Texas businessman William J. Sandbrook says he’s “bullish” on President-elect Donald Trump’s call for $1 trillion in new infrastructure spending and a massive tax cut for wealthy Americans and businesses -- and for good reason.
As the president and CEO of U.S. Concrete Inc., a $1.1 billion-a-year ready-mix concrete producer with more than 3,000 employees across the country, Sandbrook will be one of those in the economic catbird seat if Trump makes good on his pledge, and state and federal governments dramatically step up the pace of repaving America.
After years of halting and unpredictable federal spending on the nation’s highways, bridges, waterways, mass transit and power grids, Sandbrook thinks the president-elect is just the person to throw open the spigot of infrastructure spending and rev up the economy. Sandbrook’s company has laid concrete in major construction projects from New York City to the San Francisco Bay area and is salivating over the prospects of a major infusion of new construction funds.
“I believe it’s a huge stimulus,” he said in a telephone interview Friday from his headquarters near Dallas. “I’ve been lobbying Congress since 1992 on increasing infrastructure spending,” yet Congress, for the most part, has taken a “Band-Aid” approach to funding.
“Now we appear to be on the cusp of a significant inflow of money and some of the different economic policies that a Trump administration may be able to enact,” he added. “If all of that comes to bear, that’s very bullish for the economy . . . and very healthy for anybody in the construction chain.”
Sandbrook, a veteran of the construction materials industry for the past 24 years and a staunch Trump backer, is far from alone in his assessment. The Dow Jones Industrial averages roared to record levels Wednesday and Thursday, as investors swooned over the prospects of expansive stimulus spending under the incoming Trump administration.
Thierry Albert Wizman, a global interest rates and currencies strategist at the Macquarie Group, wrote late last week that traders saw “a far more expansive fiscal policy than what they had imagined under Hillary Clinton, according to MarketWatch. What’s more, he said, with the Republicans retaining control of the House and Senate and Trump soon to be in the White House, the prospects for a major fiscal expansion appeared to be far more credible.
Ironically, only days after the historic presidential election, there appears to be a growing convergence of interests between Wall Street and some liberal Democrats and independents including Sen. Bernie Sanders of Vermont. While many of the details of Trump’s proposals remain hazy or to be determined, conservative businessmen and investors on one side and liberal Democrats on the other apparently see the virtue of a major push in stimulus spending, with practically no concern about the long-term effects on the $19.7 trillion national debt.
During the 2016 Democratic primaries, Sanders put Hillary Clinton on the defensive with his liberal “revolutionary” calls for major new government spending to assist the middle class – ranging from job-generating construction projects and free college tuition to paid family leave, a higher minimum wage and even expanded health care and Social Security benefits.
Sanders has vowed to press ahead with his crusade for more stimulus spending when a new Congress convenes in January, possibly as the ranking member of the Senate Budget Committee. And while he has been a sharp critic of Trump’s policies and incendiary rhetoric, he said in a statement after the election that “To the degree that Mr. Trump is serious about pursuing policies that improve the lives of working families in this country, I and other progressives are prepared to work with him.”
Support among Republicans and conservatives for Trump’s proposals are hardly universal. Many, including House Speaker Paul Ryan (R-WI) and leaders of the House and Senate Budget Committees, would likely resist any runaway expansion of the deficit. Moreover, some government spending watchdog groups are alarmed by what they see as a possible marriage of convenience between the left and right.
“I’m not predicting that will happen, but there is a political logic to it -- but not a fiscal logic,” said Robert Bixby, executive director of the fiscal conservative Concord Coalition, who worries that the government under Trump may be returning to a bygone era of big annual budget deficits.
“The political temptation is to say, ‘Well, you get something and I get something,’ and that means Democrats get infrastructure spending and Republicans get tax cuts,” Bixby said in an interview. “They can both then say that this will be so good for the economy on both ends and that we have to do it.”
Some budget groups and organizations including the Committee for a Responsible Federal Budget and the nonpartisan Congressional Budget Office warn that it will take a comprehensive strategy of spending cuts, higher taxes and major reforms of Social Security, Medicare and other entitlements to slow the growth of the long-term debt. But Trump and many liberal Democrats have dismissed such an approach, saying that it would only depress the economy just when it needs a fresh boost.
Sandbrook, the Texas concrete manufacturer, agrees with that argument. And while he expresses concern that a big spending and tax package could lead to an uptick in inflation, he is far less concerned about its long-term impact on the national debt.
“I think with a growing economy, the theory is there’s more money to pay down the debt because there is more money flowing through well-paid jobs,” he explained. “But any stimulus can be inflationary in nature, there’s no question about that. But inflation is at historic low levels, so there is a school of thought that a little bit more inflation is probably healthy for the economy.”
The fight over infrastructure spending has a long, tortuous past. Congressional Republicans fought President Obama for years over infrastructure spending, with the GOP largely ignoring Obama’s warnings that the U.S. had fallen behind China and other global rivals in upgrading its highways, bridges, tunnels, waterways and electrical grids.
Congress had done a relatively good job of funding highway and bridge projects with the federal gas tax through 2008, but then the process began to break down as the trust fund began to run out of money, and lawmakers resorted to a series of stop-gap measures to keep state construction projects afloat.
Obama and the Republican-controlled Congress finally reached an agreement last December on a five-year, $305 billion highway and mass transit spending bill that put an end to the uncertainty but that still fell well short of the $478 billion plan that the president had advanced earlier that year.
In the heat of the presidential campaign earlier this year, Trump sought to upstage Democratic rival Hillary Clinton by proposing twice as much in spending on infrastructure as she had proposed. Trump vowed to finance $1 trillion of additional spending on highways and bridges over the coming decade, without raising taxes but instead providing incentives for private investment.
The Trump infrastructure proposal was part of a larger budget and fiscal package of increased military spending and one of the largest tax cuts for individuals and businesses since the Reagan administration.
Taken together, Trump’s economic strategy would likely drive up the budget deficit by $5.7 trillion or more in the coming decade and substantially increase the government’s overall interest costs for borrowing by the Treasury.
Sandbrook said it was a no-brainer for him to support Trump over Clinton, even though the former secretary of state had advanced a relatively bold infrastructure plan of her own.
“Well, she was talking the right things, but to me, it was just more of the same,” he said. “At least on infrastructure spending, you need an outsider like Trump to really shake it up to get the funding, to get the political will.”
“I think with a political insider, it would be more of the same,” he added. “It would be more Band-Aids. I would be doing more lobbying. I would be saying the same thing to the same people for 25 years and nothing would change.”