Tuesday, February 13, 2018

Drastically Changing the Rules On Infrastructure Spending

Most observers have figured out that the Trump infrastructure spending plan seems to be weirdly lopsided in an unrealistic way, with $200 billion in federal spending somehow supposed to inspire a total of $1.5 trillion in spending by state and local sources along with private ones.  What has not been made all that clear publicly is how this plan upends decades of established practice in fiscal relations between the federal and the state and local governments.  The long-established formula has been 8 to 2, that is $8 in federal money for $2 in state or local money in infrastructure construction projects.  Trump's plan proposes to completely reverse this to a 2 to 8 formula, $2 in federal money for $8 in state or local money.  Anyone who thinks this is going to provide any actual infrastructure activity that would not have otherwise is simply completely delusional.

Of course it is well known that the private sector input will involve tolls or other payment methods to make sure the private interests make a positive rate of return. One important area many want to see work done is on fixing bridges. The American Society of Engineers has identified about 50,000 bridges in the nation that need repair.  However rhey also estimate that only about 100 of those are reasonably suitable for private tolling.  This is another not-going-anywhere part of the proposal.

However, Trump is apparently hoping to raise money by outright selling off some publicly owned infrastructure assets.  The Washington Post reports today that in the Washington area this includes the two main airports, Dulles and Reagan National, as well as the George Washington Memorial Parkway (currently not tolled).  I can hardly wait and am curious what else around the country is going to be put on the block for a grand fire sale leading to all kinds of tolls and other nonsense.

Barkley Rosser


David Billingsley said...

Please remove typos, at least in the title! A sloppy appearance will mean people will not pay attention to your arguments!

rosserjb@jmu.edu said...

Thanks, David, and I apologize. I do not at this moment have access to a computer that lets me onto blogger.com where I can correct things. Indeed, I wrote the post sort of in a hurry just before I turned over my laptop for repairs. I checked the text, but not the title. I think the text is OK. I stupidly did not double check the title. Sorry, folks.

rosserjb@jmu.edu said...

For those who do not know, I can come in as an outsider and make comments like any of you, but I must get into blogger.com to change anything in the post itself, and I csnnot get there from this computer. Will fix it tomorrow.

Sandwichman said...

Fixed the title for ya, Barkley.


rosserjb@jmu.edu said...

Thanks, S-man. Just now on computer where I can get at it.

Anonymous said...

the imposition of tolls on yet more major transport routes should accelerate the 'retail apocalypse' and 'middle class squeeze' playing out in the US currently.

"The middle-class squeeze is the situation where increases in wages fail to keep up with inflation for middle-income earners leading to a relative decline in real wages..." https://en.wikipedia.org/wiki/Middle-class_squeeze

"The retail apocalypse refers to the closing of a large number of American retail stores in 2015[5] and expected to peak in 2018.[6] " https://en.wikipedia.org/wiki/Retail_apocalypse