From the Transport Politic:  Should the U.S. spend $1 trillion on new infrastructure?


Donald Trump wants to make a big splash by supporting a huge new infrastructure bill ….

From a financial perspective, the tax credits would do nothing to support projects that don’t make money, meaning all hope is lost for fixing Flint’s lead-in-water problem through this legislation, for example. The plan would provide automatic 10 percent pretax profits to contractors, just as a matter of general policy. Credits could be distributed even to projects that were already planned, meaning that there is no guarantee that the investment would actually increase investment or produce new jobs. Meanwhile, the proposal provides no source to actually pay for those tax credits, meaning they could be “weaponized” to “justify future cuts in health care, education and social programs,” as Ronald Klein has put it.

Writing in The New York Times, Paul Krugman focuses on the proposal’s secondary effect, which would be shifting infrastructure from public to private hands. This is “not a plan to borrow $1 trillion and spend it on much-needed projects,” he writes. “It is, instead, supposed to involve having private investors do the work both of raising money and building the projects—with the aid of a huge tax credit that gives them back 82 percent of the equity they put in.” Krugman’s point is that the proposed tax credits are, in reality, giveaways to companies that will then own and operate infrastructure permanently at little to no costs to themselves. The plan, in this way, is privatizing future public assets. …

In the transportation space, as many have noted, profit-motivated investments will mean, overwhelmingly, toll highways. Given that the vast majority of transit lines—perhaps all of them in the U.S.—are deficitary, and the fact that it is inconceivable to imagine developing pedestrian and biking projects that charge customers to use them, a transportation investment structured on these lines seems likely to be very auto-oriented, at least compared to current federal transportation expenditures, which are distributed 1-to-4 transit-to-highways.

What would be the direct consequences of thousands of new miles of grade-separated highways? Massive incentives for increased sprawling, unwalkable development, destruction of greenfield and agricultural land, and disincentives for investment in urban infill. Significantly more vehicular travel generated through induced demand. Massive new carbon emissions.

There are, of course, lots of parallels to what is already happening in B.C. and proposed at the federal level.