Archives: 02/2018

Trump Plan Probably Won’t Repair Crumbling Infrastructure

The White House released President Trump’s infrastructure plan today, which calls for spending $200 billion federal dollars as seed money to stimulate a total of $1.5 trillion on “gleaming new infrastructure.” Almost lost in the dozens of pages of documents issued by the administration is that the reason why the federal government supposedly needs a new infrastructure program is that our existing infrastructure is crumbling, and the reason it is crumbling is that politicians would rather spend money on gleaming new projects than on maintaining the old ones.

The White House proposes several new funding programs. The administration could have dedicated one or more of these programs to maintenance and repair of worn-out infrastructure. Instead, all $200 billion can be spent on new projects, and knowing politicians, most of it will be. To make matters worse, funds for most of the programs would be distributed in the form of competitive grants, but experience has proven that competitive grants are highly politicized. 

“In the past, the Federal Government politically allocated funds for projects, leading to waste, mismanagement, and misplaced priorities,” agrees White House economic advisor Gary Cohn. The administration’s solution, Cohn continues, is to “stimulate State, local, and private investment.” In other words, instead of most decisions being made by Washington politicians, they will be made by local politicians. But if local politicians were any better at maintaining infrastructure, then we wouldn’t have tens of thousands of local bridges classed as “structurally deficient” and the New York, Washington, Boston, and other subway systems wouldn’t be falling apart.

The White House says that the federal funds it proposes to allocate to infrastructure may be spent on either new construction or maintenance, which is an advantage over some existing federal programs that can only be spent on new construction. But just because they can be spent on maintenance, doesn’t mean they will be.

The New York subway system is falling apart because the city doesn’t have enough money to maintain it. Yet it has enough money to spend $10 billion on a tunnel between Penn Station and Grand Central Terminal for Long Island Railroad trains, which the New York Times has called “the most expensive subway in the world.” It also has enough money to build the eight-mile Second Avenue subway, which at $2.1 billion a mile must be the second-most expensive subway in the world.

Mixed News in the Trump Education Budget

Quickly reading through the overviews of President Trump’s proposed FY 2019 budget, the good news is that funding coming through the U.S. Department of Education would be cut. The bad news is that the budget would potentially include up to $1 billion applicable to private school choice, which would threaten centralized regulation of choice, rendering such choice far less meaningful. Think Common Core for all!

Overall it appears spending by the U.S. Department of Education would decrease by around $3.6 billion—or about 5.4 percent—from 2017, based on quick calculations using the Department’s budget summary and data in an addendum that alters the summary due to the budget legislation enacted last week. As I’ve noted before, eliminating such ineffective—and unconstitutional—undertakings as the $1.2 billion 21st Century Community Learning Centers would be solid policy, and frankly the evidence is compelling that the overall K-12 and higher education federal endeavor has been an expensive mistake.

The bad news is that overall cuts would not be greater, while the budget would create a new, $1 billion Opportunity Grants program that would include money for private school voucher programs. The program would be broken into two pieces—Scholarships for Private Schools and Open Enrollment Grants—with only the former open to private choice programs. No specific funding split between the sub-programs is identified in any of the budget materials I’ve seen, so it is unknown how much of the funding would go to private choice. But even a small amount of money relative to overall education spending can be a powerful lever to get states and schools to open themselves to regulation—it just needs to look like a lot in news stories or ledgers—and that is the huge danger of federal school choice. Of course, the Constitution no more authorizes federal choice programs than it does other education undertakings.

The budget is likely dead on arrival, and there are certainly things I missed in a quick once-over. But at the very least it reveals an administration that has sort of the right inclination on education—shrink the federal footprint—but that will curb that inclination when it comes to school choice.

Trump Budget Outlook

The Trump administration has released its federal budget for 2019. The document lays out various reform proposals and provides projections of revenues and spending through 2028. The projections are a little outdated already given the budget-busting spending deal reached last week, but it is still interesting to take a look.

The chart compares Trump’s proposed revenues and spending to the most recent CBO baseline projections from last June (which run through 2027).

Despite the large tax cut in December, the Trump administration is projecting federal revenues to be higher in years after 2023 than did the CBO before the cuts were enacted. The administration is assuming strong economic growth of about 3 percent in coming years, partly based on the benefits of tax reform and its deregulatory initiatives.

On spending, the administration projection assumes that it can move various cut proposals through Congress, generating large savings down the road. But with a spendthrift attitude currently prevailing in Congress, such reforms seem optimistic. Note that the CBO projections do not incorporate last week’s discretionary spending increases, whereas Trump’s figures include large defense increases and large nondefense cuts in coming years.

The FISA Follies: “War of the Memos” Edition

As I was preparing for a Demand Progress-sponsored panel on Congressional oversight of intelligence matters on the afternoon of February 9, Demand Progress Policy Director Daniel Schuman and I agreed that if President Trump was going to refuse to “declassify” the House Intelligence Committee Democrats rebuttal to the “Nunes Memo,” he would wait until the late Friday news cycle to do it. We didn’t have to wait long for that prediction to come true

In a moment, I’ll get to the issue of whether Trump actually has the authority under the Constitution to do what he did, but I want to start with is this paragraph from the New York Times story referenced above:

But Donald F. McGahn II, the president’s lawyer, said in a letter to the committee on Friday night that the Democratic memo could not be released because it “contains numerous properly classified and especially sensitive passages.” He said the president would again consider making the memo public if the committee, which had approved its release on Monday, revised it to “mitigate the risks.”

In that same NYT story, House Intelligence Committee ranking member Adam Schiff provided further context:

In a statement on Friday night, Mr. Schiff said that Democrats had provided their memo to the F.B.I. and the Justice Department for vetting before it was approved for release by the committee. The Democratic memo was drawn from the same underlying documents as the Republican one.

“We will be reviewing the recommended redactions from D.O.J. and F.B.I., which these agencies shared with the White House,” Mr. Schiff said, “and look forward to conferring with the agencies to determine how we can properly inform the American people about the misleading attack on law enforcement by the G.O.P. and address any concerns over sources and methods.”

So if Schiff is to be believed, House Intelligence Committee Democrats ran their memo by Justice Department and FBI officials prior to the unanimous committee vote to release his memo, then sent the memo over to the White House for reaction. Trump and his team then demanded still more redactions. If the above account is correct, the same Justice Department or FBI officials who reviewed the original “Schiff Memo” apparently demanded still more redactions once it got to Trump’s desk.

It’s this sequence of events which brings me to the question of whether Trump has the authority under the Constitution to censor or rewrite Congressional work product, with or without Congressional assent, if it contains references to Executive branch information asserted as being classified, in part or in whole. The short answer is no. The longer answer is still no, but with some caveats.

Trump Infrastructure Plan

The Trump administration has rolled out its 2019 federal budget, which includes a plan to boost investment in the nation’s infrastructure.

I see five components to President Trump’s infrastructure policies so far.

First, Trump approved business tax cuts in December, which will boost private capital investment in pipelines, broadband, factories, and much else. The private sector owns more than three-quarters of U.S. infrastructure, so the tax cut will create wide-ranging benefits.

Second, the administration is taking steps to reduce costly regulations and speed permitting on infrastructure projects. The new budget proposes to “shorten the process for approving projects to 2 years or less.” The number of federal rules creating roadblocks to construction has increased over time. Kudos to Trump for removing some of the barriers.

Third, the budget proposes spending an additional $200 billion over 10 years of federal dollars on infrastructure, as summarized here. There is a new “Incentives” program, a “Transformative Projects” program, and a “Rural Infrastructure” program.

These new programs are unaffordable, especially given that last week’s budget bill exploded annual deficits to more than $1 trillion. Creating a new $50 billion program for rural areas is particularly ridiculous given that the government already has a range of wasteful rural subsidies.

In general, new federal subsidies for infrastructure are not needed. Any state wanting to improve its infrastructure can do so with its own funding. States can raise funds through taxes, debt, user charges, public-private partnerships (PPPs), and privatization. Federal infrastructure subsidies are often counterproductive, as I discuss here.

Giving Trump’s new subsides fancy titles such as “Transformative Projects” program” will not make them more efficient than current bureaucratic federal efforts. All federal spending for infrastructure comes from taxpayers who live in the 50 states, and there is no “transformative” magic that happens when cash is sent through Washington.  

Fourth, the Trump plan would boost incentives for the states to pursue PPP deals, including expanding various loan programs and broadening eligibility for private activity bonds. Here the end goal is a good one, but a better way to encourage PPPs and privatization would be to end federal subsidies altogether and repeal the tax exemption for municipal bond interest. That exemption dissuades the states from privatizing facilities such as airports.

Fifth, the Trump plan would make reforms to federal control over lands and structures. It would create a “capital revolving fund” to allow agencies to buy real property that they currently lease. That may save money, but the administration should instead focus on reducing the government’s size and its need for office space in the first place. (The government currently owns or leases 275,000 buildings). The Trump plan would also allow agencies to generate more revenues from public lands, and allow “for the sale or lease of federally owned assets.” That sounds positive.

In sum, Trump’s infrastructure plan includes both big government and small government policies. The plan states, “President Trump’s proposal will return decision-making authority to State and local governments, which know the needs of their communities.” But the best way to do that would be to end federal subsidies and all the related string-pulling from Washington.   

Government Scope Supercharges Size

In a remarkable surrender to Big Government, Senator Ted Cruz of Texas voted for the budget deal last week that hiked spending $300 billion over two years. The deal essentially scraps the Budget Control Act, pushes the deficit over $1 trillion, and sets the stage for $1.5 trillion more in spending over the coming decade.

Why did Cruz do it?

Because the deal included disaster-related spending for Texas, according to Cruz’s comments. Yet the senator surely knows that for practical and constitutional reasons, federal subsidies for local and private disaster rebuilding makes little sense. (I discuss here).

In his comments on the deal, Cruz lamented, “This bill will increase our deficits and increase our debt. That’s foolhardy…we should be reining in government spending.”

Yet Cruz explains: “Washington logrolling sometimes forces lousy choices. This is one of those choices.”

That is the key point. Before recent decades, federal spending on local disaster recovery was very limited. But now that such spending is routine, one of the most conservative senators was bought off in classic logrolling fashion to support Washington’s spending orgy.

Here is one lesson: the size of the budget and scope of federal activities are related. As the scope expands, logrolling becomes easier, which strengthens support for all spending programs. The more different programs there are, the more different levers can be pulled to generate support for each program and for overall spending increases.

Suppose the government had just two programs, A and B. Supporters would seek spending increases, but some legislators may not have much A and B spending in their states, and thus might favor restraint to save money.

Now Congress adds a new program, C. It appeals to members with different interests and in different states than A and B. The addition of C strengthens support for A and B because supporters of C must vote for A and B to gain support for their program.

Perhaps you know that Congress puts farm subsidies and food stamps in the same bill to combine the support of rural and urban members. But you may not know that Congress started subsidizing dams in the West a century ago because Western legislators wanted something in return for their support of Army Corps projects in the East. That is logrolling. It explains much of the history of federal government expansion, and it runs counter to the democratic ideal of true majorities approving specific policies, as I explain here.