President-elect Donald Trump has placed a heavy emphasis on the need to rebuild the nation’s infrastructure, a plan that conceivably could secure bipartisan support with the right approach.
However, as outlined in a new ITEP issue brief, paying for infrastructure investments is a divisive topic, and there are copious reasons that Trump’s plan should be met with a healthy dose of skepticism.
Mr. Trump’s advisors have suggested (PDF) that additional infrastructure funding could be generated by giving private investors a tax credit that would wipe out 82 percent of the up-front costs associated with building toll roads or other income-generating infrastructure projects. They claim that offering $137 billion in federal credits would spur $1 trillion in infrastructure investments, and that the economic growth created by those investments would ultimately make the plan “fully revenue neutral.”
This claim of revenue neutrality is based on unrealistic assumptions about the impact these credits would have on overall infrastructure investment. More importantly, Mr. Trump’s infrastructure proposal is a short-term approach to a long-term shortfall in our nation’s infrastructure revenues. It would also fail to fund many important infrastructure investments and would needlessly subsidize private investors for at least some projects that would have been undertaken even in the absence of this program. While expanded investments in infrastructure are clearly needed, this proposal is a deeply flawed approach to realizing that goal.