Senator Bernie Sanders (I-VT) has unleashed a devastating report revealing the truth about President Trump’s trillion dollar plan for rebuilding America’s crumbling infrastructure.
“It is a huge giveaway to Wall Street that fails to create the millions of jobs we need to modernize our road, bridges, water systems, rail, airport, and dams,” declares Sanders in his report, which is subtitled: “Why Trump’s public-private partnership model is good for Wall Street but bad for America.”
Instead of financing the $2 trillion that the American Society of Civil Engineers estimates will be needed just to repair the existing infrastructure, Sanders’ report explains, “Trump actually cuts direct federal spending on our crumbling infrastructure by nearly $145 billion over the next decade. This would force state and local governments to shoulder more of the financial burden for our infrastructure at a time when they can least afford it.”
“Under Trump’s proposal,” explains Sanders, “billionaires on Wall Street, wealthy campaign contributors, and even foreign governments would receive hundreds of billions in tax breaks to purchase our highways, airports, and water treatment plants. They would then be allowed to impose huge new tolls and fees on the backs of American commuters and homeowners.”
“Just like Trump’s ‘health care’ bill,” points out Sanders, “this is actually a $231 billion tax cut for the top two percent. His infrastructure plan would create $200 billion in new tax loopholes and other giveaways for wealthy investors, and it would reward corporations that have stashed their profits overseas with huge tax cuts.”
The money raised mostly from private investors would not actually be used to repair the pothole filled roads, aging bridges or other existing public assets like water treatment plants, for the most part. That is because the incentive is to invest in new projects like toll roads that the investor can own and milk profits out of for many years to come.
“This private financing scheme,” says Vox Senior Editor Brad Plumer, formerly of the New York Times, “experts across the political spectrum say, wouldn’t address most of America’s most pressing infrastructure needs – like repairing existing roads or replacing leaky water mains poorer communities like Flint. It’s a narrow, inadequate policy.”
It may be inadequate but it would be wildly expensive. Sanders makes clear this would be the most expensive way to finance even these most basic infrastructure updates. When government does the work, it is financed by tax-exempt municipal bonds or private equity that is repaid out of taxes and user fees.
“Private equity financing is markedly more expensive than traditional government financing, however,” explains Sanders, “by as much as three to six times.”
As an example, the charge for a $100 million investment financed the traditional way by the government over 30 years would be about $90 million. Since private equity expects to get a much higher return on investment, that would raise the cost to about $450 million.
Sanders cites past efforts financed privately, and at the end of the report lists many of them, all of which have been a nightmare for taxpayers without end.
“For example,” writes Sanders, “in Chicago, a private investor group led by Morgan Staley will collect $11 billion as part of its 75-year contract to run the city’s parking meters. Not only have they raised parking prices by as much as 800 percent in some neighborhoods, but incredibly, [under the contract] the city has been forced to pay $31 million and counting to cover lost revenue whenever a street is temporarily closed for maintenance.”
In Indiana, tolls on a privatized road more than double this month as commuters wait in long lines and visit unsanitary rest stops, adds Sanders, adding:. “In Bayonne, New Jersey, many homeowners are at the risk of foreclosure because they cannot afford water bills that have spiked dramatically after the water system was taken over by a private equity firm.”
“Trump plan is the exact opposite of what we should be doing as a nation,” states Sanders. “Instead of creating more tax giveaways to corporate America and Wall Street, we should be eliminating tax loopholes that allow profitable corporations to stash their cash in offshore tax havens around the world. And we should be using this revenue to directly invest $1 trillion to modernize our nation’s infrastructure – a plan that would put 15 million Americans back to work in good-paying jobs. Today the Untied States spends less on infrastructure as a percent of GDP than at any time in the past 20 years.”
When Trump first proposed a major effort to address America’s deteriorating infrastructure, it left Democrats concerned the president might have finally found an issue that would win over the voter’s hearts and minds. Now that they have seen what he wants to do, instead they are on the attack.
“When he called for a trillion-dollar infrastructure bill, we thought that was great,” Senate Minority Leader Charles Schumer (D-NY) said at a press conference this week, according to the usually conservative Chicago Tribune.
“What they’ve proposed is privatizing most of our infrastructure to give wealthy financiers tax breaks on projects they were probably going to build anyway,” adds Schumer. “It’ll lead to ‘Trump tolls’ from one end of the country to the other.”
Ron Klain, who served as Vice President Joe Biden’s chief of staff, and was involved in the 2009 stimulus effort, says he was surprised by the administration’s proposal once it was actually laid out to an extent:
“It’s been the most convoluted thing you could imagine,” Klain explained to the Chicago Tribune. “I thought to some extent that when Trump had a highly simple message – I’ll spend money here – he’d learned our lesson.”
“We had this bill that was like Noah’s Ark for every project,” adds Klain, “and he’s just spending money. Instead, it’s like Pharaoh telling people to build bricks without straw, because Republicans don’t want to spend the money.”
Like so many of Trump’s promises, the infrastructure plan looks like something America needs and people want, but instead, it is a gimmick designed to enrich Trump’s rich friends and supporters.
Like his promises about health care, tax reform, the environment and military spending, it is a sham and a scam that will enrich a very few while draining the life, wealth, and energy out of the vast majority of Americans.