Why the Trump Approach to Infrastructure Misses the Mark
February 3, 2017
Throughout the campaign and in his first weeks in office, President Trump has consistently talked about the importance of infrastructure. But his signature project, a wall on the border between the United States and Mexico, reflects a limited view of infrastructure, its importance, and its potential.
A good infrastructure bill would go beyond roads, bridges, and walls to incorporate broadband infrastructure and green jobs. Financing is also imperative when we talk about infrastructure: Trump’s infrastructure plans are financed through corporate tax breaks, which would benefit corporate interests and waste taxpayer dollars.
Why is infrastructure so important?
Infrastructure is the backbone of the economy. A well-connected highway system revolutionized travel and the exchange of ideas and goods across the U.S. in the late 20th century, and physical infrastructure continues to be deeply important today. As a recent paper released by the Roosevelt Institute put it, “infrastructure is the ground on which the economy is built, and today that doesn’t just mean roads and bridges, it means high speed internet, next gen transport, and investment in green technology and the green economy.”
However, many communities have been left out of infrastructure developments in the past. Lead contamination in the water of Flint, Michigan, and the lack of access to broadband in rural communities and communities of color are just two examples of exclusionary infrastructure. A strong infrastructure plan would be inclusive, ensure equitable outcomes, and go beyond traditional definitions of infrastructure.
A forward-looking approach
The recently released Blueprint to Rebuild America’s Infrastructure, which outlines the Senate Democrats’ $1 trillion vision for infrastructure investment in the U.S., addresses traditional infrastructure issues such as roads and bridges, but also provides critical investment to energy infrastructure and expanding broadband services.
Many of the proposed investments (detailed in the table below) have effects that go beyond generating jobs. Not only will installing affordable and high-speed internet create 260,000 new jobs, but it will also go a long way toward bringing connectivity and access to the rural communities and communities of color that are most likely to lack affordable internet. Similarly, the 1.3 million jobs that this plan will create in clean energy will also actively combat the effects of climate change. This type of foundational infrastructure investment is the basis of strong economic growth, and will bring the benefits of technological advancement to all Americans.
The importance of financing
Federal infrastructure investment has the potential to be extremely effective in stimulating both GDP growth and job growth, provided it is financed appropriately. Two of the most discussed financing methods are deficit spending (federal borrowing) and tax breaks to private companies. But any plan that is financed through tax breaks to corporations will have deeply harmful consequences. The main infrastructure plan advanced by Republicans, the Ross-Navarro plan, is financed this way. (The Ross of Ross-Navarro is none other than Wilbur Ross, President Trump’s nominee for commerce secretary.)
The basic idea behind the Ross-Navarro plan is to provide tax credits to equity investors that are worth 82 percent of their overall investment. So if a company wants to invest $100 million in an infrastructure project, they would receive a tax credit worth $82 million. These tax credits come directly from the pockets of average taxpayers like you or me, and the primary beneficiaries are the corporations, not workers or end-users.
A better way to finance
In contrast to corporate tax breaks, government deficit spending on infrastructure has many positive effects. A 2014 report by the Economic Policy Institute demonstrates that “by far the biggest near-term boost to gross domestic product and jobs comes from financing the new investment through new federal government debt.” The same report shows that returns on public infrastructure investment are very high, especially relative to the business tax breaks.
Federal financing of infrastructure is not only a good investment, but allows the funds to be targeted to communities that need them most. Communities of color, rural communities, and communities affected by the decline of the manufacturing sector were cut out of previous infrastructure investments. If we are serious about helping those who have been left behind, any new infrastructure bill must pay attention to these communities.
The importance of doing infrastructure right
It is critically important to not just invest in infrastructure but make the kinds of investments that grow the economy and benefit Americans as a whole. The Ross-Navarro plan fails to do that. Rather than using taxpayer dollars to subsidize corporations, it is imperative that we invest in high-speed internet, next-gen transport, and investment in green technology and the green economy. Not only are these good investments in our future, they will create the kinds of cutting-edge jobs that will help the U.S. thrive.