Trump's Hardest Construction Job
(Bloomberg View) -- Ignore the flim-flam, and President Donald Trump is offering some good ideas with his infrastructure proposal. The question is whether it's too little, too late.
Broadly, the plan envisions spending $200 billion to stimulate investment by states and businesses, with a goal of restoring roads, bridges and so on. It also aims to simplify regulation. With customary modesty, the White House calls it "the most comprehensive infrastructure bill in our Nation's history."
Some aspects are indeed promising. Giving states and cities an incentive to spend more on their own public works makes sense, especially when borrowing costs are moderate. Encouraging them to impose user fees, such as tolls, might help control costs and leave them less reliant on Washington.
Attracting private investment is likewise a sensible goal. In addition to boosting available funds, it could lead to more efficient and innovative projects, and thereby reduce public maintenance costs down the road. Such partnerships carry risks, but with proper oversight they can be a good way to leverage tax dollars.
Streamlining red tape, meanwhile, could be a boon for businesses. Trump's plan would impose deadlines on regulators to complete environmental reviews and issue permits for new projects, while limiting the number of agencies involved in each decision. Although optimistic by Washington standards -- the whole process, it says, should take no more than two years -- it's on the right track.
That said, the plan has problems.
One is that it's premised on a bit of voodoo. It presumes that a $200 billion federal outlay would lure $1.3 trillion in outside spending, while offering no plausible evidence. Those new funds would also be offset by cuts elsewhere, including to the transportation budget, which means the proposal isn't offering nearly as much as advertised. If Trump wants bipartisan support, he'll need to accept a bigger up-front investment (the Democrats, intrepidly, propose $1 trillion).
There are other complications. Congress has just passed a tax cut that will make it difficult for states and cities to raise taxes, yet this infrastructure plan depends on them to spend more money. And the bill prioritizes projects based on their ability to attract private capital, placing very little emphasis on their economic impact.
There's no denying that stuff needs fixing. By one estimate, the U.S. must invest $2 trillion over the next decade to keep its public works in decent shape. A federal effort that induced more state spending, encouraged public-private partnerships, and cut red tape has a lot going for it. Combine these elements with an increase in the federal gas tax, in fact, and a fiscally prudent overhaul starts to look feasible.
Of course, with deficits rising and elections looming, the odds of success are long. But credit where it's due: On a problem that Congress has avoided for too long, this plan offers a decent start.
--Editors: Timothy Lavin, Michael Newman.
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