructure by the Obama administration,’ said Mr. Norquist. ‘They tried to stop and did stop pipelines, coal production, gold exploration, mining of natural gas and fracking.’

Yes, those tax credits will likely go toward the infrastructure priorities of Trump’s cronies: “pipelines, coal production, gold exploration, mining of natural gas and fracking.”

Senate Democrats’ Plan

In January, Senate Democrats introduced a plan of their own: We the People build infrastructure that we own and all get to use. My post at that time, Don’t Be Fooled By Trump’s Promises on Infrastructure Jobs, had the details.

Their plan is called “A Blueprint to Rebuild America’s Infrastructure, Creating Over 15 Million New Jobs.” Click through for a one-page description or read their full, detailed report.

Here’s a quick summary:

● $210 billion to repair crumbling roads and bridges, (saving the average American family over $1,700 a year). 2.7 million new jobs.

● $110 billion to modernize water and sewer systems. 2.5 million new jobs.

● $180 billion to expand rail and bus systems. 2.5 million new jobs

● $200 billion for a new vital infrastructure projects (VIP) program that will direct major federal investments to the most critical national projects. 2.6 million new jobs.

● $75 billion to rebuild America’s schools. 975,000 new jobs.

● $70 billion to modernize America’s ports, airports and waterways. 845,000 new jobs.

● $100 billion to build 21st-century energy infrastructure. 1.3 million new jobs.

● $20 billion to expand broadband access to millions of Americans. 260,000 new jobs.

● $20 billion in funding to address critical infrastructure backlogs on public lands and in Indian country. 260,000 new jobs.

● $10 billion to construct new Veterans Administration hospitals and extended care facilities

● $10 billion to support the creation of new innovative financing. 1.3 million new jobs.

 

How To Pay For This?

As I explained in my January article,

Senate Democrats offered a very simple way to pay for their infrastructure proposal – largely the same plan Bernie Sanders offered during the primaries.

Corporations have well over $2 trillion of profits stashed in tax havens, just waiting to be taxed. Senate Democrats say, ‘Let’s just close that loophole and collect those taxes.’

Doing so would immediately generate more than $700 billion of tax revenue, plus another $100 billion or so each year. In addition, the corporations would “bring the money” back and the untaxed portion would be used to expand and hire, and distribute the rest to shareholders. Either way, this brings that money into the U.S. economy.

The Choice

So there is a choice. Trump’s plan has us paying for corporations to build the infrastructure they were already planning to build, for their own profit reasons. They get to keep it after we pay for it. And then they get to make us pay them to use it.

The Democrat’s plan makes the corporations pay taxes on profits they have stashed outside the country to pay for the public infrastructure we need. Then we own it and we all get to use it.

Which plan do you think is better? Call your member of Congress and bother of your Senators and let them know which you think it best.

***

Reposted from Our Future.

Johnson also is a fellow at the Commonwealth Institute and a Senior Fellow at the Institute for the Renewal of the California Dream. Follow Dave Johnson on Twitter: www.twitter.com/dcjohnson.

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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