Trump Proposes $1.5T in Infrastructure Spending: How Much Is Needed?

Mish

In his State of the Union address, president trump laid out a proposal for infrastructure spending. Details were scant.

"Tonight I am calling on Congress to produce a bill that will generate at least $1.5 trillion for the new infrastructure investment that our country so desperately needs. Every federal dollar should be leveraged by partnering with state and local governments, and where appropriate, tapping into private sector investment to permanently fix the infrastructure deficit. And we can do it."

Lovely. How much is really needed?

Here are two estimates from a Reuters recap on Trump's Infrastructure Spending Proposal.

  • McKinsey & Company researchers say that $150 billion a year will be required between now and 2030, or about $1.8 trillion in total, to fix all the country’s infrastructure needs.
  • The American Society of Civil Engineers, a lobbying group with an interest in infrastructure spending, puts it at $2 trillion over 10 years.

Details Scant

Where is the money coming from? What percentage is from state budgets?

Trump did not say.

  • State budgets must be balanced so state spending will require tax increases.
  • Public-private partnerships tend to be boondoggles or giveaways to political cronies.
  • Estimates tend to be low, especially when public unions are involved.

Synopsis

  • US debt is spiraling out of control.
  • Trump added $1.5 trillion to deficits with corporate tax cuts.
  • Trump wants to add another $1.5 trillion from somewhere without precisely stating where.
  • The US dollar is sinking.
  • Interest rates are rising.
  • The stock market is in a bubble.

Repeat after me. This does not matter because (make up any reason you want but this is a common one) we owe it to ourselves.

Here is another idea: Deficits only matter when Democrats are in charge.

Mike "Mish"Shedlock

Comments (20)
No. 1-20
SweetKenny
SweetKenny

Who needs money when you have a big military - just go take it.

Realist
Realist

Trump has never worried about debt before. He isn’t worried about it now. I believe he even suggested on the campaign trail that he would be happy to let the US default on its debts. Just like his businesses, he believes it is okay to default.

channelstuffing
channelstuffing

trillion here,trillion there ,what's a few moar trillion when you money grows on trees vern,or betta yet printed outta of thin air

stillCJ
stillCJ

Editor

Just wondering, what is your native language channel; or did you go to school in California?

Jojo
Jojo

The money-tree must be in bloom!

stillCJ
stillCJ

Editor

Does the anticipated deficit take into account increased tax revenues from more successful US business and more working people taxes, and the money corporations have been holding offshore being brought here? I want to see the accounting.What about fewer people on welfare? Do all state budgets have to be balanced? Why do they all have deficits then? Also, does the budget accounting consider Trump not giving away $billions to countries that are not friendly to the US? I am going to guess - probably not. I think that is where he said he would get the money to spend here in America. Who is against that?

Mike Mish Shedlock
Mike Mish Shedlock

Editor

Yes, the bipartisan CBO takes all that into consideration. And so do I. I actually favor tax cuts with reduced spending. There is no reduced spending and the cuts were lopsided.

ReadyKilowatt
ReadyKilowatt

Infrastructure spending isn't about these moon-shot projects. It's about daily maintenance for decades. What politicians want is onetime projects that they can name after themselves. What the people need is invisible stuff that just works.
https://www.youtube.com/watch?v=XTopVi1hVVM

KidHorn
KidHorn

States don't have to have balanced budgets. To be more precise, their spending in any given year can exceed their tax revenue. If they spend too much, they do the same thing the feds do. They issue debt.

KidHorn
KidHorn

There's no way Trump will be able to raise $1.5 trillion on infrastructure projects. It will never make it out of the house. The only way it might happen is if there are some very inconvenient infrastructure failures and then the general population demands we do something about it. Similar to what happened with banks in 2007. It took a stock market collapse to bail them out.

FlyOver_Country
FlyOver_Country

I don’t see issues with deficit spending when done appropriately. When the economy is tanking, like it was in 2008, 1T in infrastructure spending was appropriate. But when the economy is growing, government is supposed to be saving or at least cutting back on spending. The economy has been growing enough for the past few years that a 1.5T proposed infrastructure spending bill right now makes absolutely no sense.

RonJ
RonJ

"Every federal dollar should be leveraged by partnering with state and local governments..." State and local governments are already over leveraged.

Carl_R
Carl_R

I always laugh when someone tells me that "Party A is the one that is fiscally responsible", or "Party B is the one that is fiscally responsible". Both parties are the same, and want to spend money they don't have. The last President that we had that actually took the time to read the budget, and who attempted to install zero-based budgeting (as opposed to each project starts with last year's budget and gets increases) was Carter, and both parties were glad to have him gone.

Ambrose_Bierce
Ambrose_Bierce
(deleted message)

And I am waiting for the whispers about Regime Change to mention China. If you want a trade war Mano y Mano, get right to the point Trump. Tell them to hold elections or no trade.

DBG8489
DBG8489

No government ever starts spending on something when "the market is tanking" and then later stops and starts "saving".

They spend and the programs they spend on become fiefdoms for someone somewhere and any cut to that program is considered a direct attack on those who benefit.

It isn't the job of a government to control the economy or make winner/loser decisions in a market. A government exists to secure the rights of its citizens and mediate disputes. Give a government the power to control a market and you give those who have the ability to bribe that government the ability to control that market.

Kinuachdrach
Kinuachdrach

Sechel: "We'll also see a great deal of mal-investment ..." We have been seeing a lot of mal-investment over the last decade. Just think about the thousands of bird-whackers littering the landscape from California to West Texas to Eastern Canada, unreliably generating electric power and reliably generating subsidies from taxpayers. Or think about the teenage girls who are collectively running up $Billions in debt for worthless college degrees. Or think about California's still-incomplete expensive bullet train to nowhere. If we can find a way to redirect those kinds of mal-investments into productive value-adding infrastructure, we would be ahead of the game. Unfortunately, that would require the Political Class to get out of the tax & subsidize business, and to cease money-printing & let interest rates rise.

Escierto
Escierto

Yeah, let's start building bridges to nowhere. I think this has been done already but hey: I'm turning Japanese
I think I'm turning Japanese
I really think so

Kinuachdrach
Kinuachdrach

Trader_0; "... both wind and solar generation have recently become cheaper than coal and mostly everything else ...". I will believe that when Democrat politicians start whining about Big Wind & Big Sun, and demand an end to direct & indirect subsidies and start imposing taxes on those boondoggles. But my big beef is not with the misuse of tax-payer money, it is with the legally-protected destruction of rare bird life, especially migrating raptors. Kill a bald eagle with a gun, and you are in deep doo-doo; kill a bald eagle with a subsidized bird whacker, and you are untouchable. Makes absolutely no sense, except to our Political Class.


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