Trump’s long-awaited infrastructure plan is a fraud

Elham Khatami

Elham Khatami Associate Editor, Think Progress

President Donald Trump unveiled his long-awaited infrastructure plan on Monday, touting the proposal as a $1.5 trillion investment in the nation’s highways, bridges, waterways, and other infrastructure projects. The plan’s topline number sounds great on the surface, but it wildly misconstrues the actual investment being proposed by the federal government — and Trump knows it.

The proposal aims to turn $200 billion in federal funds into a $1.5 trillion investment over the next ten years by placing most of the financial burden on states and cities, which will have to cover at least 80 percent of the cost of any infrastructure project in order to qualify for federal grants, likely through higher taxes, tolls, and other user fees. The $200 billion number is a dramatic reduction in federal cost-sharing from years past.

In an interview with the Wall Street Journal in January, Trump conceded that the $200 billion in federal funds is “not a large amount,” going on to criticize the amount of money the United States has spent on the wars in Afghanistan and Iraq. In a tweet Monday morning, Trump reiterated his criticism:

But Trump’s plan barely makes a dent in what’s needed to fix the country’s ailing infrastructure. Instead, it places the onus on cash-strapped states and municipalities to come up with the revenue to improve their own infrastructure. As CityLab reported last year, this will be especially difficult for “cities that never financially recovered from the recession, like Detroit, Cleveland, Stockton, and Memphis,” which are limited in their spending ability and yet need infrastructure investments the most.

According to the American Society of Civil Engineers’ (ASCE) annual Infrastructure Report Card, the United States needs to invest $4.59 trillion by 2025 in order to improve the country’s infrastructure — a figure three times larger than even the rosiest estimate in Trump’s proposal and more than 20 times larger than the $200 billion actually allocated.

“If the United States continues on this trajectory and fails to invest, the nation will face serious economic consequences, including $3.9 trillion in losses to U.S. GDP and more than 2.5 million American jobs lost in 2025,” the ASCE report said.

The $200 billion in federal spending includes $100 billion in incentive grants, aimed at encouraging increased state, local, and private infrastructure investment; $50 billion in rural formula funds, which seeks to promote investment in rural infrastructure needs; and $20 billion in so-called transformative projects, described as projects “that can significantly improve existing infrastructure conditions and services” but are considered too risky to attract private or local investments.

Even calling it a $200 billion investment by the federal government is a misnomer. Instead of finding new sources of revenue, the funds will be entirely offset by cuts to other existing infrastructure programs, including a 19 percent decrease in funding for the Department of Transportation and a 3 percent decrease for the Department of Energy, as highlighted in Trump’s fiscal 2019 budget, which was also released today.

Pointing out the glaring lack of new sources of funding in the infrastructure proposal, Michael Linden, fellow at the Roosevelt Institute, said on Twitter, “All told, he’s basically proposing a $0 infrastructure plan.”

It is unlikely that most lawmakers on either side of the aisle will support Trump’s proposal — with Democrats, and some Republicans, criticizing the plan’s lack of new revenue sources.

But even if the proposal made its way through Congress and money began flowing to projects around the country, it’s unlikely the spending would have any meaningful impact on the worsening condition of the most vital infrastructure programs.

By leaving local governments on the hook for 80 percent of the cost of a project, the Trump administration is encouraging investments in public-private partnerships. A city will partner with a private developer, for instance, to construct a new building as part of neighborhood revitalization. But spending is most needed where public-private partnerships are hard to come by. Private financiers seek to tap into sustainable revenue streams when deciding what projects to invest in, and there are few revenue streams to be had for street repairs or water pipe maintenance. In states that have ceded some authority to private companies for the management and maintenance of highways, regressive tolls have hit the poorest workers the hardest.

Posted In: Allied Approaches

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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A Friendly Reminder

A Friendly Reminder