Wednesday, March 22, 2017

As Pothole Season Opens, a Driver's Thoughts Turn to 45's Infrastructure Lies

And, of course, as Paul Krugman noted in November, what was proposed was never very populist:
To understand what’s going on, it may be helpful to start with what we should be doing. The federal government can indeed borrow very cheaply; meanwhile, we really need to spend money on everything from sewage treatment to transit. The indicated course of action, then, is simple: borrow at those low, low rates, and use the funds raised to fix what needs fixing.

But that’s not what the Trump team is proposing. Instead, it’s 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.

... what reason do we have to believe that this scheme will generate new investment, as opposed to repackaging things that would have happened anyway?

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