Paul Krugman: Build He Won’t

Beware of Trumps bearing gifts:

Build He Won’t, by Paul Krugman, NY Times: …is public investment an area in which progressives and the incoming Trump administration can find common ground? Some people, including Bernie Sanders, seem to think so.

But remember that we’re dealing with a president-elect whose business career is one long trail of broken promises and outright scams — someone who just paid $25 million to settle fraud charge… Given that history…, you should probably assume that it’s a scam until proven otherwise.

And we already know enough about his infrastructure plan to suggest, strongly, that it’s basically fraudulent…

The … Trump team is … calling for huge tax credits: billions of dollars in checks written to private companies that invest in approved projects, which they would end up owning. …

There are three questions you should immediately ask.

First, why do it this way? Why not just have the government do the spending…, the eventual burden on taxpayers will be every bit as high if not higher.

Second, how is this scheme supposed to deal with infrastructure needs that can’t be turned into profit centers? Our top priorities should include things like repairing levees and cleaning up hazardous waste; where’s the revenue stream? Maybe the government can promise to pay fees in perpetuity…, but that makes it even clearer that we’re basically engaged in a gratuitous handout to select investors.

Third, what reason do we have to believe that this scheme will generate new investment, as opposed to repackaging things that would have happened anyway? For example, many cities will have to replace their water systems in the years ahead, one way or another; if that replacement takes place under the Trump scheme rather than through ordinary government investment, we haven’t built additional infrastructure, we’ve just privatized what would have been public assets — and the people acquiring those assets will have paid just 18 cents on the dollar, with taxpayers picking up the rest of the tab.

Again, all of this is unnecessary. If you want to build infrastructure, build infrastructure. It’s hard to see any reason for a roundabout, indirect method that would … provide both the means and the motive for large-scale corruption … unless the inevitable corruption is a feature, not a bug. …

Cronyism and self-dealing are going to be the central theme of this administration… And people who value their own reputations should take care to avoid any kind of association with the scams ahead.