Donald Trump and Hillary Clinton don’t agree on much, to say the least. But the two bitter rivals are singing from the same page in promoting hundreds of billions of dollars’ worth of infrastructure construction as a way of boosting the economy and creating new jobs.
Clinton was the first out of the gate with a plan to spend $275 billion over five years on everything from highways and bridges to railways and broadband service, while creating an “infrastructure bank” to provide an additional $225 billion in loans and loan guarantees for state and local governments.
“In my first 100 days as president, I will work with both parties to pass a comprehensive plan to create the next generation of good jobs,” she said in late June. “Now the heart of my plan will be the biggest investment in American infrastructure in decades.”
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Not to be outdone, Trump has vowed to double-down on infrastructure spending if he makes it to the White House. He insists that Clinton’s plan would merely address “a fraction” of what needs to be done, and promised to spend at least twice as much as she has proposed.
“We will build the next generation of roads, bridges, railways, tunnels, seas ports and airports that our country deserves,” Trump said during his speech on Monday to the Detroit Economic Club. “American cars will travel the roads, American planes will connect our cities, and American ships will patrol the seas. American steel will send new skyscrapers soaring.”
The promise of new, job-generating public works projects makes for good politics on the campaign trail, especially in many of the economically depressed areas of Rust Belt states likes Pennsylvania, Ohio and Michigan that have suffered from the closing of plants and businesses and are bedeviled by crumbling roads and bridges.
While the two have similar goals in mind, Trump and Clinton would finance their infrastructure programs in fundamentally different ways: Clinton would raise taxes on businesses and corporations to pay for the new construction, while Trump would essentially raise the federal debt by selling low-interest “infrastructure bonds” to investors.
“The citizens would put money into the fund, and it will be a great investment, and it’s going to put a lot of people to work,” Trump explained recently during an interview with the Fox Business Network. “We’d do infrastructure bonds for the country, from the United States. We have to fix our infrastructure, but we have to fix it without cost overruns to get it done properly.”
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The American Society of Civil Engineers has repeatedly bemoaned the sorry state of U.S. infrastructure. The group has estimated that it would take as much as $3.6 trillion over the next four years to adequately meet demands for new roads, bridges, transit systems, sea ports, airports and inland waterways.
University of Virginia political scientist Larry J. Sabato said it was encouraging to see the semblance of agreement between Trump and Clinton on the country’s long-term reconstruction needs to keep the U.S. competitive with China and other global rivals.
“At least both nominees agree we have an infrastructure crisis,” Sabato said in an email on Tuesday. “In 50 years we will barely qualify as a first-world country if we don't take dramatic, expensive action now.”
Sabato added that Trump’s and Clinton’s views on infrastructure “signals the very real possibility of a consensus in 2017,” provided the two parties can reach a compromise on funding sources. But regardless of whether Trump or Clinton succeeds President Obama in the White House, enacting major infrastructure legislation would be a very heavy lift at best.
It seems safe to assume that, barring an electoral tsunami in November, Republicans will retain control of the House of Representatives in 2017, which would allow the GOP to serve as a check on any infrastructure push from Clinton.
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Even in the increasingly unlikely event that Donald Trump actually wins the White House, there is very little reason to assume that a Congress in which House Republicans would go along with a plan to spend hundreds of billions of dollars on infrastructure.
Lawmakers had to be dragged kicking and screaming into an agreement on a desperately needed $300 billion five-year highway bill last year -- a deal that was nearly a decade in the making -- and there is no evidence Republican leaders have the appetite for another internecine brawl over a major spending bill. Obama broke his pick trying to pass additional stimulus spending in the fall of 2011, when Republican lawmakers blocked his $50 billion “American Jobs Act.”
In fact, the policy agenda the House Speaker Paul Ryan (R-WI) has been rolling out over the summer, called “A Better Way,” doesn’t list infrastructure improvement as one of its priorities for moving the U.S. economy forward -- a pretty dramatic break with the GOP’s presidential nominee and his party’s national platform. (Ryan does appear to want to make some focused improvements in the nation’s energy-delivery infrastructure.)
There is another difficulty inherent in a major infrastructure push at the federal level: Most infrastructure spending is undertaken by state and local governments. The federal government can provide incentives and assistance, but the initiative driving specific projects has to come from thousands of state legislators and city and county commissioners.
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The Wall Street Journal reported on Monday that although record low interest rates have made borrowing extraordinarily cheap, many state and local governments are “scaling back” on publicly financed infrastructure projects. Indeed, municipal borrowers issued just $140 billion in bonds to finance new projects last year. That was 53 percent lower than in 2006 and 21 percent lower than in 1996, when adjusted for inflation.
Rather than adding to their long term debt, many state legislatures and city officials are focusing instead on propping up underfunded employee pension funds and meeting their rising Medicaid costs, according to the newspaper.
There is also a strong argument that regulatory rules that grade the kinds of municipal bonds that fund infrastructure spending as high-risk are also a drag on spending.
In the end, though, the biggest obstacle is political, and that’s more than enough to likely scuttle any major push to build out infrastructure.
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Even one of Trump’s closest economic advisers, Stephen Moore of the Heritage Foundation, is completely dismissive of Trump’s infrastructure proposal, which he calls flat-out “wrong.”
“The real infrastructure crisis in America is private infrastructure,” Moore claims. “Computers. Factories. Plants. Forklifts. Trucks. Warehouses. Businesses aren’t buying them because they are bleak about the future. Business spending over the past year is negative. Partly that’s because Mr. Obama has raised taxes on business investment.”
With friends like that, Trump’s infrastructure proposal doesn’t need enemies.
