A Short Vade Mecum for the Courtier-Technocrat in the Age of Trump
Procrastinating on November 20, 2016

Should-Read: There is, as of yet, no Trump fiscal policy plan. There is only a plan to have a plan to have a plan.

On the tax side, getting good policy looks hopeless: another big tax cut for the super-rich and the rich, sold to outsiders as something that will induce a tidal wave of entrepreneurial activity and sold on the inside as simply allowing you to keep your money that would otherwise flow to the losers and the cheaters and the moochers.

On the spending side... at the moment it does indeed look like money for nothing: have the government pay for projects most of which would have been built by privates anyway, and then entrench monopoly pricing of what ought to be free public-good infrastructure for a generation: a zero on the short-term Keynesian boost to employment and production, a zero on the medium-term Wicksellian rebalancing to allow the normalization of interest rates, and a zero on boosting America's long-term potential by filling some of the infrastructure gap.

As I have said, however, there is a potential key at hand here: it is not in Donald Trump's interest for his infrastructure plan to be a failure. It is in his interest for it to build many, many large things. The debate can be moved here.

Paul Krugman: Infrastructure Build or Privatization Scam?: "Trumpists are touting the idea of a big infrastructure build.... But remember who you’re dealing with...

...you are at great risk of being scammed.... It’s not a plan to borrow $1 trillion and spend it on much-needed projects.... Private investors do the work both of raising money and building the projects--with the aid of a huge tax credit that gives them back 82 percent of the equity they put in.... You should immediately ask three questions....

First, why involve private investors at all? It’s not as if the federal government is having any trouble raising money.... One answer might be that this way you avoid incurring additional public debt. But that’s just accounting confusion.... Second, how is this kind of scheme supposed to finance investment that doesn’t produce a revenue stream? Toll roads are not the main thing we need right now.... Third, how much of the investment thus financed would actually be investment that wouldn’t have taken place anyway? That is, how much “additionality” is there?... All of these questions could be avoided by doing things the straightforward way: if you think we should build more infrastructure, then build more infrastructure, and never mind the complicated private equity/tax credits stuff.

You could try to come up with some justification for the complexity of the scheme, but one simple answer would be that it’s not about investment, it’s about ripping off taxpayers. Is that implausible, given who we’re talking about?