Why Trump's $1 trillion infrastructure plan is 'doomed'

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U.S. Transportation Secretary Elaine Chao says the Trump administration will unveil a $1 trillion infrastructure plan later this year.


Those are the signs President Donald Trump and everyone in America should be seeing in their heads when they hear an announcement like that because this plan is already doomed to failure before the first bulldozer driver turns the ignition.

Its three explicit and implicit goals for the Trump team, boosting the economy, improving our network of roads, bridges, and airports, and building a virtual bridge to the Democrats will all fail and fail dramatically. And we know this because they always do.

Let's start with boosting the economy. Deficit spending has been a political football kicked by conservative free marketers and lauded by liberal Keynesians for decades. Conservatives argue that big government spending projects don't provide enough enduring economic bang for taxpayer dollars and simply leave a larger debt for future generations to shoulder. Keynesians say that government-generated demand is a fine driver for the economy and often the only way to fill the gaps the free market is allegedly leaving behind.

This is an age-old debate that may never be settled, but a relatively recent and extensive study from a decidedly non-conservative source should at least give the big government spenders great pause.

In their 2010 report, Harvard University professors Lauren Cohen, Joshua Coval, and Christopher Malloy found that states that receive increased federal spending usually see private businesses in their state cut their investment, cut jobs, and suffer decreased sales. Even the authors of the study were surprised by those results, but they stand by them. So much for that economic boost from Uncle Sam.

Strike one

Now let's look at the supposed great improvement we'd get from spending those big bucks on our "crumbling" roads, bridges, and airports. One of the nation's most outstanding urban planners and founder of the StrongTowns movement, Charles Marohn, has become the leading spokesman for explaining the dangers big federal infrastructure projects present for our infrastructure.

In an article published earlier this year, Marohn explained how these federal projects fail because they create infrastructure that comes with long term costs local states and cities can't afford, they focus on "fixing" infrastructure that has already proved immune to fixing by previous spending efforts; they target new construction over maintaining the infrastructure we already know is essential; and big federal projects lead local governments to surrender their superior ability to identify the projects their communities really need.

Strike two  

And finally, there's the aspect of this plan President Trump has personally floated which includes cutting corporate taxes and using the repatriated billions of being held by companies overseas to partially fund this infrastructure program.

The idea is that the Trump team will get Democratic Congressional support for his tax cuts in return for promising to give Democrats a share of that money for projects in their districts and states. Keep dreaming.

Just ask the Reagan administration officials who thought they had a deal with Democrats in 1982 and 1983 to swap support for an increase in Social Security taxes in return for spending cuts. President Reagan agreed to the tax hike, but the Democrats never produced any of that promised support for the spending cuts in what Reagan would later call one of the worst mistakes of his presidency.

And who could forget how President Obama was essentially betrayed by his own party that failed to hammer out the details and implementation of his big 2009 stimulus plan? When it failed to produce many of the big public works programs he promised, he was forced to famously admit, "Shovel ready was not as shovel ready as we expected."

Countless presidents from both parties have seen big spending programs go over budget, over time, and fail to produce the promised results.

Strike three

President Trump and his team have already taken an ill-advised and unproductive wrong turn by trying to tackle the difficult political issue of health insurance policy reform in all-too-quick fashion. Doubling down on that kind of mistake by putting together a massive infrastructure plan would more than likely make things worse all around.

Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.

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