Clinton and Trump both promise US infrastructure bonanza

US presidential candidates Hilary Clinton and Donald Trump are both promising massive programmes of infrastructure spending should they win the US presidential election on 8 November.

In her first 100 days as president, Clinton has pledged to work with Democrats and Republicans to pass a comprehensive plan to “make the biggest investment in American infrastructure in decades” including establishing an infrastructure bank.

Announcing a major plan to rebuild US infrastructure, Clinton said: “In America, we build great things together - from the transcontinental railroad to the interstate highway system to the Hoover Dam. But today, our investments in infrastructure are roughly half what they were 35 years ago. That’s why I have announced a $275 billion, five-year plan to rebuild our infrastructure—and put Americans to work in the process”. 

Clinton says she will pass her infrastructure plan in her first 100 days of office and her transition team is already believed to be working on the detail ahead of what the Democrats hope will be a victory in next Tuesday’s presidential poll. 

The $275bn plan includes: - 

  • A massive repair and expansion programme of roads and bridges, including smart investments to improve roads, reduce congestion, and slash the “pothole tax”. 
  • Major investment in public transport and encourage local governments to work with low-income communities to ensure unemployed and underemployed Americans are connected to good jobs.
  • Connecting all Americans to the internet. Clinton will work to ensure that by 2020, 100 percent of households in America will have access to affordable broadband. She will also invest new resources in bringing free Wi-Fi to public buildings and public transportation.
  • Investment in building world-class American airports and the modernisation of the US’s national airspace system. These investments will reduce carbon emissions and save travellers and airlines an estimated $100bn in avoided delays over the next 15 years.
  • Building energy infrastructure for the 21st century. Unlocking America’s clean energy potential by modernising infrastructure like dams, levees, and wastewater systems—saving billions of gallons in clean drinking water and generating clean energy.

Clinton says she will increase federal infrastructure funding by $275bn over a five-year period, fully paying for the investments through business tax reform. Of these funds, she would allocate $250bn to direct public investment, while the other $25bn will be set aside for a national infrastructure bank, which would leverage its $25bn to support up to an additional $225bn in direct loans, loan guarantees, and other forms of credit enhancement.

Clinton’s infrastructure plan would in total result in up to $500bn in federally supported investment. The bank would also administer part of a renewed and expanded Build American Bonds programme and would look for opportunities to work with partners in the private sector.

Trump, meanwhile, Donald Trump is planning to spend even greater amounts on infrastructure if he wins the keys to the White House. According to a report on Yahoo Finance, the Republican presidential nominee’s campaign has a plan to spend $1 trillion on a variety of infrastructure projects over ten years if he is elected.

Trump has long supported infrastructure spending, and has said he would double the amount that his Democratic rival plans to spend. Interestingly, Trump’s plan does not call for tax increases to finance projects. Instead a tax credit would be offered to private companies to finance projects, while the companies would also have to take equity investments in the projects. According to Yahoo Finance, $167bn of the $1 trillion investment would be equity investment, while the rest would be debt raised by private partners.

All projects built under the Trump plan would be required to generate cash flow, like toll roads or airports that produce tax revenue instead of free parks or highways without tolls. The equity investment partners would also take the revenue, essentially privatising much of the new infrastructure and making riskier investments more palatable. Trump’s campaign claims that taxes on the revenue generated by the infrastructure projects as well as taxes from workers would offset the lost revenue from the credits.

Infrastructure spending appears to be one of the few things that both Clinton and Trump agree on and their plans have the backing of the business community who seem to believe that with monetary policy stretched to its limits and economic growth still sluggish, spending by the government will kick-start private investment and economic dynamism.

So, whoever wins next Tuesday, provided the candidates’ election promises are kept then US infrastructure should be in a very healthy place in the years ahead.

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