by Gaius Publius
That big infrastructure bill you keep hearing about, and Democrats are starting to come on board with? It's a trap.
Ronald Klain writing in the Washington Post (my emphasis throughout):
As the White House official responsible for overseeing implementation of President Obama’s massive infrastructure initiative, the 2009 Recovery Act, I’ve got a simple message for Democrats who are embracing President-elect Donald Trump’s infrastructure plan: Don’t do it. It’s a trap. Backing Trump’s plan is a mistake in policy and political judgment they will regret, as did their Democratic predecessors who voted for Ronald Reagan’s tax cuts in 1981 and George W. Bush’s cuts in 2001.
First, about the author. The Washington Post article tells us, “Ronald A. Klain served as assistant to President Obama and oversaw the team implementing the American Recovery and Renewal Act from 2009-2011. He was an adviser to Hillary Clinton in the 2016 campaign.”
His discussion of Clinton's plan may well be biased toward Clinton, but if so, it's moot at this point. Clinton advisor or not, he's right about Trump's plan based a look at the Trump team's underlying analysis (pdf). Here's Klain's discussion of the Trump bill's many problems.
It's a “Tax Cut for Investors” Bill, Not an Infrastructure Bill
Trump's so-called “infrastructure” bill is really just a tax cut bill for investors in infrastructure and would do nothing to guarantee that the most needed (as opposed to the most profitable) projects are undertaken. Klain:
First, Trump’s plan is not really an infrastructure plan. It’s a tax-cut plan for utility-industry and construction-sector investors, and a massive corporate welfare plan for contractors. The Trump plan doesn’t directly fund new roads, bridges, water systems or airports, as did Hillary Clinton’s 2016 infrastructure proposal. Instead, Trump’s plan provides tax breaks to private-sector investors who back profitable construction projects. These projects (such as electrical grid modernization or energy pipeline expansion) might already be planned or even underway. There’s no requirement that the tax breaks be used for incremental or otherwise expanded construction efforts; they could all go just to fatten the pockets of investors in previously planned projects.
Moreover, as others have noted, desperately needed infrastructure projects that are not attractive to private investors — municipal water-system overhauls, repairs of existing roads, replacement of bridges that do not charge tolls — get no help from Trump’s plan. And contractors? Well, they get a “10 percent pretax profit margin,” according to the plan. Combined with Trump’s sweeping business tax break, this would represent a stunning $85 billion after-tax profit for contractors — underwritten by the taxpayers.
What else would you expect from Donald Trump but an opening of the purse to builders and contractors. But jobs too, yes? Actually, no, not as the bill is written.
No New Jobs Guarantee; No American Jobs Guarantee
Keep in mind, this bill doesn't fund projects; it funds investors. Now Klain on whether it will create new jobs:
Second, as a result of the above, Trump’s plan isn’t really a jobs plan, either. Because the plan subsidizes investors, not projects; because it funds tax breaks, not bridges; because there’s no requirement that the projects be otherwise unfunded, there is simply no guarantee that the plan will produce any net new hiring. Investors may simply shift capital from unsubsidized projects to subsidized ones and pocket the tax breaks on projects they would have funded anyway. Contractors have no obligation to hire new workers, or expand workers’ hours, to collect their $85 billion. To their credit, the plan’s authors don’t call it a jobs plan; ironically, it is Democrats looking to align with Trump who have given it that name. They should not fool themselves.
Yes, there will be jobs — but new jobs? No guarantee. There's also no guarantee, zero, that projects funded by this bill would hire U.S. citizens as workers. Trump himself is notorious for trying to use (very cheap) imported foreign labor on his domestic projects.
From Fortune in 2015:
Donald Trump’s companies tried to import at least 1,100 foreign workers
Companies owned by GOP frontrunner Donald Trump have sought at least 1,100 foreign worker visas since 2000—a practice that stands in stark contrast to Trump’s self-portrayal as a presidential candidate who would create and project American jobs.
A Reuters’ analysis of Department of Labor data shows that nine Trump-majority-owned companies have applied to bring waitresses, cooks, vineyard workers, and other laborers into the country on foreign worker visas. Most of the visa applications have gained approval, Reuters says. Palm Beach, Fla., resort Mar-a-Lago Club has sought the most foreign workers of the nine Trump-owned businesses. It has submitted applications for 787 workers since 2006. This month, it sought to bring in 70 foreign workers to work as maids, cooks, and servers on H-2B workers later this year[.]
The visas the Trump companies have relied on the most—H-2B—is a subset of the H-2 visa program that covers nonagricultural foreign workers. (H-2A visas are for farm workers.) The H-2 program is often criticized for leaving workers vulnerable to employer abuses. Last month, a Buzzfeed investigation portrayed the system as one that—at times—fosters modern-day slavery.
All of these problems, by the way, can be easily exploited by any Democrat not looking to be “bipartisan” with the new president. Unfortunately, Democrats are starting to look like easy marks for this plan.
Jonathan Chait at New York Magazine on Chuck Schumer's plans:
Democratic Senate Minority Leader Charles Schumer is plunging ahead with his plan to help Donald Trump pass a gigantic infrastructure plan. One apparent reason for this decision is a misunderstanding about how public opinion works — a mistaken belief that Democratic senators will get credit for working with Trump, when in reality the primary credit will flow to Trump, and the secondary credit to Republicans in Congress, even those who might oppose popular bills.”
Chait goes on to discuss how Schumer is hoping to triangulate the Republicans, to put them in a box, since Republicans didn't really want to spend on massive infrastructure when Obama was president. “[Schumer's] premise is that he can force Trump to choose between a large public infrastructure plan supported by Democrats and the opposition of fiscal conservatives in the Republican Congress, who have opposed such a plan for several years. Signing an infrastructure bill, Schumer says, would mean 'breaking with the Republicans who have always opposed these things.'”
Shorter Chait: “Silly Schumer.”
Here's why. Schumer, according to Chait, wants to offer a substitute infrastructure bill, a “real” one instead of this tax-cut giveaway bill, on the assumption that Republicans won't bite. If Schumer does that, Chait thinks Republicans will bite (as do I).
And here's what would happen:
To be sure, it will be slightly awkward and embarrassing for Republicans in Congress to suddenly toggle their rhetoric from denunciations of wasteful pork to support for necessary infrastructure upgrades. But this is where Schumer plans to come and rescue them. His party will supply the votes for the bill that will create the jobs needed to make Trump popular, and thus to supply the tailwind for down-ballot Republicans. Conservative Republicans eager to maintain their anti-spending purity can cast symbolic votes against the bill without preventing it from coming to the floor. Then they can enjoy the political benefits from rising wages under their party’s government. And if the deficit rises? (Which it probably will, after a debt-financed infrastructure law, debt-financed tax cuts, and debt-financed defense hikes.) Well, then Republicans can point to the big-spending infrastructure bill Democrats passed over their objections, stuffed with Democratic pork. And they can demand cuts to social spending to rectify it.
Outfoxed again, should it play out this way. And even if it doesn't, the appearance of Democratic collaboration will stain them all anyway. They should never touch this thing, in any of its forms.
It's a Trap
I can think of no better way for Democrats to validate Donald Trump's presidency — and guarantee that their own party remains in the minority throughout the lifetime of every Sanders voter who refused to pull the lever for Clinton — than to give, or even appear to give, any support to this.
It's true that individual Democrats (the self-serving “Schumercrats”) may keep their own seats at the moneyed insider table. But the Party as a whole will complete its own destruction, the one that the Party accelerated during the disastrous Clinton candidacy. Protecting the Inside Game at the expense of their Party's fortunes, or worse, the nation's, will destroy both the Party and the nation.
It looks like Bernie Sanders isn't suckered into this one, no matter how many well-placed others are. That's one clear mind at least among the muddled.
“When fascism comes to America, it will be wrapped in the flag and carrying the cross.” — Sinclair Lewis