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article imageOp-Ed: Trump's infrastructure program and asset recycling

By Ken Hanly     May 29, 2017 in Business
Washington - Trump has long promised a $1 trillion investment program in U.S. infrastructure but it seems that the program will actually be an excuse to privatize for the benefit of his business friends.
Trump's program would actually cut existing infrastructure programs, privatize the U.S. air traffic control system and provide incentives for public-private partnerships. As well, the Trump administration says it is considering paying state and local governments to sell of their public infrastructure. Using a process called "asset recycling," states, cities and counties would lease assets such as roads and water systems to private equity investors in exchange for cash to build new infrastructure. The federal government would pay a bonus to state, or local governments who make such deals.
The idea of asset recycling, which has an environmentally friendly sound, is actually the latest capitalist scheme to ensure that government helps out banks and big investors. It re-brands privatization and tries to disassociate it from failed neo-liberal privatization policies. It is now a trend not just in the U.S. but in Australia and is being considered by Canada's Liberal government. As the Canadian Union of Public Employees(CUPE) puts it: "CUPE has previously explained, 'Asset Recycling' is a new phrase describing corporatization, marketization and privatization of government assets. An asset is 'recycled' when a government, corporation or bank either sells or borrows against its physical assets to get money for investment in new capital... Asset recycling is just another scheme driven by bankers and governments desperate to hide past failures of neo-liberal privatization policy."
Trump can please Wall Street even more and perhaps he will be forgiven for his foibles. Even if it is found necessary to dump Trump the policy will no doubt remain. Gary Cohn, the director of Trump's National Economic Council and a former president of Goldman Sachs said: “The bigger the thing you privatize, the more money we’ll give you.”
Slate's Henry Grabar writes: “The megafunds aiming at American infrastructure investment, like a Saudi-backed $40 billion fund run by Blackstone, whose CEO Steve Schwarzman heads Trump’s business council, could buy airports or bridges, while local governments use the new cash to pay for the new projects—like pipes for Flint—that the private market can’t or won’t provide. In the long term, governments would be left with money-losing assets while Wall Street runs more lucrative public assets such as bridges, airports, utilities, and prisons.” A perfect example of what can happen with asset recycling is provided by Chicago's leasing of the city''s parking meters in 2008 to Morgan Stanley shoring up the city's operating budget in the short term but losing taxpayers nearly $1 billion over the 99 year of the terms lease.
We still do not know what Trump's actual infrastructure plan will be. Transportation Secretary Elaine Chao says a legislative package will be released later this year. The need for infrastructure investment is dire. Infrastructure spending has already dropped by half over the past three decades. Trump's budget will create a situation where state and local governments have nowhere to turn except to private sector and asset recycling programs. Trump may find support from Wall Street and international investment firms. Will Trump's working class supporters see what is happening?
Back in 20016 the Center on Budget and Policy Priorities warned that state and local spending on infrastructure including highways, bridges, schools and waste water treatment plants was at a 30-year low. A 2013 report by the American Society of Civil Engineers claimed the U.S. had infrastructure needs of $3.4 trillion up to 2020 including $1.4 trillion for roads, bridges and transit plus $736 billion for electricity and power grids. It also needs $391 billion for airports and $131 billion for waterways and related projects. The only problem is that such needs can be met only if it profits Wall Street, and big investment banks, in the U.S. and elsewhere. Trump no doubt thinks he has the final and best solution.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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