Why Trump and Dems’ $2 Trillion Infrastructure Plan Is Headed for a Ditch

Why Trump and Dems’ $2 Trillion Infrastructure Plan Is Headed for a Ditch

Democratic leaders said this week that President Trump had agreed to pursue a “big and bold” $2 trillion infrastructure package. There are plenty of reasons to be skeptical that a deal that size will pass this year — or that the announcement is anything more than political theater.

“Infrastructure Week should get back on track once President Trump agrees to unwind his tax cuts AND locates an additional $1T to fund the proposed $2T in increased infrastructure spending...and that was before the Robert Mueller letter to Attorney General William Barr became public,” strategist Chris Kruger of the Cowen Washington Research Group wrote in a Friday note to clients, tongue firmly in cheek.

His takeaway: “Impeachment is more likely than infrastructure.”

The proof that the latest infrastructure push is likely to roll into a roadside ditch before long was right there in Tuesday’s announcement. “The ball is in the president’s court to come up with pay-fors,” Senate Minority Leader Chuck Schumer told TV cameras outside the White House after meeting with Trump. "We told him unless he is willing to come up with the pay-fors for this large package, it will never get done.” Schumer called for rolling back some of the GOP’s 2017 tax cuts as a precondition for looking at increasing the gas tax. Trump’s not likely to agree to that.

An Old Story

It’s the same roadblock that has prevented progress on infrastructure for years. Everyone says they want to tackle infrastructure. It’s much harder to reach agreement on just how much the federal government should spend or how it should be paid for. And simply pushing ahead with an infrastructure package that adds to annual deficits is seen as politically unrealistic.

“GOP lawmakers say the president’s grand proposal for a $2 trillion deal is too ambitious and warn that they will oppose any measure that adds to the deficit,” The Hill reports. “Many Republicans also say they are against raising taxes to pay for an infrastructure initiative, a stance that would make it extremely difficult to find money to finance a package even half the size of Trump’s desired amount.”

New York magazine’s Eric Levitz notes that Republicans accept that deficit-financed tax cuts can pay for themselves despite a lack of empirical evidence to support the notion, but they are quick to dismiss borrowing to pay for investments in “productivity-enhancing infrastructure.” GOP lawmakers have floated a number of other ways to pay for an infrastructure package without raising taxes, like selling off distressed government assets, an idea that has gotten some bipartisan backing.

The Play Resumes Later This Month

Trump and Democratic leaders plan to meet again in a few weeks to discuss how to pay for their infrastructure plan, so we may find out then if the president supports that idea or others. Either way, given all the obstacles an infrastructure deal faces, don’t bet on one happening anytime soon.

The gridlock, paradoxically, leads lawmakers to get even more ambitious, as the Tax Policy Center’s Howard Gleckman notes: “If you are not really going to pass a bill, you may as well not pass a $2 trillion bill,” Gleckman explains. “And if you are going to blame the other guys for failing to pass the bill, you might as well hammer them for blocking a $2 trillion jobs bill.”

The political show must go on.