I’m sending this letter to our Prez.
Dear President Trump,
It’s a no brainer really.
We need to spend like mad on our infrastructure as fast as possible. Maybe $2 trillion in the next 5 years, if we can build with the zeal of Roosevelt in the 1930’s, but surely in the next 10 years.
The returns will be dramatic. We will:
- Turbocharge the economy and make it grow at 4 percent for the foreseeable future!
- Provide great jobs for disrupted middle class workers, such as coal miners and steel mill hard hats – people who are your core constituency.
- Reduce the federal deficit at the same time! I’m serious.
- Significantly reduce the horrific income inequality in America, which is growing worse as we cut benefits for the poor and lower taxes on the rich. You don’t want a revolution on your hands.
- Provide a hugely needed boost to the demand-side of the economy.
And it will be a move supported by both the Democrats and the Republicans of almost all stripes. It will tax your legendary deal making prowess only modestly.
During the campaign you said you would spend $1 trillion, over 5 years, on fixing our badly disintegrating roads, bridges, airports and other facilities. Almost no one disagrees. (In fairness President Obama tried to do the same but ran into resistance from the opposition unwilling to give him any success. But he’s gone now and you will get all the credit).
How Much Infrastructure Rebuilding Should we do?
Every four years The American Society of Civil Engineers (ASCE) assesses 16 major categories of infrastructure – from roads, bridges and dams to aviation, rails, waste water and public transit. It provides a letter grade and the dollar amount of deferred maintenance to get our infrastructure up to snuff. In the 2017 report our overall grade was a D+. It has gotten worse in every category over the years. Here’s a summary:
The report says that we have an infrastructure deficit of $4.59 trillion dollars. To be pragmatic we could spend about 2 trillion dollars over the next ten years, to design and implement the upgrades.
The ASCE provides a state-by-state assessment of the highest priority projects that should be undertaken. These are critical and shovel-ready – meaning all they need is funding and they are ready to go. So we can get going as soon as you are ready to act. Think of the big Rose Garden ceremony we could have, with Paul Ryan kissing your ring, as you sign this bill!
Where Will the Money Come From?
We are talking about an expenditure of $200 billion/year for ten years. Mr. Trump, we should just spend it through government borrowing and not attempt to go “revenue neutral”, i. e pay for it through cuts in other spending or, heavens forbid, extra taxes. You know that will kill it faster than a drone missile attack.
Now here’s the thing to note: in reality this does not increase the budget deficit.
Counterintuitively, we’re spending $200 billion more annually, and yet it does not increase the real deficit! The official government debt will show an increase of $200 billion, but it would be a phony rise. The reason lies in the way the government does its accounting – it runs on a Cash basis. Non-cash liabilities are not on the books. If the federal government were a company such accounting would be illegal. We would have to show “Deferred Maintenance” as a Liability of $4.59 trillion (per the chart above). Then when we spend $200 billion we would owe that much in dollar liability but Deferred Maintenance liability would reduce by the same amount. Thus no increase in Federal Debt!!
But wait there’s more. The $200 billion spent would provide 2.5 million direct jobs to people who are the most displaced in the workplace today. The construction workers and the semi-skilled labor force. I know you love those guys! Also another 5 million indirect jobs would be created. I estimate that the government would collect $50 billion per year in new taxes from the additional jobs. More money to give a tax cut to your faves: the corporations and the rich!
The ASCE and others also estimate that our crumbling infrastructure costs us thousands of lives (Road accidents alone claim 35,000 lives per year, way more than crime and terrorism). Also according to a report from the American Society Of Civil Engineers, the U.S. economy is expected to lose just under $4 trillion in GDP between 2016 and 2025 if infrastructure investment gaps are not addressed. This gap will grow to $40 trillion by 2040!
So if we spend $200 billion for ten years ($2 trillion total) we gain at least $4 trillion in economic growth! We also create 7.5 million good American middle class jobs that cannot be exported abroad. I told you it is a no brainer. By the most conservative calculations the GDP is given a 1.5% boost per year by this spending. In the last few years the GDP has been growing at just under 2% – an anemic growth. (You inherited such a mess!) But add in another 1.5% and we are at 3.5%. Back to the high growth era following the rapid infrastructure build up by Roosevelt. (He was a Democrat, but early on so were you, no?)
This Infrastructure spending does it all and has the added bonus of reducing inequality in America. Instead of trickle-down economics which makes the rich richer, this spending injects money at the bottom, at the grass roots, where it does the most good. It boosts demand and therefore it boosts investment by companies to meet this demand. Win win! (So much winning – we’ll need a break from all this winning – you should take a rest after getting an infrastructure bill passed – maybe, a few rounds of golf at Mar-a-Lago?).
But seriously, Mr. President, isn’t this exactly what you promised – a big boost to the economic growth of this country and well paying jobs for the working men and women of America?
Yours Truly, etc…
I like it. I hope he reads his mail.
Unfortunately, he’s too preoccupied with himself to embrace such sensible thinking. Then there’s this insight too… .http://www.newyorker.com/magazine/2017/02/27/why-facts-dont-change-our-minds
Thanks, Arun. Great article by Elizabeth Kolbert that you refer to. Yes, reason and data do not readily change peoples’ minds.
In this case it’s Trump’s own avowed policy of building the infrastructure – he needs to not get bogged down in Republican debates about “how to fund it” or cutting spending elsewhere to “pay for it”, because it more than pays for itself.