US president Donald Trump wants the US to become an “infrastructure nation” and is calling for $1000bn for national rebuilding, the largest amount since the 1950s. Money for the plan, he says, would come from public and private funds.
Pundits are doubtful, however. Randall O’Toole, senior fellow at Washington, DC-based think tank Cato Institute, says $1000bn and the country’s infrastructure problems are overblown. “There are groups who want to make money off the federal government,” he says.
Mr O’Toole believes most US infrastructure is already adequately maintained through user fees. “The federal government is more likely to build new infrastructure than repair the old infrastructure,” he adds.
Mr Trump is suggesting public-private partnerships as an alternative way to pay for infrastructure by giving tax credits to private parties to build it. However, the infrastructure still must be paid for via tolls, user fees or taxes. “This means the taxpayer will pay for the infrastructure improvements anyway,” says Mr O’Toole.
According to Mr Trump, costs will be offset by creating jobs and, hence, additional payroll taxes. But Mr O’Toole says what really counts is whether or not new infrastructure projects generate growth, more economic benefits and benefits to the national gross domestic product (GDP), and that Mr Trump’s plan would reduce GDP, not increase it.