Most observers have figured out that the Trump infrastructure spending plan seems to be weirdly lopsided in an unrealistic way, with $200 billion in federal spending somehow supposed to inspire a total of $1.5 trillion in spending by state and local sources along with private ones. What has not been made all that clear publicly is how this plan upends decades of established practice in fiscal relations between the federal and the state and local governments. The long-established formula has been 8 to 2, that is $8 in federal money for $2 in state or local money in infrastructure construction projects. Trump’s plan proposes to completely reverse this to a 2 to 8 formula, $2 in federal money for $8 in state or local money. Anyone who thinks this is going to provide any actual infrastructure activity that would not have otherwise is simply completely delusional.
Of course it is well known that the private sector input will involve tolls or other payment methods to make sure the private interests make a positive rate of return. One important area many want to see work done is on fixing bridges. The American Society of Engineers has identified about 50,000 bridges in the nation that need repair. However they also estimate that only about 100 of those are reasonably suitable for private tolling. This is another not-going-anywhere part of the proposal.
However, Trump is apparently hoping to raise money by outright selling off some publicly owned infrastructure assets. The Washington Post reports today that in the Washington area this includes the two main airports, Dulles and Reagan National, as well as the George Washington Memorial Parkway (currently not tolled). I can hardly wait and am curious what else around the country is going to be put on the block for a grand fire sale leading to all kinds of tolls and other nonsense.
Barkley Rosser
Now that I no longer live in DC, I would love to see an attempt on making the GW a toll road.
I cannot imagine a more expensive enterprise(not a whole lot of room around the GW), nor can I imagine a project that would create more gridlock.
Well, unless they wanted to toll the beltway.
This stuff is right in Trumps wheelhouse. He has a lot of experience with large construction projects. He started his political career back in the 80s by taking over a city renovation project of a skating rink in Central Park which produced nothing but a mudhole in 6 years. Trump finished the project in 4 months, 25% under budget.
Next up Selling the Interstate Highway system off piecemeal. And why stop there? The U.S. military forces own a lot of territory – Sell it and lease back.
For that matter why not privatize the entire military… that way taxpayers would get a bargain because when we didn’t need all of them their services could be purchased by other nations. Indeed this might reduce U.S. defense costs since we would have to outbid Russia or China, or Iran or, or, or.. when we wanted to wage war, and congress would balk at paying too much, thus keeping defense costs at a minimum.
Besides if it were privatized there’s no telling who the actual owners were … they could be from anywhere on the globe.
Laissez-faire knows no bounds.
Actually, asset sales probably represents the easiest solution for the debt and entitlement hole we find ourselves in. For example, the US government owns 640 million acres of land, and is probably not using all of it as well as a private company might. Sell it off at very little cost and use the money for whatever we might have a higher priority for. That is how a businessman would think.
When a statement commences with “most observers (or most smart …)” I look for my large bag of sea salt.
“Most observers have figured out that the Trump infrastructure spending plan seems to be weirdly lopsided in an unrealistic way, with $200 billion in federal spending somehow supposed to inspire a total of $1.5 trillion in spending …..
Something about a 2 to 8 ratio.
See: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/49910-infrastructure.pdf
Exhibit 4 is spending for FY 2014.
Investment fed’s 38%, O&M Fed’s 12% of spending.
Maybe Trump following Obama!
A good example of an underutilized government asset sale is here in Portland OR. The Post Office had a large hub facility (about 4 square blocks) located in a formerly light industrial area just north of downtown. Well the light industrial failed and the area became a wasteland ripe for redevelopment.
Well redevelop it did. Now known as the “Pearl District” the area is now packed with luxury apartments, multi million dollar condos, leading edge companies, and all the accoutrements. The Post Office built another hub in a much less congested, more suitable location. The entire 4 block former Post Office was virtually empty for 10+ years, maybe a dozen people worked there.
Recently the was parcel was sold, I would guess about $25 million per block. So that’s $100 million in money to the Federal government (thru the Post Office), picked up off the ground, to be used for infrastructure, reduce debt, cut taxes, preserve benefits, whatever, in return for a passport office and truck storage. What is there to possibly criticize?
EM,
Yeah, putting a toll on the GW would be just ridiculous.
Sammy,
Yes, apparently Trump did OK with a small skating rink in NYC. Do you want to have the Trump Org do all of this? I do note they have numerous bankruptcies.
Your example of the P.O.in Portland is hilarious. What that shows is that in fact the feds are selling off unused assets right now, in some cases making money doing so. I think you overstate what can be made from this. The issue of this plavn is to have private sector taking over running stuff, but most of the highways they have tried to do so have ended up being either financial or practical or both messes, such as the mess regarding the Indiana Toll Road. In the 1800s there were 254 private companies running roads. They all went bust, all, and those roads were taken over by one level of government.
ilsm,
Sorry, that data does not show what you think it does. The formula involves joint projects and has been 8 to 2 feds locals on joint projects. But the vast majority of that state and local spending is not on joint projects. I hope you understand that state and local governments spend lots of money on transportation and other infrastructure with no fed in put. It is clearly inadequate. But now we have Trump coming in with this screwball proposal. Sorry, you are out to lunch on this one.
Sammy,
Your Portland, Or. example sounds to me like the Fed’s investing in property at low property prices and selling at high prices, no? Several major private enterprises in Silicon Valley have been doing that for years. It’s a pretty standard way of investment… letting time and population growth do it’s thing on limited land.
The company I worked for bought a ranch 100 or 200 acres at the furthest outreaches of San Jose in the South (then county property). opposite direction of where the growth was going in 1950’s. Most of it was orchards leased to farmers and a huge spread of small buildings (individual little rooms) and park with a large lake used occasionally for high spending client sales and “education” on using our products.
They sold it for multiple millions … now a huge area of high rise apts, and retail at the cross-roads of the only southbound State Highway, a a major cross-town freeway and light rail intersection.
A major Health Care (not-for-profit) bought a large portion of it rom the company in the late 1960’s, and built a huge hospital complex on it before there was much else around. The company made millions of profit off that sale as well.
They also bought part of another ranch even further south out in the boonies and 20 years later built their western Research facility in a swale at the top of the hills, unseen from anywhere — nobody even knew it was there. A little winding ranch road led to it. They still own that ranchland … it will be worth millions upon millions in profits when the sell that land.
You can ask why the company did this? The company had a real-estate division the sole job of which was to identify long term future population growth into virtually uninhabited ranch land and buy it up on the cheap at any possible future location where the company might eventually want to build more facilities — pure speculation on land prices .. then either just hold it (leased back to ranchers) or eventually build on it for the company’s own growth.
You try to make it sound like the Fed intended on losing money or didn’t have a clue. Of course that’s the standard anti-federalist’s claim by the laissez-fair set isn’t it?
Sammy,
I’ll add this too. When the military decides it no longer has good use for military land the close the bases (after Congress finally lets them) and sells the land to cities or private developers for huge profits, even after taking out old military buildings, finding and eliminating old unexploded munitions, and soil contamination.
In the bay area that includes the
– SF Presidio (prime land now developing million dollar homes, shops, and city park in the toney (sp?) Marina district,
– Fort Baker right across the bay at the Golden Gate doing the same, – Coast Guard Air base in Alameda,
– Treasure Island in the middle of the Bay between SF and Oakland, and
– Monterey’s Fort Ord, now housing a new State University and the rest being developed by private enterprises.
These were real – estate profits just like the PO in Portland… not necessary fro defense since the end of the Vietnam war… mid-1970’s.
Longtooth,
Absolutely I agree. There are a lot of federal assets just begging to be monetized. If only we had a real estate guy in charge………. oh wait…..
Yeah, Sammy, a real estate guy who went bankrupt six times. After the last time he had to get financing from a bunch of Russian oligarchs and criminals to the point that he cannot publicly release his tax returns, with the Russians apparently heavily involved in pushing him into the presidency.
So, if only we had a real estate guy deeply in hock to Russian oligarchs and criminals in charge so the Russians could take control of our federal assets……. oh wait………
The government is not a business. It should not be run like a business nor run by a businessman or businesswoman.
Giving Sammy (or his like) short shrift ignores the fact that about half the population in the U.S. believe just what Sammy believes. Sammy expresses in short but meaningful bursts on AB precisely what the laissez-faire, federal gov’t is too big and inept crowd believe.
If you can’t or won’t address those beliefs and what they lead to if Sammy get’s his way, then how does any body expect to change them or some of them at all? If you can’t change them then how is it supposed to change? Do you think Sammy will eventually die off and nobody will replace him?
It’s a benefit to AB that Sammy posts his beliefs for the sole reason that they informs of what those beliefs are and perhaps, why they persist.
Of course I don’t think there’s a snowball’s chance in hell of changing Sanmy’s beliefs — but that isn’t the point. How are those beliefs going to change? And if we don’t address them then we do ourselves no favors.
Longtooth,
Maybe I (we) are right.