An Urban's Rural View

The Infrastructure Plan That Still Isn't

Urban C Lehner
By  Urban C Lehner , Editor Emeritus
Connect with Urban:
One of the problems is that many of the bridges, roads and other infrastructure projects the nation needs would not produce enough revenue to lure private investors. (DTN photo by Chris Clayton)

Russell B. Long was born to be a U.S. Senator. In 1948, when he was only 29, Louisiana voters elected him to a senate seat previously held by both his father and his mother. He was re-elected five times, serving 38 years in the Senate and acquiring a reputation as an unrivaled legislative tactician.

In the U.S. Senate, the satirist Ambrose Bierce quipped, "A quorum consists of the chairman of the Committee on Finance and a messenger from the White House." Russell Long chaired the finance committee for 15 years. Some called him "the fourth branch of government." He was so powerful that a reporter who covered the committee during his era used to say that in Long's case, a quorum did not even require the messenger from the White House.

Long's most lasting legacy, though, might be a piece of wisdom he dispensed about the process of seeking agreement on tax legislation. What he always heard, he said, was: "Don't tax you, don't tax me, tax the fellow behind the tree."

Actually, Long's shrewd witticism distills all of interest-group politics, and not just tax-law lobbying, to its textbook essence. Everyone wants government benefits. No one wants to pay for them. We all have something we think government should provide. We all want someone else -- the fellow behind the tree -- to pay.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

Take, for an example currently in the news, infrastructure. There's widespread agreement that America's needs refurbishing -- a lot of refurbishing. Campaigning for president, Donald Trump laid out a $1 trillion infrastructure plan. Serving as president, though, he hasn't moved to implement that plan. It's not just that he's had a few other things on his mind, though he surely has. The real reason is he still hasn't answered the Russell Long question. He hasn't figured out who will pay for it.

His original idea was that with a little "deficit-neutral" jiggering of the tax code, private investors would pay. The arithmetic behind his public-private partnership scheme was, to say the least, convoluted. (If you think I'm exaggerating, read it for yourself, http://tiny.cc/…) The underlying idea was that the infrastructure would be revenue-producing -- think toll roads -- so private investors, with proper tax encouragement, would have an incentive to build it. In building it, they would employ people who would pay taxes, reimbursing the government for the tax breaks, and making it "deficit-neutral."

Critics pointed out that in an economy with a low unemployment rate like today's, most of the people hired would probably already have other jobs and be paying taxes anyway, making it unlikely the tax breaks would be recouped.

The bigger problem with the plan, though, was that many of the bridges, roads and other infrastructure projects the nation needs would not produce enough revenue to lure private investors. That's especially true for rural infrastructure which, as I argued here (http://tiny.cc/…) and here ((http://tiny.cc/…), typically serves sparse populations and generates negligible economic returns.

Now, according to a Washington Post report (http://tiny.cc/…), Trump has backed off on the public-partnership notion. Now, it seems, Trump sees government -- federal, yes, but especially state and local government -- as the fellow behind the tree. But does any government or combination of governments have enough tax revenue, or enough stomach for more debt, to pay for a trillion dollars in infrastructure investment? That apparently is one of the details to be worked out.

And while a trillion seems like a bundle, it may not be enough to do the job. The American Society of Civil Engineers thinks $3.6 trillion of infrastructure investment will be needed by 2020 (http://tiny.cc/…). Even adjusting for civil engineers' self-interest in promoting spending on things they design, there's a strong case to be made for their estimate. Just fulfilling President Trump's promise to bring broadband internet to the countryside could cost hundreds of billions.

If any of this is going to happen, we're going to need to find a lot of fellows behind a lot of trees. If they were easy to find, we might have seen some progress by now. Truth is, there doesn't seem to be much searching for them going on in Washington. That nobody wants to pay would come as no surprise to the late Russell Long.

Urban Lehner can be reached at urbanize@gmail.com

(ES/)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]

Comments

To comment, please Log In or Join our Community .