Going Private: The Trump Administration’s Big Infrastructure
By Dean Baker
The Trump administration’s “infrastructure week” ended whatever hope any of us had that something positive could come out of this administration. It’s clear that his promise for rebuilding the country’s infrastructure is just another Trump scam.
During his campaign, Trump repeatedly complained about the poor state of the country’s infrastructure. He had a point, as both the federal and state and local governments have cut back spending in recent years.
It’s clear that his promise for rebuilding the country’s infrastructure is just another Trump scam.
In the case of state and local governments, there was often little choice. Loss of tax revenue due to the recession and slow recovery, coupled with balanced budget requirements in state constitutions and city charters, meant that there was little money to spend.
In the case of the federal government, the deficit hawks insisted that we reduce the deficit, even though there is no evidence that high deficits are pushing up interest rates and/or leading to inflation. Interest rates continue to be extraordinarily low in both real and nominal terms. In fact, they were far lower than they were in the late 1990s when the federal government was running budget surpluses.
Inflation continues to run below the Federal Reserve Board’s 2.0 percent target. In the last few months it appears to be slowing slightly. Given this evidence, there seems little basis for the concern that budget deficits are too large.
Nonetheless, the domestic discretionary share of the budget, which includes everything from education to the Justice Department to infrastructure and public spending on medical and other research, was cut back sharply by the deficit hawks.
The baseline that Trump was working from projected that domestic discretionary spending in 2027 would be almost 20 percent less than it had been in 2010, even as the economy grew by close to 40 percent over […]