Wednesday, March 15, 2017

Blogger Candidate Forum: What Does Infrastructure Mean?


Old Post Office Building under renovation for the Trump International
Washington D.C.
Hello Everyone:

It is time for the weekly edition of Blogger Candidate Forum.  Today we are going to step away from the subject of sanctuary cities, for now, Blogger promises, and on to the subject of infrastructure.  Specifically, we are going to look at what will President Donald Trump's $1 trillion build out look like?  This is the question that Laura Bliss ponders in her CityLab article "What Does Trump Mean When he Says 'Infrastructure?'"  It is an issue that has been moved to the back burner, for now but no less important.  Another question that needs to be asked is whether or not Congress will make it happen?  Ms. Bliss writes, "Key among the questions waiting to be answered is a very basic one:  What is Trump talking about when he talks about 'infrastructure'?  Is it the state highways and municipal water pipes you're imagining?  Or could it also be the kind that's attached to the the kind of projects a golf course developer/casino magnate would best: real estate?"  All could questions that hopefully will be answered in the next 3 years and 10 months.

Segment of I-97 between Baltimore and Annapolis, Maryland
On the campaign trail, POTUS used some traditional infrastructure words when spoke on the subject.  In a post-election interview published by the New York Times, then-President-elect Trump said,

We're talking about a very large-scale infrastructure bill...[a]and we're going to make sure it is spent on infrastructure and roads and highways."  (; date accessed Mar. 15, 2017)

President Trump's economic advisors released a proposal (; date accessed Mar. 15, 2017) to privatize infrastructure projects  The proposals describes infrastructure as the

...complex network of airports, bridges, highways, ports, tunnels, and waterways that underpins private sector growth.

Los Angeles International Airport Theme Building, 1961
Los Angeles, California
This is all well and fine but neither the proposal, nor POTUS has clearly states what specific types of projects would be applicable to the privatization scheme, "which would incentivize private companies to bankroll, construct, and own infrastructure assets by handing them tax credits worth 92 percent of their original down payments."  In all, the advisors (Laura Bliss notes that they did not return request of comment as did the transition team) claimed that the plan would drive $1 trillion in infrastructure spending, at zero cost to taxpayers "because the original federal tax credits would be eventually offset by tax revenue from associated wages and business profits.  Does this make any sense?

Flint, Michigan water pipes

What type of projects would get built under the proposed privatization scheme?  Most likely the ones that would not necessarily serve the public interest.  For example, badly needed water pipe reconstruction in Flint, Michigan is not as attractive as-maybe, a toll road in heavily travel area-to investors.  However, it would be still hard to conceive of enough glamorous highway projects that would add up to $1 billion in infrastructure investment-"or enough tax revenue from profits for the feds to break even."

Rendering of an industrial park in Port of Vancouver, Washington

Be that as it may, it is possible that  POTUS may not be referring to "rebuilding infrastructure" in the typical way, rather, in new property development.  That would make sense given his background in real estate development.  Ms. Bliss speculates, "Could an industrial park primed to have a major, even transformative, economic impact on a region be considered infrastructure?"  Further, POTUS has also found success developing apartments thus, could housing be thought of as infrastructure?  What about all the sewer and utilities needed to support new residential projects?  Consider the construction booms in in Hunters Point, San Francisco and Roosevelt Island, New York City.  The point is that developers frequently pay out of pocket via impact fees for utilities (i.e. water and power) and roads that come with these types of lucrative developments.  Laura Bliss speculates, "But perhaps under a Trumpian infrastructure scheme they'd be eligible for a whopping 82 percent tax credit."

Construction on Roosevelt Island, New York
  How many ways can we say this would be so wrong?  Several ways.  First, without an encompassing definition of "infrastructure, there is almost no reason to believe that the Trumpian scheme would actually create new investment.  The New York Times columnist Paul Krugman pointed out in his column "that it could wind up privatizing projects that would have been built anyway with regular federal support-in other words, removing assets from the public's control, and for giveaway prices."  To put it this way, if Trumpian definition of infrastructure includes some types of profitable real estate development, then the federal government would be funding ventures that private companies would want to be part of anyway.  In effect, the federal government would control the market, essentially padding the wallets of said private stakeholders-while the public picks up the bill. Mr. Krugman presents once example of how this would play out:

[I]magine 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 i equity-buit it would a tax credit of 82 percent of that sum, so that its outlays would only be $36 million.  And any future revenue from tolls would go to the people who put up that $36 million.  ((; date accessed Mar. 15, 2017)

Clear as mud, right?

To put it another way, if we apply this method to a profitable business park.  The taxpayers foot the bill for a development that private development companies would have built without any incentive.  The companies that build and manage the center receive large checks-the very definition of corporate welfare.  This would result in grand scale corruption.

Members of Congress, on both sides of the aisle, said they would work with President Donald Trump on his infrastructure  bill.  Before they jump on board, they should first pin down a specific definition of infrastructure, "because there is no legal definition."  How President Trump defines infrastructure may not be the way you or Blogger define infrastructure.

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