There seemed, back in November, two ways the Trump infrastructure fiscal expansion could have gone.
The first was driven by the facts that Trump seemed to have ambitions that were "Pharoahnic", and that Trump had been a real estate developer.
There were then no Trump plans for the infrastructure program. There were, however, plans to have plans. And the plans to have plans were aided by the fact that building things was what you would expect someone who had been a real estate developer to focus on. Since there were no plans, there was an opportunity to develop for Donald Trump with a real, technocratic infrastructure plan. It would have had, from Trump's perspective, three advantages:
It would actually work--it would boost American economic growth, and so make people happy.
It would be Pharoahnic. Trump would leave his mark on America's landscape in a visible way--something that is, for somebody who has for two decades been playing the game of celebrity, a big win.
It would make Trump's presidency both be and appear to be a success, from the desired perspective of helping to make America even greater than ever.
And the idea that the economy was already at full employment, and did not need additional stimulus of any kind? That extra stimulus would be offset by the Federal Reserve, and that the overall effect on employment would be very small? That, taking into account the Federal Reserve reaction, the only major effect would be to raise interest rates? Perhaps. But that would not have been a downside. If you do seek--as we do--to normalize interest rates in the medium term, and if you want to see whether there are discouraged workers out there, moving away from monetary to fiscal as the stimulative balancing item is exactly the right thing to do. An extra $300 billion/year of bond funded infrastructure would substantially normalize interest rates.
The second was driven by the fact that there are an awful lot of small-government fanatics and some fiscal conservatives in the Trump coalition. That way would have generated a politics in which the normal fiscal infrastructure stimulus that both the situation and Trump's background seemed to call for would not happen. It would simply not be done.
Instead, the Trump infrastructure plan would wind up building infrastructure on the government's dime. That infrastructure which would then have been given away to friends of the administration. They would then have charged monopoly prices for access to it.
Little good as infrastructure--monopolists charging monopoly prices are rarely public benefactors on any large scale. No good of stimulus. Think of Silvio Berlusconi, but not on an Italian but on a North American scale.
Another pointless episode of bunga-bunga policy.
The U.S. would have been likely to lose, substantially, if that was what the Trump fiscal expansion had turned out to be. And then, of course, there would be the Trump tax cut: another nail in the coffin of sane and prudent fiscal policy, and another brick in the wall of the Second Gilded Age.
We may still have this bunga-bunga policy.
But with each day that passes with not even a plan to plan to have a plan, it looks more as though there is no Trump administration--just the reality TV simulacrum of one, cabinet members following their own administrative agendas, White House propaganda aides following their own propaganda agendas, and a Congress that seems to lack any sort of positive leadership. Not constructive infrastructure policy. Not bunga-bunga infrastructure policy. Simply no policy at all.
Constructive infrastructure policy now looks completely off the table.
Destructive bunga-bung infrastructure policy is still a possibility, but a low probability one.
No infrastructure policy now looks like the way to bet at even odds...