Don't Fear Trump's Infrastructure Plan Until It's a Plan

Private companies may be salivating right now, but no one knows what a trillion-dollars investment will look like or what it will accomplish.

by Kastalia Medrano
Flickr / Jonathan Kos-Read

Donald Trump’s plan to invest in American infrastructure has, since his election, received less press attention that his appointment of extremists to White House positions. Still, a Trump-branded road bill may be the first thing to make it through congress with a degree of bipartisan support. The issue of aging infrastructure may be the last non-polarizing subject in American politics. Still, money is polarizing and Trump is going to have to figure out how he’ll pay for the biggest of big-ticket items. Will he usher in a new era of private contracts or follow traditional models of government funding?

To be sure, there are advantages to private infrastructure funding. It offers government’s more access to capital up front, but it also raises the issue of profit sharing over the longer term. Chicago, for instance, turned over its parking meters to a private Wall Street contractor that did a great job updating systems then started price-gouging commuters, who now have no recourse. Could what happened in the Second City happen in a third and a fourth? To find out, Inverse spoke to Casey Dinges, a senior managing director at the American Society of Civil Engineers and advocate of infrastructure policy.

Trump hasn’t offered many details, but he has stated his intention to adopt a 10-year, $1 trillion infrastructure plan. Does that plan feel like a reasonable response to America’s existing issues?

At the outset, we’ve identified a need over 10 years of $3.6 trillion. So his number is a step in the right direction, but it would not get at this entire gap. A trillion dollars is good, but it’s not enough, and that’s just to meet existing backlogs, to get at a good state of repair. Maybe that number could be negotiated through Congress. I’d use the word ‘plan’ somewhat reservedly, I think we’re still in the ideas stage on this.

If he were to use private investment, do you think that would adversely affect tax-paying Americans?

The idea of a more private investment in infrastructure wouldn’t be an original idea to Donald Trump. Other countries are already further down the public-private partnership for infrastructure than the U.S. And you’re already starting to see it happen here with the Triple P [public-private partnership] model for new toll roads. The Private sector frontloads money to get a new project built and then the private sector wants to get its money back, plus some rate of return.

So, if you’re a citizen looking at this issue, you’re thinking, ‘Okay, a public-private partnership, a private entity fronting the money, I guess that’s a good thing because the public sector has a hard time coming up with that money, and maybe they can do things that ultimately reduce the life cycle maintenance cost of the facility.’ But what’s a reasonable rate of return? Three percent? Five? Ten?

Details are very thin at this point. There’s this notion of an 82 percent tax credit; does that mean we’re getting into the realm of tax reform, are we combining an infrastructure bill with a tax reorganization bill?

People are yearning for more details and there’s bipartisan interest … It’s just hard to say at this point.

You hear the term ‘deficit-neutral’ a lot with regard to his infrastructure plans. He believes that tax incentives will pay for themselves. Do you buy that?

This term deficit-neutral, it doesn’t mean you’re not willing to increase user fees like the gas tax. His belief is that by doing these projects, he’s putting people to work, putting contractors to work, and that that will offset the cost. The supply side approach is a more Republican approach … expanding the economy increases wages and projects pay their own way. The more Democratic approach is … ‘We haven’t raised this gas tax in 20 years, the price of fuel is so low, will there ever be a better time?’

I’ve been doing this long enough to have been through a few cycles of this. There are slightly different economic approaches, and there’s not always bipartisan support like there may be right now.

So knee-jerk distrust might not be warranted here?

All the public knows is that the infrastructure they’re experiencing is not that great or that they’ve been told by a president-elect it’s not that great. People say, ‘No, I want infrastructure but I don’t want to pay more for it.’ But if it’s delivering value for the work provided — if a road got built that wasn’t going to get built any other way — it might be the only game in town. The set-up in the U.S. is a mixed bag already: energy, electricity, ports, there are a lot of private entities there.

Basically, you’re saying we’re going to have to wait and see if Trump can formulate an actual plan.

Remind the public that they’re going to pay either way — whether it’s the new model or the old model. If it’s public, they pay. If it’s public-private, they still pay. And if we do nothing, they still pay. They’re already paying right now.

This interview has been edited for brevity and clarity.