Trump's Infrastructure Scam

A post yesterday looked at Donald Trump's irresponsible budget proposal.  It also looked at Trump's infrastructure "plan" which amounts to little more than a scam and seeks to privatize much of the task, leaving taxpayers hostage to rapacious private interests.  Here in Hampton Roads Virginia, the Elizabeth Rivers Tunnels scam has demonstrated the greed with which such "public/private" projects enrich the private interests while screwing over the public.  In my view, after defending the nation from hostile outside forces, a main responsibility of government is to provide the roads, bridges, tunnels, airports, etc., that serve the interests of the public and which allow economic growth and prosperity for all, not just certain greed motivated private interests.  As for tolls, they are little more than a way for government to dodge its responsibility to fund and build much needed infrastructure through tax revenues and bind issues. A piece in Fortune looks ate the scam nature of Der Trumpenführer's infrastructure proposal.  An second piece in a column in the New York Times by a Nobel Prize winning economist similarly, calls out Trump's "plan" as a scam.  First, these highlights from Fortune:

Trump’s infrastructure plan hinges on a $100 billion matching grant program for states and cities to launch their own projects, with additional funds coming from a $50 billion rural investment program, along with a few other line items. That’s supposed to entice private companies to come out of the woodwork and rebuild America to the tune of $1.5 trillion.

Just like Mexico won’t pay for a border wall, private investors won’t pay for roads, bridges, and energy infrastructure just because the president says they will. Kicking federal obligations to private companies doesn’t work that way.

Private investors care about only one thing, and that’s maximizing profit. They won’t be drawn to projects that won’t make them enough money, no matter how badly needed the projects are.

And even for projects that do materialize, private investors’ need for profit means the costs of building new infrastructure are often passed along in the form of road tolls or other fees—sometimes, these can be exorbitant. This dispels the commonly held myth that privately financed projects are always a better deal for taxpayers. As another corporate giveaway, the plan would encourage putting major public infrastructure (like, say, Ronald Reagan Washington National Airport) up for sale, and would loosen environmental rules designed to protect local communities.

It came as part of a budget package that would also cut $48 billion in federal funding for other programs and services that won’t be matched by a paltry $20 billion per year in infrastructure investments. Among other things, the president once again called for the total elimination of the Community Development Block Grant program, and major cuts to Amtrak, Superfund environmental cleanups, and other programs. You better believe that Americans would suffer under this plan.

The piece in the Times is similarly harsh and calls out Trump's proposal as a con job.  Here are highlights:

Donald Trump doesn’t give a dam. Or a bridge. Or a road. Or a sewer system. Or any of the other things we talk about when we talk about infrastructure.

But how can that be when he just announced a $1.5 trillion infrastructure plan? That’s easy: It’s not a plan, it’s a scam. The $1.5 trillion number is just made up; he’s only proposing federal spending of $200 billion, which is somehow supposed to magically induce a vastly bigger overall increase in infrastructure investment, mainly paid for either by state and local governments (which are not exactly rolling in cash, but whatever) or by the private sector.

And even the $200 billion is essentially fraudulent: The budget proposal announced the same day doesn’t just impose savage cuts on the poor, it includes sharp cuts for the Department of Transportation, the Department of Energy and other agencies that would be crucially involved in any real infrastructure plan.

One section says that it would “authorize federal divestiture of assets that would be better managed by state, local or private entities.” Translation: We’re going to privatize whatever we can. It’s conceivable that this would be done only in cases where the private sector really would do better, and contracts would be handed out fairly, without a hint of cronyism. And if you believe that, I have a degree from Trump University you might want to buy.

At one level, none of this should be a surprise. The current infrastructure nonplan looks a lot like the sketchy proposal the Trump campaign laid out in 2016, back when he was still pretending to be a different kind of Republican. 

Yet there is something puzzling about Trump’s failure to come up with a remotely plausible infrastructure plan.

First, the economics: America desperately needs to repair and upgrade its deteriorating roads, water systems, power grid and more. . . . massive infrastructure spending would have been an even better idea five years ago. But it’s still something that needs doing.

Where would the money come from? . . . . Despite a modest rise in interest rates, the federal government can still borrow very cheaply: The interest rate on inflation-protected long-term bonds . . . . So borrowing now to pay for essential infrastructure would still be good economics.

And as I said, there would be political advantages, too. If Trump just pushed ahead with a straightforward, conventional public investment plan, he could trumpet the number of workers employed on new projects.

[A]nd another point: Public spending can yield a lot of private profit. An infrastructure program involving real money could be very lucrative for Trump cronies, or for that matter Trump himself. Yes, there are rules that are supposed to prevent that kind of profiteering, but does anyone think those rules would be enforced under current management?

So why isn’t Trump proposing something real?

Part of the answer is that in practice Trump always defers to Republican orthodoxy, and the modern G.O.P. hates any program that might show people that government can work and help people.

But I also suspect that Trump is afraid to try anything substantive. To do public investment successfully, you need leadership and advice from experts. And this administration doesn’t do expertise, in any field. Not only do experts have a nasty habit of telling you things you don’t want to hear, their loyalty is suspect: You never know when their professional ethics might kick in.

So the Trump administration probably couldn’t put together a real infrastructure plan even if it wanted to. And that’s why it didn’t.

New GOP Tax Withholding Could Leave Taxpayer's Owing Money for 2018

Behind the scenes a battle is going on where Republicans are pressuring the IRS to withhold as little as possible from taxpayers' pay checks to fulfill the claims that the tax cut benefits more than the very wealthy.  The problem is that such a move would leave many taxpayers finding out a year from now that either (i) they will get little or no refund, or (ii) they owe money, with many not having the funds to pay the taxes due.  Of course, all Republicans care about is giving a false picture until the 2018 midterms have passed and then it will be a case of "tough sh*t" for those who find themselves owing money a year from now.  A piece in Politico looks at the subterfuge being pushed by Republicans.  Here are highlights:

The IRS is facing its first big challenge implementing the new tax law: deciding how much in taxes to withhold from millions of Americans’ paychecks.

The agency is under pressure to take as little as possible so people will see big increases in their take-home pay ahead of this year’s midterm elections.

But that would come at a cost: smaller or even nonexistent refunds next year, though millions rely on them to plug holes in their family budgets. Democrats are already accusing the Trump administration of plotting "phantom windfalls" ahead of the November contest that will come back to haunt taxpayers next tax season.

“We oppose any attempts by the administration to systematically under-withhold income taxes during the 2018 tax year, knowing that in 2019 taxpayers may find they owe taxes when they were expecting a refund,” Sen. Ron Wyden and Rep. Richard Neal, the top Democrats on congressional tax committees, wrote to acting IRS Commissioner David Kautter.

“You’re going to start seeing a lot more money in your paycheck,” Trump said Monday during a speech to the American Farm Bureau Federation. The IRS did not respond to a request for comment.

There is a history of politicians trying to manipulate withholding, through obscure tables issued by the IRS, with an eye toward providing a short-term boost to the economy. President George H.W. Bush tried it ahead of the 1992 election, and the 1986 tax overhaul attempted, unsuccessfully, to quash refunds altogether.

Most of the new tax law took effect Jan. 1 because Republicans want it to boost growth before voters head to the polls this fall.

As Wyden and Neal pointed out, bigger paychecks now could mean a nasty surprise in 2019. Some accustomed to receiving annual refunds could potentially find themselves suddenly in arrears to the IRS.

“This is not something you want to fool the American taxpayer about — you don’t want to have them feeling good because they’re getting a big bump in take-home pay only to be surprised next year,” said Larry Gibbs, a former IRS commissioner.

“People ought to be able to understand what is being withheld from their paycheck and what that means — not just in terms of a bump in take-home pay, but also whether they’re still going to get a refund,” he said.

Taxpayers have long prized their tax refunds. The share receiving money back from the IRS at tax time has been firmly lodged at 70 percent or more since the 1960s, despite complaints from experts that it amounts to giving the government an interest-free loan.

So what should taxpayers do who receive larger paychecks?  Probably start setting much of it aside to make sure they don't find themselves in a huge mess come April 15, 2019.   Interest and penalties can quickly run up one's bill to the IRS.   As for Republicans, this effort is part of their campaign of lies and deceit, something that is the norm in today's Republican Party.