United States President Donald Trump is channeling his inner Keynes again.
After months of speculation that his planned $1 trillion infrastructure project, something that Democrats like Paul Krugman have championed for years, was just campaign talk, the president reaffirmed his commitment, and provided some more specifics on Tuesday.
Speaking at a town-hall style event with CEOs in Washington, the real estate billionaire mogul confirmed that he wants to only fund infrastructure projects that are shovel-ready.
“If you have a job that you can’t start within 90 days, we’re not going to give you money for it … because it doesn’t help us,” Trump said.
“There is a certain logic to that, but we’ll be satisfied with a year, but it won’t be any more than a year. We have to build roads. We have to build highways. We’re talking about a major infrastructure bill of $1 trillion, perhaps even more, and we have to do our jobs.”
Trump also announced that he plans to slash regulations so states can move ahead with enacting new building projects. Alluding to a chart illustrating the complications behind the legislative process and regulations, he explained that it can take as many as 20 years to begin a highway construction project.
“It costs sometimes hundreds of millions of dollars just to go through the process. A lot of you are such pros, some of the best pros in the world sitting in this room, you understand it is a process,” Trump stated.
“It gave us an advantage if you could get through the process. But getting a building approved in New York is a horrible, horrible thing. That’s nothing compared to when you get into the highways and the dams.”
Steve Bannon, Trump’s right-hand man, said in an interview last year that the administration wants to do something big like the New Deal but for the 21st century.
“It’s everything related to jobs. The conservatives are going to go crazy. I’m the guy pushing a trillion-dollar infrastructure plan. With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything. Ship yards, iron works, get them all jacked up. We’re just going to throw it up against the wall and see if it sticks. It will be as exciting as the 1930s, greater than the Reagan revolution — conservatives, plus populists, in an economic nationalist movement.”
Remember, Bannon doesn’t like Austrian economics so Trump is likely getting the worst economic advice possible (SEE: Steve Bannon doesn’t like Austrian economics or limited government Republicans).
What should be interesting is to see what kind of opposition he receives from Democrats and the media. For years, prominent liberals have called for trillion-dollar infrastructure projects – Krugman said it was necessary just before Election Day but changed his tune once Trump won the election.
Either way, government stimulus projects are nothing but Napoleonic economics: having taxpayer-funded workers dig a hole and then refill that hole. It’s also a simple case of what is seen and unseen.
Proponents of this kind of program often aver that infrastructure is crumbling all over the U.S. and these infrastructure spending initiatives will revitalize the economy. But is that true? David Stockman, former Reagan White House budget director, doesn’t think so.
What is crumbling politically is the case for deficit spending. At the end of the day, that’s what the infrastructure brouhaha is all about. Its just another variation of the misbegotten Keynesian notion that the state can command economic growth via borrowing or printing money in order to fuel aggregate demand.
In fact, however, true economic growth and wealth generation stems from the supply side of the economy. That is, from the exertions and productivity of labor and the efficiencies, innovations and investments generated by entrepreneurs.
And that leads to the real reason for our present stall speed economy. Over the last 15 years, there has been a sharp decline in real net business investment (after depreciation of the existing capital stock), labor hours utilized by the business economy and net business formation and entrepreneurial activity. If Washington really wants to deal with faltering economic growth it should work on removing the regulatory, tax and welfare state barriers to the ominous trends shown in the graphs below.
Indeed, we do not need any more Federal subsidies for any category of infrastructure—–especially transportation. If we need more airport capacity or modernization than is being funded by the $36 billion per year we are already spending, for example, then the 10% of the population which accounts for 90% of air travel should pay for it in higher user charges on their tickets.
Likewise, if the $65 billion currently being spent to subsidize the capital and operating costs of local mass transit systems is not enough—–then let local taxpayers absorb the burden, not unborn generations which will inherent the nation’s $18 trillion public debt.
And when it comes to enhancing real economic productivity and growth, nothing could be more inimical than to pour tens of billions into hopeless white elephants like Amtrak and the Obama high speed rail boondoggle.
In short, the infrastructure bleaters have it exactly upside-down. The economic crisis confronting the nation is owing to the state getting way too big, not because public spending on infrastructure or anything else has been shortchanged.
But “muh” roads…
–AM
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