Doublespeak and the National Debt

The following article by Ryan Erickson and Kevin DeGood was posted on the Center for American Progress website March 30, 2017:

On March 9, 2017, Chairman Bill Shuster (R-PA) dropped by the House Transportation and Infrastructure Committee’s Subcommittee on Water Resources and Environment to cheer on its work in setting the legislative priorities related to the country’s water infrastructure: ports, canals, and more. In remarks noting the urgency of needed repairs to water infrastructure, Shuster referenced President Donald Trump’s pledge to make $1 trillion in infrastructure investments. Shuster said, “Look, a trillion dollars is not going to come from the federal government.”

It was a short statement at a subcommittee hearing that usually would not result in attention-grabbing headlines. But, despite the modest setting, the statement was telling.

Chairman Shuster was taking a standard conservative line on any pay-fors in an infrastructure bill—specifically, that the bill cannot add substantially to the deficit. While Shuster seemed to concede that federal funding would need to be a component, he cited other sources—state and local governments, as well as the private sector—as needing to make up a substantial chunk of President Trump’s $1 trillion infrastructure pot. Plenty of Shuster’s colleagues have argued against a debt-financed infrastructure plan, repeating long-standing conservative arguments about adding to the national debt. And just last week, the Trump administration chimed in when Transportation Secretary Elaine Chao said that debt-financed infrastructure “will not happen—number one, because we just don’t have that much money, and number two, what it would do to our deficit, to our financial markets, would not be good.”

So what is special about Chairman Shuster’s statement? Shuster and other conservatives’ view on infrastructure is completely antithetical to the approach Republican leaders in the House are taking on another major legislative priority: tax reform.

President Trump and House leadership have made it clear that they desire to pass major tax reform in 2017, with a particular focus on the corporate tax system. To that end, the House majority released a proposal for tax reform last year as a starting point for the changes they are looking to make. Independent analysis of the plan by the Tax Policy Center, however, shows that it could substantially add to the nation’s debt: $3.1 trillion over the next 10 years, or three times the cost of financing a $1 trillion infrastructure plan with public debt, as Senate Minority Leader Chuck Schumer (D-NY) has proposed. House Republican leaders claim their tax plan is “revenue neutral,” but it clearly is not.

President Trump and House Speaker Paul Ryan’s (R-WI) logic on infrastructure versus tax cuts as a debt-worthy investment gets even more absurd when you consider whom their tax plan helps. According to that same independent estimate by the Tax Policy Center, 99.6 percent of the benefits of the House majority tax plan would go to the top 1 percent of earners. Essentially, Republican House leaders are saying that adding to the debt is okay if it is in the name of tax cuts for the rich but bad if it is in the name of infrastructure investments that could boost economic productivity, grow the economy for people at all income levels for decades into the future, and fix crumbling bridges and roads without massive giveaways to Wall Street.

Chairman Shuster’s comments at the subcommittee hearing demonstrated that the house majority is not burdened by the need for consistency. By calling for private investment in any infrastructure plan—Shuster’s opening statement went on to highlight “two $4 billion pipeline projects” that are “100 percent privately funded”—the chairman essentially walks away from the thousands of communities and projects that do not fit the needs of private equity investors pushing costly public-private partnership deals. Moreover, the choice of pipelines is also instructive: Pipelines are private assets built by for-profit businesses with private financing. These projects have nothing to do with fixing old water pipes that leach lead into drinking water or repairing a rural highway that helps farmers deliver crops to market. The overwhelming majority of infrastructure facilities provide broad public benefits that do not generate a stream of revenue for investors. In short, they are public goods that deliver public benefits, and building and maintaining them requires the federal government to spend money. Unfortunately, both as a candidate and as president, Trump has pushed a plan designed to provide hefty tax cuts to elite Wall Street investors in exchange for their infrastructure investments at the expense of the working Americans who will foot the bill in the form of higher tolls and other user fees. Aside from a few megaprojects in big urban areas, this plan will do nothing for Main Street America.

Sadly, comments by Chairman Shuster and President Trump betray a different kind of consistency: a relentless desire to push policies that benefit the wealthiest 1 percent at the expense of everyone else.

Conservatives frequently argue that tax cuts pay for themselves because they boost economic growth and thus increase tax revenues. They also often say that infrastructure investment that relies heavily on the private sector will lower taxpayer costs. But in effect, they do neither: Evidence shows tax cuts do not grow the economy and do not boost government revenues. The Tax Policy Center’s analysis of the House plan concurs, finding that the plan would reduce revenues by $3.0 trillion even when anticipated economic growth is factored in, and the revenue loss would still be $2.5 trillion even with a more optimistic set of assumptions. Meanwhile, the argument for private infrastructure financing is just sleight of hand: Private infrastructure finance might not result in a need to raise taxes, but costs would go up either way for people using facilities enabled by privately financed construction. Moreover, the ability to control these costs could be under the domain of private companies accountable to their owners instead of the public.

Making a public—and, if necessary, deficit-financed—infrastructure commitment would ensure that any productivity-boosting assets—such as new bridges or rail lines, technologies to make airports more efficient, or broadband access for Americans in rural areas—remain under public, not Wall Street, control. Likewise, any tax bill cannot promise massive tax cuts to the wealthy if conservatives are serious about shrinking the debt.

The Trump-Ryan approach on adding to the debt is a clear example of doublespeak—a convenient, seemingly sensible-sounding argument to shroud tax cuts for the wealthy: the centerpiece of conservative economic policy. It is time to call this doublespeak out for what it is.

View the post here.