Sunday, February 26, 2017

Economists Across the Political Spectrum Agree - Trump Plan for Infrastructure Spending is Rediculous

In Trump's Mind That is Probably a Plus

How does the government get $1 trillion of infrastructure spending by spending only $137 billion? They don't of course unless one lives in the fantasy world of Trumpies.  So here's the plan.

"The proposal is this: To stimulate $1 trillion in expenditures over 10 years, the Trump administration should hand out $137 billion worth of tax credits to private businesses. That federal tax credit would leverage a flood of private money, covering 82 percent of the equity needed for new projects, argues Ross, who co-authored the plan with Peter Navarro, a University of California at Irvine business professor whom President-elect Donald Trump has tapped as his trade adviser."

The reaction from reality, that is economists.

"Hogwash, say economists from across the political spectrum. “It is totally ill conceived,” Lawrence H. Summers, Harvard University economist and former treasury secretary, said in an email.

The clash over the plan goes to the heart of one of Trump’s main campaign pledges — to boost infrastructure spending. Trump never laid out whether he would do that through federal spending or through public-private partnerships. And he has not defined what would qualify as infrastructure, potentially triggering a feeding frenzy in Congress as public officials and corporations seek support for their pet projects.

As a result, the Ross-Navarro proposal, unveiled in late October, is the closest thing to an official one. But economists say its flaws are numerous.

First, “it will function largely as a giveaway to contractors on projects that would have happened anyway,” Summers said."

Well of course.  a giveaway to private companies is what the plan is all about.  If something actually gets done, well that's not expected but would be acceptable.

Ok, Summers is a Democrat.  But what about this fellow?

"Even economists who favor privatization of infrastructure oppose tax credits as the way to go about that. Steve H. Hanke, a professor of applied economics at Johns Hopkins University, served on President Ronald Reagan’s Council of Economic Advisers, where he was in charge of the infrastructure portfolio.Hanke believes that infrastructure should be built and operated by private companies, arguing that public infrastructure projects are plagued by “massive waste, fraud and abuse.”

Yet Hanke, too, says that tax credits won’t do the trick. He says that tax credits for financing infrastructure are “an opaque way to finance infrastructure” that would “complicate an already monstrously complex U.S. tax code.”

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