The plan President Trump unveiled this week for repairing the nation’s crumbling infrastructure isn’t getting much love in the media or in Congress, in part because there isn’t much to it.
Trump’s $1 trillion infrastructure plan only includes $200 billion in actual government spending, with the rest coming from unnamed private investors incentivized by a “mixture of loans and grants” and empowered by Trump’s deregulatory agenda. A White House fact sheet presents ideas such as lifting restrictions on tolls in the interstate highway system and opening rest areas to private investment.
While short on specifics, the White House press release announcing the plan dedicates a good deal of ink to ridiculing President Obama’s 2009 stimulus package as an “expensive waste” of more than $800 billion.
Members of Congress on both sides of the aisle have reportedly balked at Trump’s infrastructure plan. Progressive Democrats are pushing their own proposal, which would simply spend $2 trillion over the next decade on fixing up roads, bridges and crumbling sewer and drinking water delivery systems.
The president’s proposal for bolstering infrastructure development with a vaguely defined partnership between the public and private sectors has policymakers looking to infrastructure investment models in other countries for guidance as to what his policies might look like in the real world. One country that keeps coming up in media coverage is Australia, where the government has experimented with a model known as “asset recycling.”
Asset recycling is basically the practice of selling off existing public infrastructure to private investors in order to pay for new infrastructure, and critics say the model fast-tracks privatization deals that prioritize profit margins over the needs of the public. Rather than being a model to replicate, Australia’s experiment provides a cautionary tale to US policymakers because its asset-recycling program amounted to “expensive loans with long-term concession contracts that have had problematic features,” according to In the Public Interest (ITPI), a progressive think tank.
“The Trump infrastructure plan would put a giant ‘for sale’ sign on the country’s roads, bridges, water systems and other infrastructure,” said Donald Cohen, ITPI’S executive director. “Rather than invest in America’s future, the plan would encourage cities and states to hand over public infrastructure to Wall Street and global corporations.”
In Trump’s vision, it seems that what’s best for public infrastructure is assumed to be what’s best for big business. In a nod to Trump’s supporters in the coal and oil industries, which are arguably the intended beneficiaries of his decision to pull out of the Paris Climate Agreement, the White House points out that the nation’s inland waterways where coal, oil and steel are transported have “been allowed to fall apart” and require $8.7 billion in maintenance work.
Trump announced his plan on the banks of the Ohio River in Cincinnati, where he abruptly stopped in the middle of his speech to wave at the captain of a barge stationed behind him.
Australia’s asset recycling program was introduced in 2014 but was formally ended two years later because former Prime Minister Tony Abbott was unable to convince lawmakers to fund it due to mounting concerns over the program’s effectiveness, according to ITPI.
The White House has explored asset recycling as a model, and reports indicate that Trump has considered offering state and local governments a “bonus” for selling off some of their assets. Australia offered a 15 percent subsidy to states and territories, which encouraged hasty decisions to privatize public assets. One territory leased a port to a Chinese company for 99 years without determining where the proceeds would go.
Another cautionary tale comes out of Chicago, where the city contracted private companies to run its parking meters and locked itself into a contract that caused parking prices to skyrocket, according to ITPI.
“Asset recycling is Chicago’s parking meter deal on steroids. It incentivizes making shortsighted deals with private investors,” Cohen said. “In what world does it make sense for the federal government to encourage cities and states to rush to sell off public assets?”