Progressives might think they can find some common ground with a Trump administration over a infrastructure rebuilding plan, but don't be fooled, Paul Krugman writes in Monday's column. It's just another scam, kind of like Trump University. "Steve Bannon, Donald Trump’s chief strategist, is a white supremacist and purveyor of fake news," Krugman opens. "But the other day, in an interview with, um, The Hollywood Reporter, he sounded for a minute like a progressive economist. 'I’m the guy pushing a trillion-dollar infrastructure plan,' he declared. 'With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything.'
But Trump's infrastructure rebuilding plan is really just a scheme to enrich a few wealthy and well-connected people, with taxpayers once again footing the bill.
Of course, it could be done the right way, with the federal government able to borrow money quite cheaply and spending money where it is truly needed, on transportation, sewage treatment, building levees, etc… But that is not what is being proposed, Krugman writes:
Instead, (the Trump team) 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.
There is no reason to do it this way, Krugman writes. Infrastructure should be built the way it always has been, the way the Interstate Highway System was built, with public money. "While involving private investors may create less upfront government debt than a more straightforward scheme, the eventual burden on taxpayers will be every bit as high if not higher." Krugman points out. There is also the fact that private investors will have no interest in building infrastructure that can't be turned into a profit center. Privatizing these public projects is a gratuitous handout to select investors, who would be aquiring public assets for "just 18 cents on the dollar, with taxpayers picking up the rest of the tab."
The inevitable corruption in what Trump and Bannon are proposing is a feature not a bug. Krugman's suggestion:
The Trump people could make all my suspicions look foolish by scrapping the private-investor, tax credits aspect of their proposal and offering a straightforward program of public investment. And if they were to do that, progressives should indeed work with them on that issue.
But it’s not going to happen. Cronyism and self-dealing are going to be the central theme of this administration — in fact, Mr. Trump is already meeting with foreigners to promote his business interests. And people who value their own reputations should take care to avoid any kind of association with the scams ahead.
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